Ban on Heavy Fuel Oil in Polar Waters

Summary#

The Department of Transport has published a proposal to change the Vessel Pollution and Dangerous Chemicals Regulations (Part 2, Division 1 — Oil) and the Administrative Monetary Penalties and Notices (CSA 2001) Regulations so Canada’s rules match an international ban on heavy fuel oil (HFO) in polar waters. The notice was published on June 20, 2026 and people have 60 days from that date to comment — this is a proposal, not yet law.

What it does#

• Implements the international ban in MARPOL that stops vessels using or carrying HFO as fuel in Arctic and Antarctic waters.
• Applies to Canadian-flagged vessels wherever they sail and to foreign vessels when in Canadian Arctic waters.
• Keeps allowed exceptions in the Arctic for:
  • emergency and rescue operations, and
  • a time-limited exception for vessels with protected fuel tanks until July 1, 2029.
• Notes a temporary waiver for Canadian marine resupply vessels that ended on July 1, 2026 (previously used to ease the transition).
• Removes a few obsolete technical provisions in the oil rules (minor housekeeping).
• Amends the Administrative Monetary Penalties and Notices (CSA 2001) Regulations to add four new violations tied to the HFO ban, with penalties ranging from $1,250 to $25,000.

Who's affected#

• The owners/operators (authorized representatives) of about 25 Canadian-flagged vessels — roughly 8 tankers, 16 cargo vessels and 1 bulk carrier.
• Foreign vessels operating in Canadian Arctic waters (they must follow the ban while in Canadian jurisdiction).
• Northern and Indigenous communities that rely on marine resupply: the analysis notes about 16,186 households in affected communities, including 12,895 Indigenous households.
• The shipping companies and a small number of mines that use Arctic shipping routes may feel small cost changes. (The government says many large vessels already use compliant fuels.)

Why it matters#

• HFO is thick, sinks or sticks to ice and shorelines, and is very hard to clean up in cold, remote polar conditions. Banning its use lowers the risk of long-lasting damage to wildlife, fisheries and communities that depend on those resources.
• Transport Canada’s analysis estimates a total compliance cost to affected Canadian vessel operators of $10.4 million (present value, 2027–2036) and a monetized benefit from reduced greenhouse gases of $4.3 million, for a net monetized cost of $6.1 million over that period.
• Avoiding a single large HFO spill could produce much larger savings: the paper estimates combined cleanup and socio‑economic savings in the order of $18.4–$21.4 million for a cargo-vessel spill and $37.0–$43.1 million for a bulk‑carrier spill.
• There are local concerns that higher fuel costs could be passed along as slightly higher shipping costs for remote communities. The proposal keeps targeted, time-limited exceptions that had been used to reduce short-term cost impacts during the transition.
• This is a domestic step to make Canada’s law match its international commitments. It is a proposed regulation; the public can comment within 60 days of the June 20, 2026 publication.