Temporary Sulphur Credit Trading Restored

Summary#

The Government of Canada published a proposal on August 29, 2020 to temporarily restore a credit-trading system for sulphur in gasoline. The change would let Canadian gasoline refiners and importers use or trade leftover sulphur compliance units (SCUs) for the years 2020 to 2025, giving them extra time to meet low-sulphur rules.

What it does#

• Re-establishes the temporary sulphur compliance unit (SCU) trading system under the Sulphur in Gasoline Regulations for 2020 to 2025.
• Lets regulated companies transfer into the re-opened system surplus SCUs they owned as of March 31, 2020.
• Allows companies in the system to create, trade, bank and use SCUs to adjust their annual pool average sulphur calculations for the years 2020 to 2025.
• Keeps the existing sulphur limits in place (for example, the annual pool average limit of 10 mg/kg remains the regulatory target).
• Requires participants to follow record‑keeping, reporting and auditing rules; reports must be filed electronically unless impossible.

Who's affected#

• Primarily gasoline refiners and importers in Canada (the regulated “primary suppliers”).
• Industry groups mentioned include the Canadian Fuels Association (CFA) and the Canadian Independent Petroleum Marketers Association (CIPMA) — they asked for this flexibility.
• Small businesses are not affected because reporting thresholds exclude producers/importers below 400,000 litres per year.
• The federal government expects minimal extra administrative cost to run the system.

Why it matters#

• Gives refiners short-term flexibility to cope with unexpected problems (for example, equipment failures or COVID-19 delays to upgrades) without breaking the sulphur limits right away.
• Could delay the year when the Canadian market reaches a true average of 10 mg/kg sulphur (without using credits) from 2020 to 2026. That means small, temporary differences in air pollutant emissions are possible between 2020 and 2025.
• The department estimates modest industry paperwork costs of about $4,041 in annualized average administrative costs (roughly $176 per affected business).
• The proposal was published with a 60-day comment period. The department intended the rules to come into force by the end of 2020 if approved.