Temporary Sulphur Credit Trading, 2026–2030

Summary#

This is a proposed change, published in the Canada Gazette on December 13, 2025, that would re‑activate the temporary sulphur compliance unit (SCU) trading system under the Sulphur in Gasoline Regulations. The re‑enactment would run for 2026–2030 and is meant to give gasoline suppliers extra flexibility while they finish upgrades needed to meet the 10 ppm sulphur limit. The proposal is in Part I (a proposal), and it has a 60‑day comment period.

What it does#

• Re‑enacts the temporary SCU trading system so regulated suppliers can generate, trade, bank and use credits to meet the annual pool average for 2026 to 2030.
• Allows surplus SCUs that a supplier owned as of March 31, 2026 to be transferred into the re‑enacted system.
• Lets suppliers use SCUs to adjust their pool average for any year from 2026 to 2030.
• Changes some reporting/notice timelines for 2026 (shorter windows tied to the date the amendments come into force — 30 days in some cases).
• Extends the deadline for keeping books and records in Canada until December 31, 2036.
• The amendments would come into force on the day they are registered, with the department intending an entry into force in early‑to‑mid 2026.

Who's affected#

• Primary suppliers: gasoline refiners and importers (the regulated parties who supply gasoline to the Canadian market).
• Industry groups involved: Canadian Fuels Association (represents refiners) and Canadian Energy Marketers Association (represents many importers).
• Indirectly affected groups include vehicle and parts makers and national supply chains (for example, vehicle manufacturers and fuel distributors).
• The government engaged with Indigenous organizations including the Assembly of First Nations, Inuit Tapiriit Kanatami, and the Métis National Council, and some local First Nations near refineries were consulted; these groups raised concerns about public health and consultation adequacy.
• Small businesses are not expected to be affected, according to the department.

Why it matters#

• Avoids immediate compliance pressure on suppliers that could otherwise force some refineries to cut back operations. That could reduce refining capacity and risk local fuel shortages in some regions.
• Gives suppliers more time to complete upgrades to meet the 10 ppm annual sulphur standard without disrupting supply.
• Using banked credits can lead to small, temporary increases in sulphur emissions from vehicles in places that receive higher‑sulphur gasoline. The department says these increases would be limited and should decline over time.
• Keeps Canada aligned with the U.S. approach to averaging and credits for gasoline sulphur (U.S. Tier 3), while the department looks at a possible permanent system in future consolidated fuel regulations.
• This is a proposal, not final. The public can comment during the 60‑day period after publication; the department intends to consider all comments before finalizing the amendments.