This spring bore witness to one of the great comebacks of Canadian political history. The Liberal Party, unpopular and road weary after a decade in power, was energized at the eleventh hour by a new leader and new sense of mission.On April 28, Prime Minister Mark Carney landed a convincing win in the 2025 federal election. This outcome would have been unthinkable at Christmas, when the governing party was polling in the low 20 percents.The climate policy legacy of the Trudeau government, first elected in 2015, was impressive but beleaguered. The Greenhouse Gas Pollution Pricing Act of 2018 established a national price on carbon, providing the legal foundation for both consumer-facing and industrial levies.The consumer-facing charge was applied to all carbon-based conventional fuels and was sometimes known as the “carbon tax.” The industrial carbon pricing scheme is an emissions trading system, with specific elements of program design and administration left to provincial governments.The Trudeau government also developed the Clean Fuel Regulations, a low carbon fuel standard that came into effect in 2023. The CFR sets a carbon intensity reduction requirement for liquid fossil fuels, which tightens every year through 2030. Suppliers of gaseous fuels like renewable natural gas can participate in the CFR market as credit creators.By the time of Trudeau’s departure from office in early 2025, the consumer-facing fuel charge had become an albatross around the neck of the government. In stark policy departure, Prime Minister Carney repealed the fuel charge on his first day in office. The industrial levy remains; indeed, the Liberal Party’s 2025 election platform committed to improving the emissions trading system, in part by working with the provinces to harmonize and integrate what currently amounts to a balkanized system of nine different carbon markets.Market, Policy Outlook&nbsp; The repeal of the fuel charge has had knock-on implications across the wider carbon policy landscape. British Columbia followed the lead of the federal government by repealing its carbon tax, leaving Quebec as the only Canadian jurisdiction still collecting a consumer-facing price on carbon. The loss of the fuel charge also tilted the competitive landscape slightly away from biofuels and drove down credit prices in British Columbia’s provincial low carbon fuel standard. At the same time, CFR credit prices have risen since the spring, due to increased industry confidence about government support for the program, and also because the CFR doesn’t yet have a credit bank built up—demand exceeds supply.Going forward, the Carney government appears committed to the CFR, which is scheduled for a program review in 2027. There is certainly scope to improve the CFR and make it work better for industry. For one, credit market reporting should be more frequent and more detailed. Provided the underlying carbon intensity targets are not diluted, the CFR will continue to be both an effective tool for decarbonization and a powerful catalyst for biofuels investment on both sides of the border.The industrial carbon pricing regime will require more finessing if it is to become a useful market driver for biofuels. Many of the existing provincial policies have deliverability requirements. Small, illiquid credit markets have further constrained the ability of clean fuel providers to participate in the decarbonization of Canadian heavy industry. While the political moment is opportune to fix this sort of problem, translating rhetoric into the nuts and bolts of workable policy will be challenging.International considerations will also impact any reform of the pollution pricing system: The Carney government is eager to grow trade with Europe, meaning that alignment with European policy (likely including some homegrown version of a carbon border adjustment mechanism) will be key.To date, Canadian fuels policy has lacked any sort of meaningful “carrot” that could match the tax credits offered in the United States. Diverse voices from across the industry continue to advocate for policy development in this area. Relevant here could be the government’s broader focus on infrastructure development, which is tightly wound with its mission to make Canada “an energy superpower in both clean and conventional energies.” A secular commitment to building pipelines, ports and processing capacity stands to benefit the biofuels industry, particularly as the government looks to balance investments in “nation-building projects” with decarbonization and Canada’s Paris Agreement commitments.Participants in the Canadian biofuels market can look to the future with more confidence than a year ago. While there will continue to be changes made at the margins to key compliance programs, the existence of these programs appears assured, despite continued resistance from opposition politicians. The Carney government lacks an outright majority in the House of Commons, but with a strong plurality and a largely chastened opposition, it is unlikely to face a serious challenge to its leadership in the next 18 to 24 months. Author: Alex Ripley&nbsp; Manager, Government Affairs – Canada&nbsp; RNG Coalition

2025-10-02 - Canada a Key Market for RNG Despite Shifting Political Tides (Biomass Magazine)

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Participants in the Canadian biofuels market can look to the future with more confidence than a year ago. 

Canada a Key Market for RNG Despite Shifting Political Tides

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