Canada’s draft regulation exempts SAF from federal carbon charge

Advanced Biofuels Canada recognizes the government of Canada for taking concrete steps towards decarbonizing aviation by publishing draft regulations exempting sustainable aviation fuel (SAF) from the federal carbon charge under the Greenhouse Gas Pollution Pricing Act.

The draft regulations create a definition of “bio-aviation fuel” and establish a full exemption of SAF from the fuel charge (carbon tax) as of Aug. 10, 2022, when uplifted to an aircraft in a Canadian province or territory where the federal GGPPA applies (currently Alberta, Saskatchewan, Manitoba, Ontario, and the Yukon and Northwest territories).

“Updating the federal carbon charge to exempt low-carbon fuels like SAF is a smart, common-sense move to encourage their adoption,” said Ian Thomson, president of Advanced Biofuels Canada. “As policies to decarbonize aviation fuel advance, this draft regulation helps bring Canada closer to stimulating SAF use in aviation fuel. Advanced Biofuels Canada encourages the government of Canada to finalize this bio-aviation fuel exemption and extend this approach to all other low carbon-intensity fuels. Further, we recommend governments adopt fuel policies that create volumetric and carbon intensity-based requirements for blending SAF into jet fuel in Canada.”

The value of the “bio-aviation” carbon tax exemption is CAD 13 cents per liter until March 31, 2023.

With annual increases to the federal carbon pricing rates, the bio-aviation exemption will increase to CAD 44 cents per liter in 2030 at the CAD$170 (USD$127) per metric ton carbon charge rate.

SAF is eligible to create compliance credits under the recently published Clean Fuel Regulations, although there is currently no obligation to reduce the carbon intensity of jet fuel in Canada.

Canada’s Aviation Climate Action Plan released in August includes an aspirational goal of 10 percent SAF use by 2030.