Did you know that your EV charging infrastructure can generate income?
Canada’s Clean Fuel Regulations (CFR) was designed to drive net-zero goals by accelerating the switch to cleaner fuels in transportation. The CFR uses a ‘cap-and-trade’ system, which is an environmental policy tool that sets a limit (cap) on emissions and allows companies to sell (trade) permits to emit a certain amount. Companies that reduce their emissions can sell their extra permits to others, creating a financial incentive to lower emissions over time.
What is Capped and What is Traded?
The CFR sets carbon emission intensity reduction targets on fuel suppliers, which becomes stricter over time. By 2030, the target amounts to a 15% reduction from 2016 levels. These “capped” carbon intensity targets are measured in grams of CO2 equivalent (CO2e) emitted per megajoules (MJ) of fuel combustion.
To comply with the annual caps on CO2 emitted per MJ of fuel, companies can either:
(I) reduce their emissions or
(II) buy compliance credits from low-carbon fuel suppliers.
Each credit represents one tonne of emissions and is listed on the federal compliance credit system. These credits are then “traded” between the fuel suppliers, with the prices of the credits determined by market supply and demand with a maximum price ceiling set by the government.
Generating Compliance Credits
CFR provides four pathways to generate compliance credits:
- Reducing life cycle emissions of traditional fuels through methods like carbon capture, utilization, and storage (CCUS) and renewable electricity.
- Developing and supplying low-carbon fuels such as renewable natural gas (RNG) and biodiesel.
- Producing co-processed low-carbon fuels that replace traditional liquid or gas fuels.
- Advancing vehicle technology by supplying fuel or energy for electric vehicles (EVs).
While the first three categories deserve a deep dive on its own, it is the 4th category that EV credits fall into: Advancing vehicle technology.
Two entities can claim credits through EV charging infrastructure:
- Charging Network Operators: Any entity that makes the chargers available to the public. As a network operator, they operate the charging stations and collect the charging data. The charging network operator must use the revenue from selling credits to re-invest it back into developing and maintaining EV charging infrastructure or putting in place financial incentives to buy or purchase vehicles. Some examples are Flo and ChargePoint.
- Charging Station Owners: Any other entity that is not a charging network operator can be a charging station host or owner. A site host for EV charging is responsible for the physical location of a charging station and the infrastructure necessary to support it. For CFR credits, the site host owns or leases the property, may own, or lease the charging stations, and has the legal right to have the charging station installed. For charging station owners there is no restriction on the use of revenue generated by the credits. Some examples are universities, restaurants and businesses with public chargers.
Now that we know who can generate the credits, let us examine the most important thing – How much are they worth?
They are worth ~200 CAD in Ontario and 400 CAD in BC. Why more in BC? The BC credits tap into both, the provincial Low Carbon Fuel Standard (LCFS system) and the federal CFR system. The price also depends on the supply and demand dynamics of the market as well as macroeconomic factors like inflation and carbon tax.
Generating Revenue from Carbon Credits
The steps to generating revenue from EV charging credits are detailed and time-consuming, involving several stages from registration, verification, and reporting to actual selling of the credits.
How we can help
Let us bring our expertise to help you with your sustainability goals; from procuring EV chargers and EVs to generating and selling EV credits, we are here for you!
Book a 15-minute, no-obligation discovery call to explore how we can help you make the most out of your decarbonization efforts and CFR credits.
