How to save money and unlock new revenue streams with CNG fleet conversion and the clean fuel regulation program

Whether you are a fleet manager, a government official or a sustainability advocate, understanding the Clean Fuel Regulation (CFR) credit system is key to achieving net zero in the Canadian transportation sector. The benefits go beyond generating revenue from selling CFR credits – you’ll reach your sustainability goals faster, reducing emissions and helping shape a cleaner, brighter future for your community.

Designed to reduce greenhouse gas emissions and promote cleaner energy alternatives, the CFR came into effect in June 2022. The credit system provides significant benefits to fleets that switch from diesel or gasoline to alternative fuels. One of them is compressed natural gas (CNG) – a sustainable, market-ready solution that can help reduce emissions and provide a quieter ride. From road tractors to delivery vehicles, converting your fleet to CNG can reduce fuel costs by up to 50 percent.

When fleet electrification is not a practical option, CNG and other alternative fuels allow for rapid implementation and highly effective reductions in greenhouse gas emissions. In Ontario, Enbridge Gas is a leader in CNG conversion projects, offering a comprehensive turnkey program that covers the entire design, construction, operation and maintenance of CNG installations. This includes infrastructure financing, as well as expert advice on clean fuel regulations and other relevant aspects of CNG adoption.

Organizations that have participated in this market and realized CFR revenue generation include:

• Tomlinson Environmental in Ottawa in 2023, it sold over 1.3 million cubic meters of CNG from its station, powering both its fleet and third-party vehicles, significantly reducing its diesel consumption and reducing its carbon footprint in Ontario.

• Bluewater Recycling Association AND Ontario Waste Management Association converted its entire waste collection fleet to CNG; they later began the transition to renewable natural gas (RNG) with Ontario’s first carbon-negative garbage truck.

Understanding CFR Credits

At the heart of CFR is the concept of CFR credits. Fuels with carbon intensity below a set benchmark – including CNG – are eligible to generate CFR credits.

Credits are recorded and sold through the Credit and Tracking System (CATS), an online platform for managing credit origination, verification and compliance reporting. Parties that have an obligation to reduce the greenhouse gas intensity of their fuels can do so in a variety of ways. This program encourages investment to support the development of low carbon fuels and transport methods such as electric vehicles and CNG.

How CFR loans generate revenue

Fleet decision makers can use CFR credits to support sustainability initiatives in their communities. By participating in the CFR credit system, fleets can reduce greenhouse gas emissions and unlock additional revenue streams.

How it’s working? First, organizations must determine whether their activities qualify for the CFR program, submit their registration, and undergo third-party verification. They then generate loans quarterly or annually. These credits are sold to parties that have an annual CFR compliance goal. The monetary value of credits fluctuates based on market demand, creating opportunities for fleets to maximize profits.

CFR program status

From June 2022, CFR is gradually gaining popularity in the transport sector. Organizations can voluntarily join the program immediately and start earning points the day they register their facilities.

While demand for CFR credits is expected to increase over time, at the beginning of trading activity credit prices ranged from C$200 and up*, signaling a promising market for investment in low carbon intensity fuels and technologies.

Calculating potential profits

An organization’s CFR revenue depends on the size of its fleet, the number of credits earned and the price of credits, which is expected to change over time. While predicting exact revenues is difficult, a hypothetical CNG fleet that previously used 30,000 liters of diesel per truck per year could achieve the following profits (assuming a CFR price of $200 per credit):

• A fleet of 25 CNG trucks: $45,000 to $90,000 per year
• A fleet of 50 CNG trucks: $90,000 to $180,000 per year
• A fleet of 75 CNG trucks: $135,000 to $270,000 per year

In the above scenarios, CFR credits represent approximately 6 – 12 cents per liter of additional income.

How Enbridge Gas is driving sustainable change

Adopting CFR creates a unique opportunity to proactively reduce emissions, increase revenue streams, and accelerate the adoption of sustainable fuel sources. For Ontario fleets, Enbridge Gas has the expertise to get clean fuel projects off the ground.

Enbridge Gas’ alternative fuel specialists are well versed in the CFR credit system. They can help you assess existing fleets, analyze options for switching from diesel or petrol and calculate potential CFR credit gains. CNG-powered fleets are quieter, cheaper to operate, improve air quality and reduce greenhouse gas emissions.

In addition, conversion to CNG opens the possibility of switching to the completely carbon-neutral energy of renewable natural gas (RNG), a market-ready alternative fuel produced from organic waste. Once the fleet is powered by CNG, no further infrastructure changes or capital investments will be needed to adopt RNG in the future. Visit enbridgegas.com/CNG to learn more about how your fleet can benefit from the CFR credit system and take advantage of the expertise available at Enbridge Gas.