Clean Fuels Program frequently asked questions - Building new domestic production capacity

Contents

Eligibility

  1. Who is eligible to apply for CFF 2.0?

    2. Legal entities validly incorporated or registered in Canada including not-for-profit and for-profit organizations are eligible to apply to CFF 2.0. Additionally, applicants to the Indigenous-led Projects Stream must demonstrate a minimum of 50% Indigenous ownership of the applicant organization.

    All applicants must demonstrate that investments will be used to undertake projects in Canada.

  1. How is Indigenous ownership measured by the Program?

    2. Applicants will need to demonstrate Indigenous ownership by identifying the percentage of controlling interest (e.g., capital stock and equity accounts, dividends policy and payment, concentration of ownership or managerial control in partners, stockholders, directors based on definition of duties). In the context of Indigenous ownership, controlling interest means ensuring meaningful participation and representation of the Indigenous entity in key decisions, including ability to exercise authority and significantly influence or determine the organization's operations, decision-making, strategic direction and financial matters.

  1. What types of fuels are eligible for funding under CFF 2.0?

    2. Eligible fuels include all liquid and gaseous clean fuels that meet the carbon intensity (CI) threshold outlined in the Applicant’s Guide. The exception is that hydrogen pathways eligible for the Clean Hydrogen Investment Tax Credit will not be eligible for support for capital projects under the General Stream of CFF 2.0. For the purpose of the CFF 2.0, ammonia eligible under for the Clean Hydrogen Investment Tax Credit would also not be eligible for funding.

    The Indigenous-led Projects stream will consider all liquid and gaseous clean fuels, including all hydrogen production pathways that meet the carbon intensity requirements outlined in the Applicant’s Guide.

  1. What type of projects are eligible for funding under CFF 2.0?

    2. Projects that are eligible for funding under CFF 2.0 are:

    • Feasibility and Front-End Engineering and Design (FEED) studies related to the buildout of new clean fuel facilities or expansion/conversion of existing ones.
    • Capital projects that include the buildout of new clean fuel facilities or expansion/conversion of existing clean fuel facilities.
  1. What scope of work does the funding from CFF 2.0 cover for feasibility and FEED studies?

    2. For feasibility studies, CFF 2.0 would cover the economic, technical, legal, regulatory, location and scheduling considerations to ascertain the real-world viability of the project and the likelihood that the project may be completed successfully.

    For FEED studies, CFF 2.0 typically covers the development of a comprehensive project plan, including the technical requirements, economic and environmental viability, detailed drawings, specifications and calculations, project’s overall budget, potential risks and a detailed timeline for project completion.

  1. Following the successful completion of a feasibility/FEED assessment, can the subsequent project be eligible for funding to build the new clean fuel production facility?

    2. Subject to availability of funding, a project that received funding for a feasibility or FEED study could apply for the subsequent capital project that involves the buildout of new clean fuel production capacity. It is important to note that the completion of the study project or receiving CFF funding for the study does not automatically guarantee funding for the capital project.

  1. What type of capital projects are eligible for funding under CFF 2.0?

    2. The capital projects must result in new clean fuel production capacity either through the construction of new facilities or expansion/conversion of existing clean fuel facilities. The projects must use fuel production technologies in advanced stages of technical readiness (TRL 9 or higher) and need to demonstrate their ability to operate commercially. TRL means the Technical Readiness Level as specified by Innovation, Science and Economic Development Canada (www.ic.gc.ca/eic/site/080.nsf/eng/00002.html)

  1. What is the required completion date for eligible studies? Is there a limitation on the construction/commissioning date of the project that may be resulting from the study?

    2. Studies funded under CFF 2.0 must be completed no later than March 31, 2030. Once completed, proponents must provide the program with documented evidence that the work has been completed. The program does not place timing restrictions on the planned construction of projects that may result from the feasibility or FEED studies.

  1. Is there a minimum production capacity requirement applicable to feasibility assessments?

    2. The minimum production capacity for studies is the same as that for capital projects.

  1. Could you provide a definition regarding “in the North” related to minimum production capacity requirements for projects?

    2. Canada’s North refers to the territories of Nunavut, the Northwest Territories and the Yukon.

  1. What is the technology readiness level (TRL) that proposed capital projects and studies must meet at the time of application? Can funding be used to assess TRL technologies?

    2. Capital projects must use fuel production technologies in advanced stages of technological readiness (TRL 9 or above) and that are designed for commercial deployment, with the intent to operate the technology at commercial scale during the project’s lifecycle.

    As study projects must also focus on TRL 9 or above, the assessment of technologies alone can not be an eligible activity. Studies should assess the economic, location and scheduling factors of potential clean fuel facilities in addition to technical assessments. Studies should also explore potential solutions to a business problem or opportunity and determine if they are viable for further analysis.

  1. With respect to studies, is there an opportunity to use funding from the re-tooled CFF to assess TRL 9 technologies?

    2. TRL 9 is a mandatory requirement under CFF 2.0, as it minimizes risk by ensuring that technology has been proven in an actual operational environment. While TRL 8 demonstrates that manufacturing issues have been resolved and the equipment is functional, there could be unforeseen challenges or limitations that only become apparent during commercial operation. A TRL 9 requirement ensures that the technology has a proven track record and is less likely to fail. While a TRL 9 requirement might seem restrictive, it aligns with the program objective to increase the domestic production capacity of clean fuels.

  1. Are end-use or distribution projects within the scope of CFF 2.0?

    2. Projects that do not directly result in new clean fuel production capacity are not supported by CFF 2.0. For example, fuel storage, distribution pipelines, or systems that facilitate the integration of clean fuels into end-use applications are not within the scope of CFF 2.0.

  1. Can projects that focus on the generation of intermediate products (e.g., biocrude) that are needed to produce an eligible fuel(s) receive funding from CFF 2.0?

    2. To be eligible for funding, the project must produce liquid or gaseous clean fuels that meet the program’s carbon intensity requirements and other mandatory criteria. The Program does not consider the end use of the produced fuels.

  1. Are solid biofuels eligible for funding?

    2. Only liquid and gaseous clean fuels are eligible under the Program. Solid clean fuels (e.g. solid biofuels such as wood pellets) are not eligible for funding.

  1. Does CFF 2.0 target biomass (e.g. forest, agricultural and waste) projects?

    2. The collection, transport and processing of biomass feedstocks alone, are not eligible for support under CFF 2.0. To be eligible for funding, the project must produce liquid or gaseous clean fuels that meet the program’s carbon intensity requirements and other mandatory criteria.

Application Process

  1. Will applications be approved only after the closing period, or will approval be ongoing as applications are received?

    2. The application process for CFF 2.0 will be continuous intake. Applications will be reviewed and recommended for funding as they are received.

  1. When will applicants be notified of a funding decision?

    2. Applications submitted to the Program will go through a 4-stage review process: Completeness Review, Mandatory Information Review, Merit Criteria Review and Investment Committee Review.

    In the first stage, the applications will be checked for completeness ensuring that all the eligibility requirements are met, questions in the application form are answered and all mandatory documents are submitted. Incomplete applications will be rejected. Applications that are deemed complete will then undergo a mandatory information review where they will be reviewed to ensure that they have provided mandatory information about the project and applicant. Applicants will be notified at this stage whether their applications are complete and meet the Program’s requirements.

    Applications that are complete and pass the mandatory information review will then be assessed against the Program’s merit criteria. Once the assessment against the merit criteria is completed, applicants will be notified through Letters of Conditional Approval or Letters of Regret.

    At each of these stages, applicants may decide to revise their application and reapply, however their submission will only be assessed in the order that the Program receives the revised application, not in the order that the first application was received.

  1. How can interested parties apply?

    2. A complete application package (proposal) needs to be submitted through the Transportation and Fuels Decarbonization Program Portal (https://fuels-decarbonisation-carburants.canada.ca/) and consists of:

    • a completed application form
    • supporting documentation
    • an attestation dated and signed by a duly authorized representative.

    The Portal is a secure environment, residing on Government of Canada servers where data is confidential.

    Applicants are able to access the Applicant’s Guides from the Clean Fuels Fund website, which should be used as a reference for the application process.

  1. If a study or capital project intends to produce more than one type of clean fuel, how will funding from CFF 2.0 be allocated?

    2. A successful and single application for a project that intends to produce more than one type of clean fuel will not receive separate and additional funding from CFF 2.0 for each fuel generated.

    A successful application will need to demonstrate that at least one of the clean fuels meets the program’s eligibility criteria.

  1. Can an applicant receive funding from CFF 2.0 for multiple projects?

    2. An applicant can receive funding for multiple projects from CFF 2.0. The applicant will need to submit a separate application for each project and each application will be evaluated individually.

Funding

  1. What is the maximum funding contribution per project and per company under CFF 2.0?

    2. Under the General Stream of the program, eligible capital projects may receive up to $50M, to a maximum of 30% of total project costs. Under the Indigenous-led Projects Stream, eligible capital projects may receive up to $50M, to a maximum of 50% of total project costs.

    For feasibility or FEED studies, CFF 2.0 may provide eligible recipients up to $5M per study, to a maximum of 75% of total project costs, under both streams.

  1. What are the stacking provisions under CFF 2.0?

    2. Total Canadian government (includes federal, provincial, territorial, and municipal governments and agencies) contributions may not exceed 75% of total project costs, except in the case where the recipient is an Indigenous Business or Community, or not-for-profit, in which case, the total Canadian government funding authorized will not exceed 100% of total project costs. The government of Canada’s Directive on Transfer Payments provides details on those contributions to be considered as a part of the stacking provisions.

    To ensure the stacking provisions are respected, prior to signing a Contribution Agreement, and for the duration of the agreement, recipients will be required to disclose all anticipated Canadian sources of funding for the proposed project, including, for example, those from other Canadian federal, provincial, territorial and municipal programs. Should sources of funding change during the duration of the Contribution Agreement, the recipient will be required to promptly disclose the change.

    The stacking limit must be respected when assistance is provided. If the actual total government assistance to a recipient exceeds the stacking limits, Natural Resources Canada could adjust its level of funding to ensure the stacking limit is not exceeded and will seek reimbursement of funds if necessary.

  1. What is the firm financing criterion and what type of evidence is required for firm financing?

    2. Firm financing refers to financing that is committed and documented at the time of application and verifiable by Natural Resources Canada. A firm financing commitment is a Commitment Letter from a financial institution or an entity (e.g. parent company, investor or other municipal, provincial or federal government funding program) that can demonstrate the financial capacity to provide the financing. The Commitment Letter, signed by an authorized officer, must indicate that the funding is both available and has been allocated to the project. If the applicant is financing the project and has demonstrated the financial capacity in their application, a resolution or attestation from the governing council or CFO is required, noting that funds are available and have been allocated to the project.

  1. How will repayability be calculated and what is the repayability period?

    2. Under CFF 2.0, contributions associated with capital projects will be conditionally repayable, while contributions associated with feasibility or FEED studies will be non-repayable.

    For capital projects, repayment will be required when the project starts to generate profit and for a period of up to ten (10) years from the commissioning date. The recipient’s repayment amount will be determined annually based on profit for that year.

    For conditionally repayable contributions, the requirements that may trigger repayments will be detailed in the Contribution Agreement along with the repayment process. Following the commissioning date, proponents will be required to provide an annual repayability report. The report will use Generally Accepted Accounting Principles (GAAP) or international financial reporting standards, to determine the after-tax profitability of the project. If profit is generated in any given year, the amount to be repaid will be determined by the following:

    Repayment = Annual Profit (net profit or income before income taxes) X percentage of NRCan funding

    While the calculation of repayment is tied to the overall annual profit of the project, repayment obligations are tied solely to the CFF-funded project, rather than the entire facility's operations (should the project be a part of a larger facility).

    The value of government credits generated through offsets and other regulations from all levels of government will be considered in project profits and financial projections. For credits forecasted to be generated under the Clean Fuel Regulations, the credit clearing price set under the regulations should be used as a baseline. Applicants that assume a credit price higher than the credit clearing price must explicitly identify the risks associated with their assumption.

    The Program reserves the right to assess profitability during the project’s repayability period. If it is determined that it is unlikely for the Project to generate profit, the Program, at its own discretion, may decide to revise the requirement for annual repayability reports on the profitability of the Project.

  1. Can you give an example of repayability?

    2. If Natural Resources Canada’s contribution is $45k towards the total project cost of $150k, (30% of costs in this example), there would be an obligation to repay some of the profits up to a maximum of $45k.

    For example:

    In year one of operation, $60k of profit is generated. Then the amount required to repay would be:

    $60k x 30% = $18k.

    Leaving $27k of the original contribution as balance ($45k - $18k = $27k).

    In year two of operation, no profit is generated. There is no requirement to repay since no profit is generated.

    In year three of operation, $200k of profit is generated. The amount required to repay would be: $200k * 30% = $60k

    Since only $27k of the original contribution remains to be repaid, the repayment for the 3rd year would be $27k.

    Once this maximum repayment is met, no further repayments are required, regardless of whether additional profits are generated. Ten years after the project completion date, there will no longer be a requirement to repay, regardless of any remaining balance of the original contribution.

  1. What are the eligible expenditures associated with CFF 2.0?

    2. Eligible expenses of recipients can be reimbursed starting on the date of execution associated with the contribution agreement. Eligible expenditures include:

    • benefits and salaries
    • professional services (e.g., engineering, installation, construction, contracting, training, data collection, maintenance, printing, logistics and commissioning and testing of equipment)
    • capital expenses, which includes costs related to Environmental Impact Assessments, license permits and fees, leasing or rental costs, upgrading and retrofitting existing capital assets, informatics and other infrastructure or equipment
    • HST, PST and GST net of a tax rebate to which a recipient is entitled
    • overhead expenses to a maximum of 15% of the eligible expenditures
    • reasonable travel costs at rates that are comparable to the Treasury Board Travel Guidelines, which includes accommodation, meals and transportation. Travel costs for activities that are not essential for the advancement of the project (e.g. conferences) are not accepted

    Please refer to the Applicant’s Guide for more details on eligible capital expenditures.

  1. What types of costs are not eligible for reimbursement under CFF 2.0?

    2. There are two types of costs that are not eligible for reimbursement.

    The first type of costs that are not accepted by the Program are those that are not eligible for reimbursement nor can be included in the total project costs. This includes but not limited to: purchase of land, fines and penalties, and lobbying activities for the purposes of obtaining contribution funding under the Program.

    The second type are costs are those that could be counted toward total project costs but are not eligible for reimbursement. These are costs that incurred between the date the Letter of Conditional Approval (LOCA) is issued and the day before the Contribution Agreement is signed and in-kind contributions. These could also be costs that are incurred during the course of the project but because the maximum contribution from the Program has been allocated, will not be reimbursed and can be considered as part of the applicant’s contribution.

    Please refer to the Applicant’s Guide for more details on non-eligible capital expenditures.

  1. Has a specific amount of funding been allocated for each of the general and Indigenous-led streams of CFF 2.0?

    2. A specific amount of funding has not been allocated for the general and Indigenous-led streams of CFF 2.0.

  1. In the original CFF, the time for negotiation of contribution agreements was long. What were the reasons for this and how will the time for negotiation be decreased in CFF 2.0?

    2. A number of challenges were experienced in finalizing contribution agreements for some companies involved in the original CFF. CFF 2.0 has implemented several design changes to address these challenges such as continuous application intake process, requiring upfront proof of site access and secured financing at the time of application, removal of program criteria not necessary for project assessment and onerous to industry, and inclusion of questions on Impact Assessment and Duty to Consult. These changes are expected to mitigate the risk of delayed assessment and contribution agreement negotiations.

  1. Could you please provide further information on the due diligence assessment associated with CFF 2.0?

    2. Project proposals that have been recommended for funding will receive a Letter of Conditional Approval, and then enter into Contribution Agreement negotiations. As a part of those negotiations, these projects will undergo further due diligence assessment. This assessment will validate information provided as part of the application process and confirm the applicant’s ability to complete the project. The applicant may be required to provide further confirmation or clarification to support the project proposal. If in-depth financial analysis is required, the Program will ask the applicant to provide details.

    Findings from the due diligence process might determine risk mitigation strategies that will be included in the Contribution Agreement or whether the department may need to withdraw its conditional approval of the project. If the applicant does not provide requested information during the due diligence process and/or it is determined the applicant does not meet the program objectives, the applicant’s proposal may be rejected.

  1. Where can information regarding projects that received funding under the original CFF be found?

    2. Please visit Open Government for information on projects funded under the CFF.

Mandatory Documents

  1. What should the proponent include in the mandatory financial statements?

    2. Publicly traded companies must provide audited financial statements for the last three years, along with the independent auditors’ report. Private companies must also provide a complete set of audited annual financial statements for the last three years, along with the independent auditor’s report, if available. If audited statements are not available for private companies, the Chief Financial Officer, or other designated official, must certify interim financial statements.

    If the company has been in operation for less than three years, a guarantor (see definition below) will be required to provide a minimum of 3 years of audited financial statements.

    A complete set of statements includes: balance sheet or Statement of Financial Position, income statement, cash flow statement, and related notes accompanying the financial statement.

  1. Could you please define what a credible guarantor is?

    2. A credible guarantor is an individual or a legal entity that can provide a financial guarantee for the obligations of the applicant/proponent or pay a debt if the applicant/proponent fails to do so. If a guarantor is needed, the program team will discuss the terms and conditions of the guarantee with the applicant.

  1. What level of precision/comprehensiveness for cost estimates is required for the business plan of production projects?

    2. The business plan for production projects must include a cost estimate that meets or exceeds a Class-3 level as per the American Association of Cost Engineers Cost Estimate Classification System.

Carbon Intensity (CI)

  1. What life-cycle analysis tools will CFF 2.0 accept?

    2. Applicants will need to use the Government of Canada’s Fuel Life Cycle Assessment (LCA) to determine the life cycle carbon intensity of the liquid or gaseous clean fuel associated with each project or study. The Clean Fuel Regulations uses this model to determine carbon intensity of energy sources, material inputs and fuels for credit creation.

    The LCA tool can be accessed at this web address. https://www.canada.ca/en/environment-climate-change/services/managing-pollution/fuel-life-cycle-assessment-model.html

  1. Are carbon intensity calculations required for applications pertaining to feasibility assessments, and must these projects meet the minimum carbon intensity requirements listed?

    2. Applications for feasibility and FEED studies must include an estimation of the carbon intensity of the clean fuel to be produced as a part of the project.

Off-take Plans and Feedstock Sustainability

  1. Are fuels that are produced for self-consumption eligible under CFF 2.0 the re-tooled CFF, and would this require an off-take plan?

    2. Projects producing liquid or gaseous clean fuels for self-use or to displace fossil fuel consumption are eligible to apply for funding under CFF 2.0. Applicants would be required to include the details of the usage (either self-consumption or displacing fossil fuel consumption) of the fuel in an off-take plan.

  1. Can clean fuel off-take plans include fuel volumes for export or must the fuel be used domestically?

    2. Fuels produced from facilities supported by CFF 2.0 can be utilized for domestic consumption, on-site or self-use, and/or for export.

  1. Are off-take plans required to cover 100% of the project output, and is there end-use criteria for off-take plans?

    2. Off-take plans do not have to cover 100% of the project output, however the comprehensiveness of the plan is considered in the assessment of the project proposal.

  1. Are projects that use carbon dioxide as a feedstock in their fuel production process required to demonstrate a supply agreement plan, if the carbon dioxide is provided by another supplier?

    2. Carbon dioxide supplied to produce eligible fuel types under CFF 2.0 requires a feedstock supply plan.

  1. Are projects that capture carbon dioxide as part of their fuel production process required to demonstrate an off-take plan?

    2. Projects must demonstrate an off-take plan for their captured carbon dioxide.

Biomass Supply Chains

  1. Is the biomass supply chains stream officially closed or still accepting applications? Does the re tooled CFF target biomass (e.g. forest, agricultural and waste) projects?

    2. The Establishing Biomass Supply Chains Stream of the CFF (2021) is closed and no longer accepting applications.

Communication

  1. How can I stay informed and connected?

    2. Please visit the Clean Fuels Fund website for program updates or contact us at cleanfuelsfund-fondsdecarburantspropres@nrcan-rncan.gc.ca for any questions or inquiries regarding the CFF program.

 
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