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

Eligibility

1. Who is eligible to apply for Clean Fuels Program - Building New Domestic Production Capacity component?
   As explained in the Applicant’s Guide, Section 2.1, to be considered for funding under the Program, applicants must be one of the following:
• Legal entities validly incorporated or registered in Canada including not-for-profit and for-profit organizations such as:
• Electricity or gas utilities;
• Private sector proponents;
• Industry associations;
• Research associations;
• Standards organizations;
• Indigenous and community groups;
• Canadian academic institutions;
• Provincial, territorial, regional or municipal governments or their departments or agencies where applicable; and,
• International companies with a Canadian presence
All projects supported under this program must be undertaken in Canada.

2. Are projects that have already begun construction eligible for funding under the Clean Fuel Program?
   This funding is intended to de-risk new investments aimed at increasing the capacity of Canada’s clean fuel production capacity. Projects for which investment decisions have been made and have reached the construction phase are not eligible for funding.

3. What type of feasibility studies are eligible for funding under the Clean Fuels Program?
   Two types of feasibility studies are eligible under this program:
   • Studies assessing the feasibility of a fuel production project; and
   • Studies assessing the feasibility of hydrogen blending in natural gas pipelines.
   All other types of feasibility assessments, such as studies assessing feasibility of clean fuel blends in end-use equipment, and studies assessing the distribution of clean fuels, are ineligible. More information on eligibility of feasibility studies can be found in Section 2.2 of the Applicant’s Guide.

4. Are feasibility studies that seek to assess the feasibility of hydrogen blending in natural gas pipelines required to demonstrate a carbon intensity assessment and meet minimum production requirements?
   Because of the specific nature of these types of projects, feasibility studies assessing the blending of hydrogen in natural gas networks are not required to provide a carbon intensity assessment or meet minimum production capacities.

5. What information should be captured in a feasibility study?
   A feasibility study is an analysis that takes all of a projects relevant factors into account – including but not limited to the economic, technical, legal, regulatory, location and scheduling considerations to ascertain the real world viability  of the project and likelihood that project may be completed successfully.

6. If an application for a feasibility assessment is successful, can the project then be eligible for capital funding to build a new clean fuel production facility? 
   The program expects that all funds will be committed through the current Call for Project Proposals as well as the Call for Project Proposals that will target Indigenous-owner projects. If funding is not fully exhausted, NRCan may initiate an additional Call for Project Proposals at a later date. If an additional Call for Project Proposals is launched, a feasibility project that is funded under this initial round of funding could apply as a production project.

7. What type of capital projects are eligible for funding under the Building New Domestic Production Capacity program component?
   To be eligible, the project must result in new gaseous, or liquid, domestic clean fuel production capacity. This includes, but is not limited to, greenfield projects, as well as expansions or conversions of existing fuel production facilities. This Program targets commercial-scale projects and minimum project size thresholds vary by fuel type. Additional details can be found in Section 2.2 of the Applicant’s Guide.

8. What is the required completion date for eligible feasibility studies? Is there a limitation on the construction/commissioning date of the project that may be resulting from the study?
   As described Section 2.2 of the Applicant's Guide, feasibility projects funded under program must be completed no later than March 31, 2026. Once completed, proponents must provide the program with documented evidence that the work has been completed. The program will not place timing restrictions on the planned construction and/or completion of projects being assessed through the feasibility studies.

9. Is the minimum production capacity requirement applicable to feasibility assessments?
   Yes. This program targets commercial-scale projects that would be using proven technologies. Consequently, to be eligible for funding, the studies must be designed for projects that meet the minimum size and carbon-intensity thresholds.

10. What is the technology readiness level (TRL) that proposed clean fuel production projects and feasibility assessments must meet at the time of application?
    Through this fund, Natural Resources Canada is supporting the production of clean fuels across the country. The program will de-risk commercial-scale projects that would be using proven technologies. As such, to be eligible for funding, proposed clean fuel production projects must be designed to use or deploy technologies at TRL-9. Feasibility studies, which would assess, among other things, the economic, technical and scheduling considerations of potential solutions to a business problem or opportunity, and determine if these are viable for further analysis, must assess projects that, when executed, expect to use TRL-9 technology.

11. Are enabling projects (e.g. end-use, distribution) within the scope of the Clean Fuels Program?
    Projects that do not result in the build-out of new clean fuel production capacity are not eligible. As such electrification, equipment retrofit, fuel-switching and infrastructure projects that enable clean fuel distribution are not eligible for funding.

12. Does the Clean Fuel Program target biomass (e.g. forest, agricultural, waste) projects?
    The purpose of this program’s Building New Domestic Production Capacity component is to fund clean fuel production projects that have proven technology that can be deployed on a commercial scale in Canada. A separate call for proposals for the Establishing Biomass Supply Chains component will be launched in late summer 2021.

13. Are ammonia and methanol production eligible for funding?
    The program understands that ammonia and methanol can be produced to be used as clean fuels, as feedstocks, and as a transport medium for hydrogen, among other uses. Subject to meeting the mandatory criteria for clean fuels outlined in the Applicant’s Guide, ammonia and methanol applications are eligible for funding consideration. Methanol is required to meet the mandatory criteria for liquid clean fuels. Ammonia is required to meet the carbon-intensity limits of gaseous clean fuels and a minimum production capacity threshold of 500,000 GJ per year./li>

14. Does the Clean Fuel Program target biomass (e.g. forest, agricultural, waste) projects?
    The purpose of this program’s Building New Domestic Production Capacity component is to fund clean fuel production projects that have proven technology that can be deployed on a commercial scale in Canada. A separate call for proposals for the Establishing Biomass Supply Chains component will be launched in late summer 2021.<

Application Process

15. Will applications be approved only after the closing period, or will approval be ongoing as applications are received?
    All applications will only be assessed after the Call for Project Proposals closes on October 13, 2021 . Each application will be assessed against mandatory criteria and, if all criteria are met, fully evaluated and rated against a comprehensive set of merit criteria by a multi-disciplinary committee composed of technical, financial and program experts from NRCan, other federal departments and possibly external third-parties to perform financial due diligence.
    
    Applications that do not meet the Program’s mandatory criteria will not be considered. Both Production and Feasibility Projects must score a minimum 70% on merit criteria to be considered for funding. Only the highest rated projects will be recommended for funding (subject to available funding). The program is aiming to notify successful applicants in winter 2022, with contribution agreement negotiations occurring after that.


16. When will applicants be notified of a funding decision?
    The program will aim to send Letters of Conditional Approval and Letters of Regret in winter 2022.


17. Will there be more than one Call for Project Proposals?
    The program expects that all funds will be committed through the current Call for Project Proposals as well as the Call for Proposals that will target Indigenous-owner projects. If funding is not fully exhausted, NRCan may initiate an additional Call for Project Proposals at a later date.


18. When and how can proponents apply?
    Proponents can access the application form from the Clean Fuels Program website. Applications must be submitted through Integro, a web-based platform designed to make applying easier. Instructions on how to register are available in the Applicant’s Guide. Applications must be received by no later than October 13, 2021, 11:59 PM EST.

Funding

19. What is the maximum Clean Fuels Program funding contribution per project and per company for the Building New Domestic Production Capacity component?
    The program may provide a successful applicant up to a maximum of 30% of total eligible project costs, up to a maximum of $150 million, per project.


20. What are the stacking provisions under this Program?
    As mentioned in Section 2.5 of the Applicant’s Guide, total Canadian government (includes federal, provincial, territorial, and municipal governments) contributions may not exceed 75% of total project costs. An exception exists when the recipient is a provincial, territorial, regional, or municipal government or their department or agency, an Indigenous business or community, or a not-for-profit. The exception states that the total Canadian government funding authorized will not exceed 100% of total project costs. Government funding to be included in stacking calculations is described in Appendix C of The Directive on Transfer Payments.
    
    To ensure the stacking provisions are respected, recipients will be required to disclose all anticipated Canadian and non-Canadian sources of funding for the proposed project. The funding sources include those from other Canadian federal, provincial, territorial and municipal programs. The disclosure requirement applies both before the contribution agreement is signed and for the duration of the agreement.


21. If an application is not selected for funding, can the proponent submit a revised application during the next intake period?
    A applicant is permitted to submit one application, per project, per Call for Project Proposal period. If your application is not approved for any funding, you may submit a revised application during a subsequent intake period, should another take place.


22. In order to qualify for the Clean Fuels Program, firm financing of a minimum of 30% of the total project costs at the time of application is required. What types of funding would meet this test – is cash in bank required? Would a written commitment by a reputable financial sponsor be sufficient?
    The definition of “firm financing” means financing that is committed and documented at the time of application and verifiable by NRCan. 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 must indicate that the funding is both available and has been allocated to the project. If firm funding is from the project applicant, and the applicant 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.


23. How will repayability be calculated, and what is the repayability period?
    Production projects are eligible for conditionally repayable contributions. These contributions are similar to an interest-free loan, and, for a period of up to 10 years after the Official Commissioning Date, repayment will be required once the project starts to generate profits. The recipient’s repayment amount will be based on the annual profit generated by the project during the ten-year repayment period.



For repayable contributions, the requirements that may trigger repayments will be detailed in the Contribution Agreement along with the repayment process. Feasibility projects are eligible for non-repayable contributions. These contributions are similar to a grant and are not required to be repaid by the recipient. More information on repayability can be found in Section 6.1 of the Applicant’s Guide.

Mandatory documents

24. What should the proponent include in the mandatory financial statements?
    The following information should be included:
    • For a business incorporated for three or more years: last three years of Audited or Reviewed Financial Statements.
    • For a business incorporated for less than three years: any available Audited or Reviewed Financial Statements including interim statements
    • If no interim statements are available: statements certified by the Chief Financial Officer

For all applicants, if the Audited or Reviewed Financial Statements are more than six months old, please submit the most recent interim financial statements (e.g. 90-day balance sheet).

25. What should the proponent include in the mandatory financial statements?
    
    As mentioned in Section 7.2 of the Applicant’s Guide, a cost estimate that meets or exceeds a Class-3 level as per the American Association of Cost Engineers Cost Estimate Classification System is required as part of the business plan for production projects.
    
    
26. The maximum size for attachment in the Integro software system is 5 MB. How can applicants submit documents larger than 5 MB?
    

    To submit files larger than 5 MB, an applicant will need to separate files in multiple parts and send as multiple attachments, for example - BOEpart1.xxx, BOEpart2.xxx.

Carbon Intensity (CI)

27. What life-cycle analysis tools will the Program accept?
    GHGenius Version 5.01 must be used to calculate the carbon intensities of projects for the application phase of the Clean Fuels Program. Once the Government of Canada’s new life-cycle analysis tool is released it will be used for ongoing reporting of the carbon intensities of the projects receiving funding from the program.


28. How will clean fuel carbon intensities be calculated?
    The carbon intensity of fuels will be estimated using GHGenius Version 5.01. Applicants must use the 100-year time horizon “Global Warming Potential values” consistent with Intergovernmental Panel on Climate Change’s 5th Assessment Report (without feedback), and must specify changes to all non-default values within the calculation, and the reason for change. A critical review of the life cycle assessment carbon intensity calculation must be conducted by a life cycle assessment expert in accordance with ISO Standard 14044 and 14071. All changes to default values must be indicated and explained.


29. Are carbon intensity calculations required for applications pertaining to feasibility assessments, and must these projects meet the minimum carbon intensity thresholds listed in Section 2.2 of the Applicant’s Guide?
    Yes, applications for feasibility and FEED studies must include an estimation of the carbon intensity of the clean fuel that would be produced from the assessed project. GHGenius provides default values that can be used to estimate clean fuel carbon intensities. Also, program’s established minimum carbon intensity thresholds (Section 2.2 of the Applicant’s Guide PDF, 496KB ) must be met.

Off-take Plans and Feedstock Sustainability

30. Are fuels that are produced for self-consumption eligible under the Program, and would this self-consumption qualify as an off-take plan?
    Yes, these fuel would be eligible, and self-consumption can be included in an off-take plan.


31. Can clean fuel off-take plans include fuel volumes for export or must the fuel be used domestically?
    Fuels produced from facilities supported by this Program can be both for domestic use and/or export.


32. Are off-take plans required to cover 100% of the project output, and is there end-use criteria for off-take plans?
    Off-take plans do not have to cover 100% of the project output, however the comprehensiveness of the plan is considered in the evaluation of the merit criteria.


33. 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?
    Yes, carbon dioxide supplied to produce low carbon fuels requires a feedstock supply plan.


34. Are projects that capture carbon dioxide as part of their fuel production process required to demonstrate an off-take plan?
    Yes, projects must demonstrate and off-take plan for their captured carbon dioxide. More information on required off-take plans can be found in Section 2.2 of the Applicant’s Guide.

Communication

35. How can I stay informed and connected?
    To stay informed and connected:
    
    • Visit our Clean Fuels Program website and sign up for email updates at nrcan.cleanfuelsfund-fondsdecarburantspropres.rncan@canada.ca.
    • Download the Applicant’s Guide, which provides application requirements, including eligibility criteria and mandatory documentation.