- Canada’s proposed biofuel incentives aim to improve domestic producers’ competitiveness against US manufacturers, but industry groups say the support remains insufficient.
- The proposal offers credit multipliers of 1.3 for ethanol, 1.4 for biodiesel and 1.5 for renewable diesel, with a 75-day review period.
Canada’s biofuels industry has called for stronger government incentives after Ottawa proposed new regulations to improve the competitiveness of domestic producers. Industry groups say the proposed changes fall short of matching US subsidies and may not attract significant new investment.
The proposed rules would award more credits to companies that produce biofuels in Canada. Producers could use these credits to meet low-carbon fuel requirements or sell them to other companies.
Proposed Incentives Fall Short of Industry Expectations
The new framework would replace a system that awards credits based on biofuel use, regardless of where producers manufacture the fuel.
Canada’s government said the changes would “close the competitiveness gap facing Canadian low-carbon fuel producers so they can compete fairly with US producers.”
However, the proposal offers ethanol producers a 1.3-times credit multiplier. The industry had requested a 1.4-times multiplier.
Andrea Kent, a board member of Renewable Industries Canada, said the proposal does not provide enough support to close the gap with US producers.
“Recognizing the problem and closing the gap (to US production subsidies) are two different things,” Kent said.
She added that the proposed incentives provide only about one-third of the support available to US ethanol producers.
Biodiesel Incentives May Not Increase Canola Demand
The Canadian Oilseed Processors Association also raised concerns about the proposed incentives.
Its Executive Director, Mark Walker, described the changes as a step in the right direction. However, he said they would leave canola demand broadly unchanged.
The proposal offers biodiesel producers a 1.4-times credit multiplier. Walker argued that this remains below US support and does little to improve the competitiveness of Canadian production.
North American Feedstock Rules Receive Support
The Canola Council of Canada welcomed Ottawa’s decision to allow feedstocks from Canada, the United States and Mexico.
Council President Chris Davison supported the approach, which covers corn, soybeans and canola used in biofuel production.
He said the policy reflects the integration of North American agricultural supply chains under the United States-Mexico-Canada Agreement (USMCA).
The US Renewable Fuels Association also welcomed the proposal. It said the rules would preserve access for imported US feedstocks used to meet Canada’s biofuel targets.
The association noted that US regulations similarly recognise Canadian canola oil and other North American feedstocks as domestic supplies for biofuel production.
Renewable Diesel Receives Higher Credit Multiplier
The proposed framework assigns renewable diesel a 1.5-times credit multiplier, higher than the rates for ethanol and biodiesel.
Imperial Oil has already built a major renewable diesel plant in Alberta. However, Federated Cooperatives has placed a planned facility in neighbouring Saskatchewan on hold amid regulatory concerns.
Imperial Oil Chief Executive John Whelan said the company had engaged Ottawa during the development of the proposed changes.
“We’re not uncomfortable with where this is headed,” Whelan said.
The proposal will undergo a 75-day review period. Industry stakeholders will have an opportunity to assess the incentives and seek further adjustments before the government finalises the regulations.