Ready to fuel a Biofuel Boom

For years, all signs have pointed to a coming surge in demand for plant-based biofuels. Now, as nations hustle to meet their Paris Climate Accord commitments, that surge is almost here – and it could not be arriving at a better time for the Canadian canola industry.

“It’s an opportunity we’re ready for, and one that we need right now,” says Jim Everson, CCC president. “Biofuel is a growing export opportunity for canola, but more importantly, it’s the key to creating a larger domestic market that is not at risk from trade actions. It’s one of our best opportunities to bring more stability to the demand side of our business.”

Both here in Canada and around the world, all conditions seem right for further expansion of biofuel demand. Fossil diesel used for transport is one of the biggest sources of greenhouse gas (GHG) emissions – and that means the move to cleaner-burning alternatives is one of the most effective ways to meet carbon-reducing commitments.

And now, thanks to developments in production technologies, the switch to higher blends of alternative fuels has never been easier. The latest ‘renewable diesel’ products require no modifications to engines or infrastructure because they are virtually identical in chemical structure to fossil diesel.

Conventional refineries can also go a step further by inserting canola right into their existing fossil fuel processing. They can now process petroleum and biofeedstocks together, integrating the renewable content right into the product coming out of the plant.

“This move to co-processing holds considerable potential because it gives refineries an opportunity to get in on the action,” says Chris Vervaet, executive director of the Canadian Oilseed Processors Association.

As Canadian biofuel production gears up, canola will be a feedstock of choice, says Fred Ghatala, director of carbon and sustainability for industry association Advanced Biofuels Canada. While many types of vegetable oils can be used to produce fuel, canola provides one of the lowest carbon intensities – in large part because Canadian growers have such a strong track record of sustainable production practices.

And while other fuel alternatives are still in development, canola is proven, tested and ready to be used as a feedstock. For more than 15 years, the value chain has been hard at work demonstrating how well canola biofuel performs and how positively it impacts the environment.

With all of these advantages converging, biofuel has become the top focus of the Canola Working Group – the government-industry coalition formed earlier this year in response to the current trade disruption with China.

How much, and how quickly, can the growing demand for biofuel offset the loss of export sales to China? A lot depends on how Canada’s own biofuel policies evolve over the next year.

The current federal government proposal is the Clean Fuel Standard (CFS), which would require fuel producers and importers to gradually reduce the carbon intensity of the fuels they supply. Analysis commissioned by Advanced Biofuels Canada shows that the CFS could result in 3.5 million tonnes of canola oil being used for biofuels annually by the year 2030. But to realize this goal, the CFS would need to include a clear market signal for biofuels, which is lacking in its current design.

Perhaps a greater challenge is the looming federal election, which creates uncertainty around the future of the CFS. While the Liberal government sees it as a key pillar of the Pan Canadian Framework to achieve Paris Accord targets, the Conservative Party has said it will scrap the CFS if it forms the next government. The Conservative Party’s climate plan does pledge to increase the availability and use of renewable fuels, but details aimed at encouraging growth in the biofuel sector aren’t clear.

“We’re concerned that we see no explicit measures for biofuel in the Conservatives Party’s  climate plan,” Everson said. “With so much opportunity, and at such a critical time for our industry, it should be a strong focus of every party. The economic and environmental imperatives are just too great.”

Regardless of the election outcome, industry advocates want to ensure that Canada’s regulations include a clear and robust signal to increase the renewable content of fuels used in Canada.

A good start would be an immediate increase in the Renewable Fuel Regulation mandate to five per cent, up from the current two per cent. With this increase, about 1.3 million tonnes of canola seed would be used for domestic biofuel production every year. The value of that canola at the farm gate would be about $650 million.

“That’s the kind of certainty the processing industry is looking for,” says Vervaet. “If there’s a clear incentive for increasing long-term demand for biofuels, the investment to scale up production will come. We’ve done all the groundwork. All we need now is a strong signal from the federal government. It’s among the most important policy priorities for the industry right now.”

While continuing to advocate for strong biofuel policies in Canada, the CCC is also clearing the path for export sales to the most promising biofuel markets. One of the next big items on the council’s to-do list is a submission seeking approval of Canadian canola as a renewable diesel feedstock in the U.S.

Securing access to these markets is a big task, Everson says. It took two years to complete the intensive documentation and analysis required when the EU introduced more stringent rules for feedstocks under the latest renewable energy directive (RED II).

But the effort paid off. At the beginning of 2018, the EU approved the Canadian submission, guaranteeing access to the world’s largest biofuel market until at least 2023.

Not all feedstocks fared as well when RED II came into effect in 2018. Palm oil did not make the cut, and will be phased out of European biofuel production by 2030.

“That’s why it’s essential that we keep improving the sustainability of Canadian canola, and keep demonstrating that advantage to the world,” Everson said. “As the world embraces biofuels, sustainability is becoming a more important part of our value proposition.”