Biofuel makers hope for increase in mandate

Canadian biofuel producers are already gearing up for what they believe will be a doubling of the country’s ethanol and biodiesel mandates in the near future.

Environment and Climate Change Canada is consulting with provinces and territories about developing a clean fuel standard to reduce greenhouse gases by increasing the use of low carbon fuels.

It has prepared a discussion paper that outlines how the standard would address a range of fuels including liquid, gaseous and solid fuels. It would go beyond transportation fuels and include fuels used in industry, homes and buildings.

The objective of the standard is to achieve 30 megatonnes (Mt) of annual reductions in GHG emissions by 2030.

The 30 Mt reduction would be in addition to the estimated four Mt reduction that is now being achieved through renewable fuels mandates.

Canada’s biofuel sector believes one of the first things the government will do to meet the ambitious target is double the ethanol mandate to 10 percent and increase the biodiesel mandate to five percent from two percent.

“We’ve heard that they are seriously considering it,” said Jim Grey, chair of Renewable Industries Canada and chief executive officer of IGPC Ethanol, which operates a plant in Aylmer, Ont.

His company recently broke ground on a $120 million expansion of the facility in anticipation of the doubling of the mandate.

Grey said biofuel is just one of many potential contributors to a clean fuel standard but it has one big advantage.

“It is one of the few readily available solutions that could have an immediate impact on the government’s agenda to hit the Paris accord’s targets,” he said. “This is something that with basically a stroke of a pen can help achieve almost one-sixth of their target.”

Ethanol and grain groups in the United States are also taking an interest in Canada’s proposed clean fuel standard.

Representatives of those industries recently travelled to Ottawa to discuss Canada’s new environmental initiative and provide feedback on their experience with the U.S. Renewable Fuels Standard.

Bob Dinneen, president of the Renewable Fuels Association, said the standard needs to be based on sound science and consumer choice.

“We are optimistic Canada’s effort will be successful and we look forward to remaining trading partners on the cleanest, highest octane source of fuel in the world,” he said in a news release.

Canada has been the top customer for U.S. ethanol for the last four marketing years. It bought 889 million litres of U.S. ethanol worth US$596 million in 2015-16. That represents 27 percent of the total export program that year.

Exports to Canada for the first six months of the 2016-17 marketing campaign are up 40 percent year-over-year, totalling 629 million litres.

That is why U.S. ethanol and grain groups made a formal submission to the Canadian government calling for the clean fuel standard to include a doubling of the federal ethanol mandate to 10 percent.

“Our product is an important supplement to Canada’s own domestic production and, should Canada boost its use of ethanol, our industry stands ready to ensure that the supplies Canada needs are available,” Tom Sleight, president of the U.S. Grains Council, said in a news release.

Grey is not concerned about a flood of U.S. ethanol filling the expanded mandate because the standard will include a carbon intensity threshold. He said a lot of the ethanol from the U.S. Midwest has a 30 to 50 percent higher carbon intensity than Canadian ethanol because it is made with coal-fired electricity.

He said there has been some talk in Ottawa about how to stimulate growth in the biofuel sector but he isn’t holding out much hope for a revival of the ecoEnergy for Biofuels subsidy program.

Ottawa plans to release a framework for the clean fuel standard some time this summer.

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