Ethanol consumption exceeds mandate

Canadians are using more ethanol and less biodiesel than they’re required to, according to a new report.

National ethanol consumption was 2.8 billion litres in 2015, or 6.8 percent of total gasoline use that year, according to a report by Ad-vanced Biofuels Canada. The federal mandate calls for a five percent ethanol blend.

Biodiesel consumption was 474 million litres, or 1.7 percent of total diesel use in 2015. The mandate calls for a two percent blend.

Ian Thomson, president of Advanced Biofuels Canada, said the biodiesel mandate might still be being met because the total annual diesel use number of 28.7 million litres includes some types of diesel exempt from the policy.

He said ethanol is exceeding the mandate because it is cheaper than gas and because it provides blenders with an inexpensive source of octane for their fuels.

One thing the report failed to mention is that a sizeable amount of the ethanol used in Canada comes from the United States.

The U.S. shipped 951 million litres of ethanol to Canada in 2015, or 2.3 percent of Canada’s total gasoline use that year, according to the Renewable Fuels Association.

“They’ve got policies and economics that make it a pretty good place to make and export biofuels,” said Thomson.

“The economics of producing corn ethanol in the Midwest and shipping it to Canada are good.”

He said the U.S. ethanol sector is more efficient than Canada’s. Companies have been able to pay down capital costs faster than Canadian facilities, and a system is in place that allows blenders to use credits to meet their mandate obligations.

The U.S. ethanol industry has under-used capacity and has hit a blend wall in that marketplace, so exporting the fuel is an attractive option.

However, there is one other ad-vantage the U.S. ethanol sector has over Canada.

“The U.S. corn industry has been a big backer of ethanol in the U.S., and our agriculture industry has been a bit slower to catch on to getting behind renewable fuel blending,” said Thomson.

He wishes Canadian farm groups would be more vocal in their support of biofuel.

One thing Advanced Biofuels Canada wants is tax reform.

Fuel is taxed by volume, and ethanol has 33 percent less energy density than gasoline, which means consumers must use more fuel to travel the same distance as they would using pure gasoline. As a result, they are paying more taxes for ethanol blends.

That cost consumers an extra $1.75 billion in taxes in 2010-15, according to the report. The association would like to see taxes applied on the energy of fuel rather than the volume.

“You’re essentially penalizing people who are using the fuels you really want them to use,” said Thomson.

Despite the heftier tax bill, ethanol has provided a net cost saving of $750 million to the Canadian economy over that five-year period, primarily because it provides blenders a cheaper source of octane than they had previously been using.

However, not everybody is sold on the benefits of biofuel. The Ecofiscal Commission says biofuel has proven to be an expensive way to reduce greenhouse gas emissions.

In a 2016 report, the commission estimated the costs at $180 to $185 per tonne for ethanol and $128 to $165 per tonne for biodiesel. The commission said that is not a good use of public funds.

The renewable fuel industry claims the commission’s report is riddled with errors. For instance, it doesn’t take into account the unique properties of ethanol such as its ability to boost octane levels.

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