New clean fuel standards promise to create a large domestic market for oilseeds but we must avoid overuse of biofuels to prevent despoilment of environmentally sensitive land around the world.
Two projects announced this month in Saskatchewan are driven by expectations that clean fuel regulations in Canada and the United States will increase demand for fuel made from oilseeds and animal fat.
True North Renewable Fuels Ltd. is studying the feasibility of a 20,000 barrel per day renewable diesel plant in Regina that would require the oil from more than two million tonnes of canola.
Covenant Energy is looking at a similar project producing 6,500 barrels per day for the Estevan, Sask., area, requiring about 795,000 tonnes of canola.
The plants are dependent on the federal government enacting new clean fuel standards. If these plants go ahead, they would likely spark the need for additional crushing plants.
In the same week, Richardson International said it would begin construction immediately to double crush capacity at its Yorkton facility to 2.2 million tonnes of seed.
However, it says the expansion is designed to meet rising food and meal demand and is unrelated to developments in clean fuel.
A new clean fuel standard in California has already sparked a renewable diesel rush in the United States.
Marathon Petroleum redesigned its refinery in Dickinson, North Dakota, to produce renewable diesel. It was expected to reach production of 12,000 barrels per day from corn and soybean oil at the end of this month.
Further adjustments could raise production to about 48,000 bpd by the end of 2023. The product will go to California.
Marathon also plans to convert its idled petroleum refinery at Martinez, California, to renewable diesel, producing 17,000 bpd, with the potential to expand to 48,000 by 2023.
Renewable diesel is a 100 percent replacement for petroleum diesel, unlike biodiesel, which is produced using different technology and is used in a mixture with petroleum diesel.
Renewable diesel produces far fewer carbon dioxide emissions than petroleum diesel and has a leg up over other propulsion systems, such as battery electric or hydrogen, because it is fully compatible with existing vehicle engines and the fuel supply chain.
Other refiners in California are also refitting facilities to make renewable diesel, some of them employing fats and used vegetable oil as a feed stock, and at least one plans to use camelina.
Washington state’s legislature is also considering a low carbon fuel standard.
The renewable fuel sector is also examining the potential to produce low carbon aviation fuel.
There would be obvious benefits for Canadian oilseed farmers from these developments.
A new, large North American market for vegetable oil would help stabilize prices, reduce reliance on export markets, shorten supply lines, create processing jobs and generate economic activity at home.
But there would be many side effects too, not all of them good.
Ever since the ethanol boom of the early 2000s there has been much controversy on the advisability of shifting crops to fuel and away from food and feed.
There has been lots of economic and social analysis about the impact of the ethanol boom on food prices and on land use in the U.S. and South America.
I’m not sure I buy the idea that we’d have greater crop diversity, much more affordable vegetables and fruit, and a more rounded diet if not for ethanol’s impact on the corn market.
But on the other hand, I think the boom in ethanol contributed to a wide set of economic incentives that encouraged expansion of crop acreage around the world that often came at the expense of natural land and its biodiversity.
The soybean expansion in South America was happening anyway, but it helped that farmers there could rotate with corn and find a market for that corn. The growth of biofuels helped speed the agricultural development of Brazil’s tropical savanna.
And more recently, the expansion of palm oil production in Indonesia has sparked concerns about deforestation and loss of wildlife habitat.
Indonesia has expanded its palm industry because there is a strong global demand for the oil for food and a host of other products, but the country also has an aggressive biodiesel mandate.
How much more pressure will there be to expand palm oil production around Southern Asia if there are ever-expanding new fuel markets consuming palm, soy and rapeseed oil?
Scientists warn that we are on the precipice of a steep decline in global biodiversity. Replacing jungle forest with palm plantations won’t help.
We need to fuel a low carbon economy, and a modest use of biofuel while we transition to more zero carbon energy can be a small part of the solution.
But massive use of biofuel is a folly that the world’s biodiversity can’t afford.