The stage is set for the expansion of Canadian canola exports into Europe next year but new sustainability regulations could get in the way, said a senior canola official.
A poor European Union rapeseed crop could force the region to import 2.26 million tonnes of rapeseed or canola in 2010-11.
Thomas Mielke, executive director of ISTA Mielke GmbH, the company that publishesOil World,believes Canada could supply 300,000 tonnes of that demand with canola destined for Europe’s biodiesel industry. That would be up from the 95,000 tonnes shipped in 2009-10.
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But his forecast hinges on how the EU’s new sustainability regulations pan out.
In June, the EU announced it is encouraging member states to ensure the feedstock grown or imported for their biofuel industries is produced in a sustainable manner.
The policy is part of a set of guidelines governing the EU’s Renewable Energy Directive. The directive, which requires member states to replace 10 percent of their transport fuel with renewable fuel by 2020, takes effect this December.
The commission wants industry and governments to set up voluntary schemes by that time ensuring crops used for the biofuel sector are grown on land that was already in production in 2008.
Independent auditors will ensure systems are in place proving that natural forests, protected areas, wetlands and peat lands were not destroyed to grow biofuel crops.
JoAnne Buth, president of the Canola Council of Canada, said it could lead to a confusing “dog’s breakfast” of different schemes in the EU and in grain exporting nations like Canada that will be supplying the EU’s biofuel sector.
The policy is creating uncertainty for Canadian canola exporters who have to figure out what type of scheme to adopt and how much extra cost it will introduce for exports destined for Europe. The only certainty is that nobody will make the EU’s December deadline, including its own member countries.
Sustainability policies like the one the EU is implementing are a new and growing form of trade barrier confronting grain exporters.
What started in the biofuel sector has spread into the food industry. Walmart recently announced a commitment to use 100 percent sustain-ably sourced palm oil for its branded products by late 2015.
Buth said the sustainability regulations and policies range from land use to labour issues.
Canada’s canola sector is already feeling the impact. The United States Environmental Protection Agency won’t allow Canadian canola to be made into biodiesel until it meets all of its sustainability requirements.
Canola meets the country’s minimum greenhouse gas reduction standard but Canada has yet to prove it satisfies U.S. land-use stipulations.
Buth said the canola industry is putting together a land-use submission in conjunction with the federal government.
