SASKATOON — A series of canola industry support measures announced by the federal government are being met with mixed reviews.
The package of policy initiatives includes $370 million in biofuel production incentives aimed at making Canada’s producers more competitive with their counterparts in the United States.
“The government intends to make targeted amendments to the Clean Fuel Regulations (CFR) to introduce a time-limited production incentive for renewable diesel and biodiesel producers and work with provinces and territories to explore complementary measures,” the Prime Minister’s office stated in a press release.
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The incentive will be applied on a per litre basis and will be available from January 2026 to December 2027 for up to 300 million litres per facility.
Advanced Biofuels Canada Association (ABFC) welcomed the announcement.
“It gives our domestic biofuels sector the chance not only to compete, but to grow,” ABFC president Fred Ghatala said in a press release.
“This new program will help restore competitiveness for domestic producers, enabling facilities to restart operations and expand capacity, and will shore up struggling feedstock markets.”
The group had been lobbying Ottawa for an incentive program that would make Canadian biofuel producers competitive with their U.S. counterparts when it comes to meeting Canada’s CFR.
U.S. biofuel producers are collecting the new U.S. 45Z production tax credit and then exporting their product to Canada where their heavily subsidized fuel competes with Canadian biofuel in meeting the CFR targets.
Canadian biofuel is not eligible for the 45Z credit and is thus at a significant disadvantage.
Ghatala said U.S. soybean-based biodiesel and renewable diesel collects a tax credit worth an average of $0.24 per litre.
The Liberal government also announced it is investing an additional $75 million over five years in Agriculture Canada’s AgriMarketing program starting in 2026-27.
The money will be spent on expanding the program into high-growth areas such Africa, the Middle East and the Indo-Pacific.
And Ottawa is temporarily doubling the interest-free portion for canola advances in the Advance Payments Program to $500,000. The new rules will be in place for the remainder of the 2025 program and the 2026 program year.
The canola sector said the government support came up short.
“The measures announced today do not reflect the seriousness of the challenge facing the value chain,” Chris Davision, president of the Canola Council of Canada said in a press release.
“We have communicated the need for appropriate financial and policy supports, and the federal government has missed the mark.”
Canadian Canola Growers Association president Rick White said farmers should not be expected to borrow their way out of the situation.
“The Advanced Payments Program is not designed to provide the required support canola farmers need under this situation,” he said in the joint press release.
Davison said the government failed to recognize the extensive impacts on the rest of the value chain, noting that exporters and processors are also facing “significant financial impacts” due to the closure of the Chinese market.
The groups were happy to see there was some support for the biofuel sector but noted that the incentive does not go far enough in driving meaningful additional domestic demand for canola.
They called on Ottawa to provide “meaningful and impactful” support for an industry navigating a trade crisis and to “pursue all avenues” for resolving the dispute with China.
Advanced Biofuels Canada also had some further requests.
It would like to see the government provide a domestic content requirement in the CFR like there is in the proposed revisions to the U.S. Renewable Fuel Standard.
Ghatala would like Ottawa to follow the lead of British Columbia and Ontario, which both moved quickly to put domestic content requirements in place in their provincial regulations.
Lastly, the organization would like Ottawa to provide a firm commitment to continuing the CFR program.
“This policy is working and should be maintained,” said Ghatala.
The CFR has come under attack recently by Conservative leader Pierre Poilievre who calls the policy “carbon tax 2.0,” noting that it will increase fuel prices $0.17 per litre by 2030.
He said the Liberals’ second carbon tax will cause a $6.4 billion contraction in the Canadian economy.
Ghatala said the CFR is as pro-agriculture as a policy can get. Canola accounted for 50 percent of the biodiesel and 22 percent of the renewable diesel credits under the CFR in 2024.
“The Clean Fuel Regulations will add $1.09 in value per bushel, creating or preserving average farm revenue by $60,000,” he said.
“Foreign markets can shut out Canadian canola with the stroke of a pen based on policies that canola farmers can’t control. What they can control is support for a Canadian policy that goes directly to their operation’s bottom lines.”
He said Poilievre should keep that in mind considering he now represents the people of Battle River-Crowfoot, the second-largest canola producing constituency of Alberta.
There is a canola crush plant in the constituency and Canada’s largest renewable diesel facility, the Imperial Oil plant at Strathcona County, is located nearby.
Canada produces about 500 million litres of biodiesel and 2.1 billion litres of renewable diesel annually.
Ghatala said if the CFR is properly updated and maintained it could create a market for another 2.3 billion litres of renewable diesel production.
That could in turn potentially create a new market for 5.9 million tonnes of canola, which is the volume of exports that will be lost by the closure of the Chinese market due to its 75.8 per cent anti-dumping tariff.
He said it is imperative that the Canadian government bolster the market for domestically produced biofuels because flow of the fuel south into the U.S. market has slowed tremendously due to the inability to qualify for the 45Z tax credit.
Canada’s biodiesel exports to the U.S. slowed to 2,000 barrels per day during the first half of 2025, down from 35,000 barrels per day the same period one year ago.
Renewable diesel exports were 5,000 barrels per day during the first half of 2025 compared to 33,000 barrels per day last year.
“The stats speak for themselves,” said Ghatala.
