Canada’s biofuel sector is pleased to see an expanded renewable fuel standard in the United States, an important secondary market for Canadian ethanol and biodiesel plants.
The U.S. Environmental Protection Agency released its final rule on an expanded national mandate earlier this month. It calls for 136 billion litres of renewable fuel consumption by 2022.
The news supported the price of soy oil and canola.
Gordon Quaiattini, president of the Canadian Renewable Fuels Association, said Canadian biofuel plants will eye the U.S. market once they have filled Canada’s federal mandate.
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“There is no question that people will be looking to both markets over time,” he said.
Canada’s mandate calls for five percent renewable content in gasoline starting Sept. 1 and two percent in diesel starting at an unspecified date in 2011.
The mandates will create a market for two billion litres of ethanol and 630 million litres of biodiesel annually once fully implemented.
Quaiattini believes the American mandate will be of particular interest to western Canadian biofuel plants because of the region’s long history of supplying U.S. consumers with oil and natural gas.
“We have all of the infrastructure and knowledge within Saskatchewan and Alberta in particular as it relates to supplying the U.S. market their energy needs,” he said.
Quaiattini believes the renewable fuel sector will use those assets and that knowledge base to send some of its product to the U.S.
However, before Canada’s canola biodiesel and wheat ethanol can be used to help fill the U.S. mandate, it must first meet the greenhouse gas reduction thresholds established in the new renewable fuel standard.
The U.S. EPA has determined that corn ethanol and soybean biodiesel qualify, but it hasn’t decided yet about wheat ethanol or canola biofuel. The agency said it welcomes Canadian parties to use its petition process to request such a determination.
Quaiattini is sure a petition will be filed and that wheat ethanol and canola biodiesel will meet the EPA’s 20 and 50 percent greenhouse gas reduction thresholds for ethanol and biodiesel respectively.
“I’m very confident that we will have no problem being part of that marketplace going forward,” he said.
American biofuel associations and commodity groups were pleased that corn ethanol and soybean biodiesel made the cut in the EPA’s final rule because they didn’t qualify under the agency’s initial rule.
However, they are outraged that the EPA continues to include the indirect land use factor in its greenhouse gas reduction calculation because that factor drastically reduces the environmental contributions of ethanol and biodiesel and puts U.S. corn ethanol at a competitive disadvantage to Brazil’s sugar cane ethanol, which receives a more favourable rating.
Quaiattini said he has confirmation that indirect land use won’t be included in the rules governing Canada’s looming federal biofuel mandates and British Columbia’s low carbon fuel standard.
