Biofuels Production and Consumption in Canada: Status, Advances and Challenges

by Mahmood Ebadian and Jack Saddler (IEA Bioenergy Task 39 Newsletter) ... Currently, over 96% of the transportation sector in Canada is fuelled by petroleum products, making this sector the second largest emitter of greenhouse gases (GHG) after the oil and gas sector.

Conventional biofuels including bioethanol and biodiesel (conventional fatty acid methyl ester- FAME) and, to a small extent, natural gas, have been produced and used in Canada to decarbonize the road transportation sector. Both federal and provincial regulations are in place, known as renewable fuel mandates, which require minimum renewable fuel blending in all gasoline and diesel consumed in the country. In addition to renewable fuel mandates, other regulations are contributing to the decarbonization of the road transportation sector in Canada such as British Columbia’s Low Carbon Fuel Requirements Regulation which requires the average lifecycle carbon intensity (CI) of fuel sold within the province to decline over time.

Since 2012, the United States (FAME biodiesel and, in recent years, HDRD) and Singapore (HDRD) have supplied between 85 and 100 percent of Canada’s total imports of renewable fuels for diesel blending, with the European Union making up the difference.

In 2016, Canadian fuel ethanol utilization exceeded the federal use mandate (2,346 million liters of ethanol), at 2,843 million liters (6% ethanol in gasoline pool).

Given the availability of suitable agricultural feedstocks and an interest to support rural development, a large portion of Canada’s ethanol demand is met through domestic production. There are currently 11 operating ethanol plants in Canada with an estimated 1.7 billion liters of annual production capacity, which represents about 60% of total ethanol demand (Renewable Industries Canada and NRCan, 2018). On average, the United States supplies 98 percent of Canada’s ethanol imports.

Canada has the world’s third largest proven oil reserves, after Venezuela and Saudi Arabia, and is one of the top ten oil exporters in the world. Energy security is therefore not the driver for Canada’s biofuel industry. The primary drivers for Canada’s biofuel mandates are rural development, diversification of agricultural markets, and GHG emission reductions to fight climate change. GHG emission reduction and clean growth are now the primary drivers (USDA Foreign Agricultural Service, 2017).

In addition to federal initiatives, current and underway provincial initiatives support the production and consumption of biofuels in Canada including British Columbia’s Low Carbon Fuel Standard (BC-LCFS), Quebec’s cap-and-trade carbon exchange program (excluding transport biofuels), British Columbia’s carbon tax, Ontario’s auction for carbon allowances, Alberta’s levy of $20 CAD per ton on fossil fuel consumption in 2017, which has increased to $30 CAD per ton in 2018. Further details of British Columbia’s Low Carbon Fuel Standard (BC-LCFS) are provided in the next article.

There are also a variety of fiscal incentives and investment subsidies that support or have supported the production and consumption of bioenergy and biofuels. Some of the largest incentive programs include:
 EcoEnergy for Biofuels had a $1.5 billion CAD budget over 9 years to boost Canada's production of biofuels.
Administered by Natural Resources Canada, the ecoENERGY for Biofuels program ran from April 1, 2008 to March 31, 2017. This program provided incentive rates of up to $0.10 CAD/liter for renewable alternatives to gasoline and $0.26 CAD/L for renewable alternatives to diesel for the first three years, declining in the 6 years thereafter.
 The ecoAgriculture Biofuels Capital Initiative encouraged producer equity/ownership in biofuel facilities and was administered by Agriculture and Agri-Food Canada. The program helped fund projects that used agricultural feedstock to produce bio-fuels and required agricultural producer equity investments of 5% to meet eligibility requirements. This program was extended to March 31, 2013, but is now expired.
 The Program of Energy Research and Development (PERD) is a federal, interdepartmental program operated by Natural Resources Canada (NRCan). PERD funds research and development designed to ensure a sustainable energy future for Canada in the best interests of both its economy and environment.
 NRCan’s Clean growth program is a federal program to advance emerging clean technologies toward commercial readiness so that natural resource operations can better reduce their impacts on air, land, and water, while enhancing competitiveness and creating jobs.
 Sustainable Development Technology Canada (SDTC) is a foundation created by the Government of Canada to support Canadian companies with the potential to become world leaders in their efforts to develop and demonstrate new environmental technologies that address climate change, clean air, clean water and clean soil. Since 2001, the Government of Canada has committed $1.364 billion CAD to SDTC.
There are also a number of new initiatives that support the development of clean technology, including bioproducts.

In June 2017, the federal government announced a Low Carbon Economy Fund of $2 billion CAD to support projects that will generate clean growth and reduce GHG emissions towards meeting or exceeding commitments under the Paris Agreement. In addition, Canada is working with international partners through Mission Innovation. READ MORE