Canola Sector Anticipates Major Biofuel Boom

March 01, 2024

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by Don Norman (Glacier FarmMedia/Western Producer) The biofuel industry could drive canola demand into uncharted territory in the coming decade, says one industry expert.

“The capacity of crush could grow from 11.3 million metric tonnes today to 18 million metric tonnes in three or four years,” said Chris Vervaet, executive director of the Canadian Oilseed Processors Association.

Vervaet was among the speakers at this year’s CropConnect conference in Winnipeg Feb. 14. His talk focused on the impact of renewable fuels on the canola value chain.

“This is unprecedented. I’ve talked to folks who have been around oilseed processing for the better part of 30 or 40 years. They’ve never seen this kind of growth.”

Roughly 2.5 million tonnes of canola seed equivalent stocks are now used for biofuel markets in Canada, the United States and the European Union. Vervaet said it could grow to five million by 2026 and as high as eight million by 2030.

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To meet that demand, seven new Canadian facilities have been announced over the last three years to bolster renewable diesel production capacity.

“If it all gets built the way that it’s been described in their press releases, that could be four billion litres of capacity over the next four or five years,” said Vervaet.

South of the U.S.-Canada border, another 25 facilities are either operating, under construction or planned.

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“They’re low-carbon essentially because of photosynthesis, the natural act of a plant taking carbon out of the air and converting it into energy,” said Vervaet. “Canola, for example, can actually have a carbon footprint that is 90 percent lower compared to conventional diesel.”

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“Renewable diesel is produced in a way that is very similar to how a traditional oil and gas refinery produces conventional fossil diesel,” Vervaet said, and the finished product is indistinguishable from fossil diesel.

“So, if you’ve got a tractor that’s running on conventional fossil diesel and you’re looking to replace it with a renewable source, you can run that tractor on 100 percent renewable diesel. It is a proven and viable solution to decarbonize transportation fuels. And it’s really becoming an important piece of policy development in terms of biofuel programs in both Canada and the United States.”

The U.S. Renewable Fuel Standard is driving the growth of renewable fuels. For more than a decade, it has mandated the amount of renewable fuel that must be incorporated into traditional fossil fuels. A new program that finalized the mixing percentages for 2023-25 was announced in June of last year.

Canada took longer to introduce similar programming, but in July 2023 it introduced the Clean Fuel Regulation. It differs from the American standard, Vervaet said.

“It still uses a mandate, but it’s not a mandate where you have to blend ‘x’ percent. It’s a mandate where you need to reduce the carbon intensity of the fuels.”

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“It’s all about debits and credits,” Vervaet said. “Lower-carbon fuels are the ones that are earning those credits. This is what everybody is chasing these days: getting those credits because there’s money to be made.”

Oil and gas companies are also trying to pivot business models, hence the number of renewable fuel refineries in the works or recently opened.

“Previously, you would never see this type of investment from the oil and gas industry,” Vervaet said. “They just didn’t support biofuels. It wasn’t part of their business model. They saw it as competition.”

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Canola acres are more or less tapped out, industry experts say, so extra production will have to come from increases in yield. In the U.S., however, there may be opportunity for canola acreage to expand. READ MORE

Related articles

Farmers promised easy Clean Fuel Regulations process (Western Producer)
Carbon intensity is ‘game changer’: To stay competitive, canola will have to improve its score (Manitoba Coordinator)

Excerpt from Western Producer: Industry says producers selling canola into new market will require only declaration that the crop was grown in Canada

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Selling canola into the market created by Canada’s new Clean Fuel Regulations will not be onerous, according to a crush industry executive.

“A lot of work has been done by the industry and the grower associations to try and make it as streamlined as possible,” Brian Conn, vice-chair of the Canadian Oilseed Processors Association (COPA), said during a recent webinar.

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That work ensured that Canada’s crop feedstocks comply with Environment Canada’s Land Use and Biodiversity (LUB) criteria through exemptions and provisions “baked into” the regulation.

It was a years-long, complicated process, but compliance with all four LUB criteria has already been confirmed by Environment Canada.

As a result, the only thing a grower needs to worry about when delivering an eligible feedstock to a grain elevator or crush plant is providing an attestation and proof that the crop was grown in Canada.

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He (Dean Roberts, vice-chair of the Saskatchewan Canola Development Commission) noted that crush plants buy canola differently than grain elevators. They can be a good outlet for off-grade and off-spec crop.

“The crushers just have a little more flexibility to deal with some of those grains than the exporters do,” he said. READ MORE

Excerpt from Manitoba Coordinator: Chris Vervaet, executive director of the Canadian Oilseed Processors Association, said the canola industry needs to roll up its sleeves and improve its score.

“We’ve got some work to do in terms of reducing our emissions,” he said.

Canola’s carbon intensity score is worse than competing feedstocks like soybean, animal fat and used cooking oil (UCO). That is primarily because the crop requires heavy doses of nitrogen fertilizer, which offsets its carbon sequestration benefits.

The other factor keeping canola’s score elevated is the lack of productivity gains. Average yields have been stuck around 40 bushels per acre for the past decade.

“Output is a big part of this carbon intensity equation,” said Vervaet. “We need more canola.”

Carbon intensity scores have a substantial impact on the bottom line for renewable diesel manufacturers because they collect credits amounting to about $100 for every tonne of carbon dioxide reduction. READ MORE