Investing in Biofuel Could Help Canadian Canola Producers Struggling with Tariffs

September 01, 2025

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by Sam Maciag (CBC News) Domestic renewable fuel production could make producers less reliant on exports, industry expert says -- As Saskatchewan Premier Scott Moe plans a trade mission to China to address recent tariffs the country imposed on Canadian canola exports, some of those impacted are eyeing up homegrown solutions.

Fred Ghatala, president of Advanced Biofuels Canada, said biofuels are a great way to make better domestic use of Canadian canola. Those fuels include biodiesel, renewable diesel and sustainable aviation fuel.

"When you produce the fuels close to home, the economic value stays in the local economy. It's one of the best solutions to lower emissions [and] increase economic activity, while really not requiring people to change the way they operate," he said.

The Canadian canola industry has been upended by international trade wars. On Aug. 14, China imposed a provisional duty rate of 75.8 per cent on canola seed, on top of the 100 per cent tariff levied on Canadian canola oil and meal in March.

The new anti-dumping duty marked another escalation in the yearlong trade dispute that started when Canada imposed 100 per cent tariffs on Chinese-produced electric vehicles in August 2024.

It's a big deal for Canada — particularly for Saskatchewan. According to the Canola Council of Canada, growers produced 17.8 million metric tonnes of canola in 2024, with 55 per cent of that coming from Saskatchewan.

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Saskatchewan has a renewable fuel standard that requires at least two per cent of the diesel mix to be renewable. Right now, about 2.5 per cent of the mix is renewable. When it comes to renewables in gasoline, Saskatchewan is doing even better at nearly 10 per cent, surpassing the provincial goal of 7.5 per cent.

Ghatala said the opportunities to use even more domestic canola oil would improve with access to biofuel refineries. But that takes investment — and he said investors need to know the government would support biofuel with policies that increase renewable fuel standard requirements.

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Ghatala said Canadian plants are also competing with imported fuel from the United States. In January, the clean fuel production credit replaced the bio-diesel blenders credit. It offers varying amounts of credits based on fuel types and emission reduction. The eligibility is limited to U.S.-produced fuels, meaning producers in the States can sell their products for cheaper.

The change to a producer-based system essentially eliminated eligibility for Canadian biodiesel and renewable diesel in the U.S., which reduces demand for Canadian feedstock like canola oil.

"We don't have anything equivalent in Canada," Ghatala said, adding he'd like to see a competitive playing field.

In Canada, renewable diesel is being produced in B.C., Alberta and Newfoundland. Biodiesel is being produced in B.C., Alberta, Ontario and Quebec.

Saskatchewan primarily provides canola feedstock that is turned into biodiesel and is exported to foreign markets where it can also be turned into renewable fuels.

The closest biofuel processing facility to Saskatchewan is operated by ADM, just across the Alberta border in Lloydminster. The 265-million-litre canola biodiesel plant opened in 2013 at the site of ADM's already-existing canola crushing facility.

The need for these kinds of facilities is why Josh Gustafson has added president and CEO to his title of farmer. He's behind Covenant Energy, which is in the process of building a $900-million renewable diesel and sustainable aviation fuel refinery in Lloydminster.

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It's something that could already be in progress in the province.

But in January, Federated Co-operatives Limited paused the construction of its own biodiesel and canola crushing project in Regina "due to regulatory and political uncertainty, potential shifts in low-carbon public policy and escalating costs."

Ghatala said without production capacity, the renewable fuel policies won't endure. In short, they need each other. The plant needs the incentives to compete and produce, and the production needs to happen to keep the policies viable and consumers engaged. Ghatala said if one drops off, so could support and investment. READ MORE

Related articles

China's canola tariffs are a dangerous trap (Globe and Mail)
Canada’s canola industry seeks U.S. biofuel policy exemption amid pressure (Globe and Mail)
Canola farmers weigh options as Chinese tariffs bite (CBC)

Excerpt from CBC: Market analyst Chuck Penner with LeftField Commodity Research said while future prices are down slightly, the cash price farmers receive for their canola, also known as the basis, is much lower.

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Farmers "don't like it, and they feel like they're being sacrificed to support eastern Canadian industries, whether that's true or not."

The hit to Canada's canola industry comes more than two weeks after China hit Canadian canola seed with a 75.8 per cent tariff.

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"You can't just stop growing one of those crops wholesale because it's a complex system," Penner said. "Farmers have been through low price environments before, but usually they're related to supply and demand, rather than these abrupt trade decisions.

"If we didn't have this China situation, farmers would be able to plan and look ahead more effectively."

Canola is considered a high source of farm revenue for Canadian producers, but it's also among the most expensive to grow.

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The canola seed tariff came into force nearly a year after Beijing launched an anti-dumping probe into the crop.

China's Ministry of Commerce has argued Canadian canola companies were dumping the product into the Chinese market, hurting its domestic canola oil market.

Ottawa and farmers have denied dumping, saying exporters are following rules-based trade.

Ottawa has said China has until September, when the anti-dumping investigation formally ends, to make a final decision on the duty. China can extend the deadline by six months. READ MORE