Used Cooking Oil Seen as Canola Risk

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December 09, 2024

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by Sean Pratt (Western Producer) Chris Vervaet, executive director of the Canadian Oilseed Processors Association, which represents most of the crushers operating in Canada, called the importation of used cooking oil a “very big risk” to the canola industry, undermining what was supposed to be a substantial market diversification opportunity for the crop.

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“It’s potentially displacing a lot of the demand that we’re going to need going into a very murky 2025 and beyond.”

He called it a “very big risk” to the canola industry, undermining what was supposed to be a substantial market diversification opportunity for the crop.

Every one million tonnes of renewable fuel consumed in Canada that is made from used cooking oil (UCO) displaces 2.5 million tonnes of canola seed.

To put that in perspective, that would be the size of Canada’s top export market in most years.

Canadians consumed 1.72 million litres of renewable diesel and biodiesel in 2023, according to a new report commissioned by Advance Biofuels Canada.

About 1.09 million tonnes of that were imported, with almost all of it coming from the United States, according to official trade data.

Vervaet said it is safe to assume that much of that was made with UCO, which has become the most popular feedstock in the U.S. due to its low carbon intensity score.

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The imported UCO isn’t sitting well with commodity groups. American farm organizations are backing the Farmer First Fuel Incentives Act, which would restrict eligibility for the new 45Z Clean Fuel Production tax credit to domestic feedstocks.

Vervaet said there are also concerns about the authenticity of the imported UCO, with allegations circulating that some of it has been fraudulently mixed with palm oil.

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China appears to be taking steps to restrict its UCO exports.

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However, according to the USDA report, the move comes at the behest of China’s biomass-based diesel industry, which argued that the rebate encouraged UCO exports over domestic consumption of the feedstock.

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“Analysts anticipate significant price volatility in the coming months, leading to potential industry consolidation as smaller traders are acquired by larger firms,” stated the report.

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If China exports less UCO to the U.S., it could create an opportunity for canola oil in that market.

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However, the bigger concern is that China has experienced “massive growth” in its renewable diesel production capacity and is starting to turn its attention to the nascent SAF sector.

He expects China’s UCO will factor prominently in the feedstock mix for those fuels.

Vervaet anticipates much of China’s biofuel production will be destined for export markets such as Canada, based on conversations he has had with folks in the sector. READ MORE

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From biofuel hopes to trade hurdles: canola industry leader sums up 2024 -- Despite current and potential trade challenges, canola is more important to Canada than ever, Canola Council of Canada executive says (Manitoba Co-operator)

Excerpts from Manitoba Co-operator: The industry must constantly look for new opportunities in biofuels, research and market expansion, Davison (Canola Council of Canada CEO and president) said.

“As we look back at 2024, we’ve seen some important opportunities taking root, but also face some ongoing challenges whose outcomes are not yet necessarily known.

”What we do know, however, is that the Canadian canola industry has a great foundation on which to build, along with a track record of innovation and collaboration across the value chain that will continue to unlock opportunities and keep us moving forward.”

The results of the economic impact study are optimistic, although Davidson admitted they may reflect higher values than an average year because it included years where canola prices were high. However, significant, ongoing investment in domestic canola processing, as well as growth in canola-based biofuel production, have driven demand.

“Over the last decade, we’ve seen canola processing and refining grow to generate six times the economic impact. And the economic contribution of canola-based biofuels has risen from approximately $70 million to about $1 billion,” he said.

“Alongside the environmental benefits, canola-based biofuels are an important opportunity to support growth and value-added production and diversify markets, increasing value to growers and the entire industry.”

Fueling up

Biofuels have taken much of the spotlight as the industry has promoted itself in the U.S., he noted.

The U.S. Environmental Protection Agency approved canola oil for advanced biofuel production in 2022. Since then, Canadian canola has “gained traction” with a “significant increase in the volume of canola moving into the United States.”

That’s despite pressure from imported biofuel feedstocks such as used cooking oil from China. During the same industry event in Saskatoon, Canadian Oilseed Processors Association executive producer Chris Vervaet said used cooking oil imports were a “very big risk” and have taken a bite out of the promised U.S. biofuel market.

He added that every million tonnes of imported cooking oil bumps 2.5 million tonnes of canola seed out of that market. Davison stressed the importance of open markets and fair treatment of canola oil as a biofuel feedstock.

As another challenge, U.S. farm groups pushed for restrictions on imported biofuel feedstocks in 2024.

“There are … challenges at the sub-national level as various states continue to develop and/or amend their respective low carbon fuel standards programs and frameworks,” he said.

Davison’s address did not mention the 25 per cent tariffs on Canadian goods, including agri-food, that U.S. President-elect Donald Trump has threatened to impose. In November, Trump said that he would apply the tariffs against Canada and Mexico as soon as he is sworn in Jan. 20, 2025, unless both countries tighten their borders to crack down on illegal drugs and migrants entering the U.S.

Research gains

Davison referred to “revitalized” research partnerships, including 13 new projects funded by the Canola Agronomic Research Program.