CALGARY, ALTA. (RFD-TV) — Canada is proposing changes to its Clean Fuel Regulations aimed at improving the competitiveness of domestic biofuel producers, a move that could affect ethanol markets and cross-border trade with the United States.
Shaun Haney, host of RealAg Radio, joined Market Day Report to discuss the proposed changes, their potential impact on U.S. ethanol exports and why Canadian farm and biofuel groups say more support may be needed.
Canada Seeks to Strengthen Domestic Biofuel Industry
In his interview with RFD-TV, Haney said Canadian ethanol producers have struggled to compete with U.S. imports, which benefit from federal production tax credits under the Section 45Z program.
Canada is the largest export market for U.S. ethanol, purchasing more than 800 million gallons in 2025, according to Haney. That represents a significant share of U.S. ethanol exports and has created added competition for Canadian producers.
The proposed amendments to Canada’s Clean Fuel Regulations are intended to make the country’s credit system more competitive with U.S. incentives.
Haney said the changes reflect a broader North American biofuel market, where policies on either side of the border can influence production, investment and trade.
Proposed Ethanol Credit Multiplier
Under the proposal, qualifying low-carbon ethanol would receive a 1.3-times credit multiplier. Canadian ethanol groups had sought a multiplier of 1.4, Haney said.
The proposal also ties eligibility for the additional credits to feedstocks harvested or produced in North America, including the United States, Canada and Mexico. Haney noted similarities with the North American feedstock approach used under the U.S. 45Z tax credit.
The proposed changes are expected to apply retroactively to qualifying credits dating back to January 1, 2026. The draft regulations are scheduled for publication on October 30, followed by a 75-day public consultation period.
Haney said the proposed multiplier is a step toward addressing the competitive gap, but Canadian ethanol producers believe it may not be enough to match the advantages available to U.S. producers.
U.S. Ethanol Groups Welcome Trade Approach
Haney said the Renewable Fuels Association welcomed the proposed amendments, particularly because they do not require a specific share of ethanol to be grown or produced in Canada.
He said that distinction matters for U.S. producers because a domestic-content requirement could have restricted American ethanol imports into Canada.
Instead, the proposed credit system is intended to improve the competitiveness of Canadian producers without shutting U.S. suppliers out of the market.
Haney said the 1.3 multiplier would still leave Canadian ethanol producers at a competitive disadvantage in some respects, given the incentives available under the U.S. 45Z program.
Farm Groups Say More Support May Be Needed
Haney said the reaction from Canadian farm and biofuel groups has been mixed. Many see the amendments as progress, but some believe the proposed ethanol multiplier falls short of what is needed.
Groups including Renewable Industries Canada, the Farms and Fuels Alliance and Grain Farmers of Ontario have supported stronger incentives for domestic ethanol production.
Haney said different segments of the biofuel industry may have different perspectives, but the consultation period gives stakeholders a chance to push for changes before the regulations are finalized.
