OTTAWA, ONTARIO (RFD NEWS) — Canada could revise its Clean Fuel Regulations this week as fuel prices remain a major concern and agricultural groups push for changes they say would make domestic ethanol production more competitive.
Lyndsey Smith with RealAg Radio joined us on Thursday’s Market Day Report to discuss how Canada uses Clean Fuel Regulations to require fuel refiners to lower the carbon intensity of their fuels, with ethanol and biodiesel playing a major role.
“The industry, farmers included, have essentially asked for a couple of amendments to the Clean Fuel Regulation because it essentially puts Canadian ethanol production behind the eight ball when it comes to actually competing with the U.S.,” Smith said.
U.S. Ethanol Competition with Domestic Refiners
In her interview with RFD News, Smith said U.S. ethanol can currently be cheaper for Canadian refiners to use to meet clean-fuel requirements than domestically produced ethanol.
“It’s actually resulted in ethanol being between 7% and 35% cheaper to bring into Canada to meet those Clean Fuel Regulation standards than it is to actually make it in Canada,” she said.
That price difference has implications for Canadian farmers and ethanol producers, particularly in regions where crops are closely tied to biofuel demand.
Smith said Canadian producers want refiners to have more incentive to purchase domestic ethanol rather than importing it from the United States.
Conservatives Push Different Approach
The Conservative Party of Canada, the official opposition, has proposed a different approach to fuel costs and the Clean Fuel Regulations.
Smith said the party has called for eliminating the regulations, which it characterizes as a “second carbon tax,” and instead reducing fuel taxes.
“The official opposition has essentially said that they would do away with the Clean Fuel Regulations and instead they would offer some tax rebates or take the tax off of diesel and fuel to bring the prices down,” Smith said.
The Conservatives have also proposed extending those tax measures and encouraging additional domestic refining capacity.
Implications for Agriculture
Any changes to the Clean Fuel Regulations could affect Canadian crop markets because so much production is tied to biofuels.
Smith said ethanol accounts for a significant share of corn demand in Ontario, with about one-third of the province’s corn going toward ethanol production.
Canola is also closely connected to Canada’s biofuel industry. Smith said about 14 million tons of canola production in Western Canada goes into crushing, with biofuels representing a significant source of demand.
“If we were to do away with the CFR, it would mean a second decrease in demand for corn for ethanol,” Smith said.
She noted the issue creates competing considerations for farmers. Crop producers benefit from diversified markets and demand for their commodities, while supporters of eliminating the regulations argue that mandated ethanol and biodiesel use adds to fuel costs.
Canadian officials are expected to provide more information on potential changes to the Clean Fuel Regulations as the week progresses.
LEARN MORE: www.realagriculture.com
