“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. 

Why it matters: The canola sector is positioning itself to take advantage of an anticipated boom in renewable fuel. 

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 U.S.and the European Union. Vervaet said it could grow to five million by 2026 and as high as eight million by 2030. 

“We’re taking a stab in the dark here a bit, but we feel pretty optimistic about the role of biofuels in seed demand going forward,” he said. 

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. 

“If that all comes to fruition in a couple of years time, that’s close to 30 billion litres of production capacity,” said Vervaet. “This is a tremendous opportunity to see more value-added processing occur in Canada.” 

Old biofuel, new biofuel 

Renewable fuels are derived from biological, easily replaced sources like canola, corn, wheat or other forms of biomass, and have gained attention based on their promise for lower carbon intensity compared to fossil fuels. 

Corn-derived ethanol is one example, and has been used as a fuel additive for decades. Biodiesel produced from canola, soy, tallow or used cooking oil is a more recent example. It’s been used for the past 15 or 20 years. 

“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 per cent lower compared to conventional diesel.” 

Renewable fuel markets have gained attention in recent months through discussion about new fuel standards in the U.S. and hot debate over fossil fuel alternatives. 

Biodiesel has been limited because it must be mixed at 20 per cent with fossil fuel. Sustainable aviation fuel, which has drawn particular attention from oilseed sectors, is also mixed, but at a one-to-one basis with fossil fuel. 

Renewable diesel, with canola as a potential feedstock, is the new kid on the block. 

“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 per cent 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.” 

By the book 

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’ per cent. It’s a mandate where you need to reduce the carbon intensity of the fuels.” 

Carbon intensity is defined as the emissions given off by producing something, divided by the volumes resulting from that production. It is expressed in emissions per unit of output. 

These policies led to creation of carbon credit markets in the U.S. and Canada to encourage development of renewable fuels, although prices have proven volatile. 

“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.” 

He used a hypothetical example based on California’s carbon credit market, in a scenario involving used cooking oil (UCO), the feedstock lowest in carbon intensity. 

“A biofuel producer that is making a billion litres of renewable diesel a year can earn almost $250 million in credits,” he said. “If they can’t get their hands on UCO, well, then they’re going to try animal fat, and if they can’t get their hands on that, they’re going to be looking at canola, and so on.” 

What does it mean for farmers? 

“At a high level, more demand equals better prices, so that law of economics applies,” said Vervaet. “But as far as farmers getting premiums by participating in these types of programs, I can’t speak to anything specifically.” 

That could change with rising demand, he noted. Buyers might introduce premiums as an incentive for producers. 

Projections show that the demand for North American canola could rise to 29 million tonnes by 2030. That is up from current demand of 20 million tonnes, 90 per cent of which comes from Canada. 

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. 

“If we can continue to grow more canola and see more of our canola go into biofuels, it doesn’t mean that we’re turning our backs on our traditional markets,” said Vervaet. “We’ll still very much be centred on satisfying those demands.”

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“Remember carbon intensity because that’s the game changer,” said the president of the Canadian Fuels Association.

That factor will help determine the value of canola when large volumes of the crop are being consumed by the renewable diesel sector.

His member companies account for 95 per cent of Canada’s production of transportation fuels.

The annual demand for biofuel in Canada is expected to reach 10 billion litres by 2030. That includes 3.5 billion litres of renewable diesel, a seven-fold increase over 2022 levels.

Manufacturers will be using a variety of feedstocks to produce that fuel and what they choose will be heavily influenced by the carbon intensity scores of those feedstocks.

“For us, that is very important, and we monetize that big time,” said Larocque.

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.

A renewable diesel plant that produces one billion litres of the fuel per year could earn $248 million in credits for using UCO as its feedstock versus $146 million for canola.

“You bet they’re going to be looking for as much UCO as they can get their hands on,” said Vervaet.

But canola is still expected to be the feedstock of choice for Canada’s plants and will also be in high demand in the United States.

COPA is forecasting 6.8 million tonnes of demand from North America’s renewable fuels sector by 2030, up from 2.4 million tonnes in 2022.

Larocque indicated the volumes could be much higher. He said Imperial Oil’s one billion litre plant planned for Strathcona County in Alberta could consume 2.5 million tonnes of canola annually if that was the only feedstock it used.

That is more than what Canada typically exports to Japan in a given year.

“That’s just one (plant) and there’s probably going to be five to seven more of those by the end of the decade.”

Vervaet said there will still be plenty of canola for the food and feed markets. He is forecasting 29 million tonnes of production by 2030, up from 20 million tonnes in 2022. Three-quarters of that production will go to traditional food and feed markets.

Larocque was asked about the backup plan if canola can’t deliver quantities that the renewable diesel industry requires.

Canada has 25 million tonnes of forest residue that could be used as a feedstock and the provinces support that idea to prevent forest fires. However, the industry is three to four years behind agriculture in developing the feedstock. Wood is harder to liquify than crops.

And there is another big obstacle to overcome.

“The problem is the supply chain that you have in agriculture is five to 10 times more efficient than it is with the forest residue right now,” said Larocque.

The upshot is that if the canola industry can’t deliver, fuel manufacturers would have to inform Ottawa that they won’t be able to abide by Canada’s Clean Fuel Regulations.

“So, we are absolutely counting on you,” he told Vervaet. “Build those crush plants.”

Canada now has 14 canola crush plants with 11.2 million tonnes of capacity. Five new projects have been announced that would boost capacity to 18 million tonnes over the next five years.

Total crush in 2022 amounted to 8.7 million tonnes or 45 per cent of the 19.5 million tonnes of canola produced that year.

COPA is forecasting 16.2 million tonnes of crush capacity by 2025, which would be 70 per cent of the estimated 23 million tonnes of production by that time.

Those plants will supply canola oil to what is eventually expected to be seven renewable diesel facilities operating in Canada, producing four billion litres of fuel per year.

There will be another 25 plants in the U.S. with 28 billion litres of capacity.

Larocque warned that the Canadian plants might not be built if the federal government doesn’t make some type of response to the tax credits contained in the U.S. Inflation Reduction Act.

Those credits are only available to U.S. manufacturers, who will collect them and then export their product to Canada, where it will then receive more federal and provincial credits. The U.S. credits amount to between 10 and 60 cents per litre.

Larocque was hoping the Canadian government would signal in its Fall Economic Statement that a policy response was coming in Budget 2024.

“Unfortunately, there was nothing,” said Larocque.

He said his association will continue to lobby federal finance minister Chrystia Freeland and energy minister Jonathan Wilkinson to get something in Budget 2024.

– Sean Pratt is a reporter with The Western Producer.

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“This is a cutting-edge project for Manitoba farmers and oilseed processors,” said Manitoba ag minister Ron Kostyshyn in a news release. 

Calgary-based firm Azure Sustainable Fuels Corp. plans to use Canadian feedstock like soybean and canola oils to produce as much as one billion litres of renewable aviation fuel per year, the news release added. 

The province agreed to give $2.9 million over two years, via the Sustainable Canadian Agricultural Partnership (SCAP), to Azure’s “Front End Engineering Design (FEED) study,” the news release said. 

A FEED study is a planning step in which the technical specifications and early construction designs may be drawn up, and more detailed timelines and budgets may be estimated. 

In June, then Manitoba premier Heather Stefanson and then federal ag minister Marie Claude Bibeau announced their governments would be providing $2.9 million toward the FEED study.  

The facility is expected to cost $1.9 billion to build, a June 20 news release said. Once built, it’s expected to create 150 jobs, and add $2 billion in total impact to the Manitoba economy. 

Construction is slated to begin in 2025, said Azure president and CEO Douglas Cole in a news conference today.

Sustainable aviation fuel is produced from renewable feedstock which, along with soybean and canola oil, can include industrial fats and agricultural or forestry residues, according to the Canadian Council for Sustainable Aviation Fuels (C-SAF). It can reduce emissions by up to 80 per cent over its lifecycle compared to traditional jet fuel, C-SAF added.

—Geralyn Wichers is associate digital editor of AGCanada.com. She writes from southeastern Manitoba.

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The Biden administration has been divided over this issue for months, as it faces a strong lobbying push from stakeholders in the U.S. Farm Belt who see sustainable aviation fuel (SAF) as one of the only routes to grow the ethanol industry.

Environmental groups say clearing land to grow crops for fuel is counterproductive to curbing global warming, while the ethanol industry argues that the U.S. needs to use ready technology to quickly reduce carbon dioxide emissions.

Reuters reported in September that the Biden administration would likely delay a decision until December. The guidance was expected in September.

“You can be confident you’ll see something coming from Treasury, I would anticipate and hope, by the end of the year,” Vilsack said in a conversation with Reuters reporters.

“They will provide some direction and guidance, and I think the actual rules and regulations and so forth may take a little bit longer.”

Vilsack said he is confident that ethanol will become an SAF feedstock.

The billions of dollars in subsidies that the ethanol industry hopes to use are part of last year’s Inflation Reduction Act, President Joe Biden’s signature climate law. SAF producers seeking tax credits must demonstrate with an approved scientific model that their fuel generates 50 per cent less greenhouse gas emissions over its lifecycle than petroleum fuel.

Midwest ethanol producers have asked the administration to adopt the Department of Energy’s Greenhouse Gases, Regulated Emissions and Energy Use in Technologies, which would enable ethanol-based SAF to qualify. Environmentalists want standards that would favour inputs like used cooking oil and animal fat.

Vilsack also said updates the greenhouse gas policy, now underway at USDA, primarily deal with how the model calculates emissions from cropland tillage.

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The U.S. Environmental Protection Agency has finalized biofuel blending volumes at 20.94 billion gallons in 2023, 21.54 billion gallons in 2024 and 22.33 billion gallons in 2025. That compares with the initial proposal announced in December of 20.82 billion in 2023, 21.87 billion in 2024, and 22.68 billion in 2025.

But the finalized volumes include just 15 billion gallons of conventional biofuels like corn-based ethanol in all three years, plus a 250 million-gallon supplemental amount for 2023. That represents a decline from the initial proposal, which included 15 billion gallons of conventional biofuels in 2023 and 15.25 billion gallons in both 2024 and 2025.

The plan also has modest increases to biomass-based diesel volumes compared with the proposal, despite a major lobbying push from groups that produce biodiesel, renewable diesel and sustainable aviation fuel to boost volumes higher.

The announcement drew strong rebukes from ethanol and biodiesel advocates.

“The industry responded to signals from the Biden administration and Congress aiming to rapidly decarbonize U.S. fuel markets, particularly aviation, marine, and heavy-duty transport, and make clean fuels available to more consumers,” said Kurt Kovarik, vice-president of federal affairs with Clean Fuels, a biodiesel group. “The volumes EPA finalized today are not high enough to support those goals.”

Iowa Secretary of Agriculture Mike Naig said the finalized mandates fail to fully support benefits that biofuels can provide to farmers and consumers.

The Renewable Fuels Association called the reductions in ethanol mandates “inexplicable” and “unwarranted.”

The final rule marks a new phase in the U.S. Renewable Fuel Standard program, which is more than a decade old and frequently pits the powerful oil and biofuel industries against each other. Under the RFS, oil refiners must blend billions of gallons of biofuels into the nation’s fuel mix, or buy tradable credits from those that do.

Ethanol producers and corn farmers like the mandates because they provide a market for their products, while the oil industry finds the requirements too pricey.

While Congress set out specific goals for the program through 2022, the law expands the EPA’s authority for 2023 and beyond to change the way the RFS is administered.

The EPA said the finalized rule would reduce reliance on foreign sources of oil by between 130,000 to 140,000 barrels per day over 2023-2025.

U.S. renewable fuel credit prices dropped eight per cent following the news, trading at $1.34 each from as much as $1.46 each the day prior, traders said (all figures US$). Biomass-based credits dropped to $1.38 each from $1.48 each the previous day.

The futures market fell sharply Wednesday in reaction to the lower-than-expected biofuel mandates, with most Chicago Board of Trade soyoil contracts locked down their daily four cent/lb. trading limit. The soyoil market had rallied to its highest in nearly 3-1/2 months last week.

Other provisions

The EPA also set out a series of regulatory changes in the final rule, in an effort to strengthen the agency’s implementation of the RFS program.

The agency will modify provisions for biogas-derived renewable fuels to ensure that biogas is produced from renewable biomass and used as a transportation fuel, as well as to allow for the use of biogas as a biointermediate.

Absent from the rule, however, was a much-anticipated pathway for electric vehicle manufacturers to generate lucrative credits under the RFS, though it was included in the original proposal in December. Reuters previously reported that the administration was planning to abandon the scheme over worries about lawsuits.

The plan would have given EV automakers, such as Tesla, credits for charging vehicles using power generated from renewable natural gas, or methane collected from sources such as cattle or landfills.

The EPA said on Wednesday it will continue to assess stakeholder comments it received on the EV scheme, and it will work on potential paths forward for it.

The American Fuel and Petrochemical Manufacturers said it was pleased to see the EPA abandon the EV program, saying the RFS is a liquid fuels program that should not include electric vehicles.

— Reporting for Reuters by Stephanie Kelly and Jarrett Renshaw; additional reporting by Mark Weinraub.

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Under the deal to create an agricultural giant worth about $34 billion including debt, Bunge’s crushing capacity will increase by nearly one-third, to 75 million tonnes annually, adding plants in Europe, Canada and Argentina (all figures US$).

The deal would make the combined company better able to capitalize on an anticipated surge in demand for soybean and canola oil to produce biofuels in coming years than its rivals, but more consolidation in the industry leaves farmers with fewer buyers for their crops.

Though its grain trading business is smaller than rivals Cargill and ADM, U.S.-based Bunge is already the world’s largest oilseed processor and producer of vegetable oil. Oils produced primarily from soy and canola are seeing increasing demand from refiners for low-carbon renewable diesel.

“This really accelerates the strategic growth platform that we’ve laid out,” Bunge CEO Greg Heckman said in an interview Tuesday.

Bunge has in the past two years entered partnerships with oil major Chevron to crush oilseeds for renewable diesel and seedmaker Corteva to tailor crops for biofuel feedstocks. Its investment in startup Covercress gives Bunge access to future supplies of a new low-carbon-intensity oilseed for crushing.

“(Buying Viterra) allows us to fill in some of the areas where we needed additional origination, where we needed to be closer to the farmer to drive regenerative ag and sustainable practices,” Heckman said.

Viterra’s large network of grain shipping terminals and country elevators, particularly in oilseed production regions of North America, Argentina and Europe, would complement Bunge’s existing oilseed processing business, analysts said.

In the U.S., the deal marks a reversal after Bunge sold 35 grain elevators in 2021, citing poor profits. Viterra’s elevators have better locations across Bunge’s network, Heckman said.

The Viterra network would aid Bunge’s processing plants by both purchasing oilseeds from farmers and shipping products like livestock meal, analysts said.

“Scale is key in this business and the more points along the value chain you possess, the more opportunity you have,” said Ben Bienvenu, equity research analyst at Stephens.

“Bunge (stock) was a way to express a bullish view on the renewable diesel buildout via equity prior to this deal. And it’s only more so post this deal,” he said.

The U.S. Energy Information Administration said in February that annual U.S. renewable diesel production could more than double by 2025, driven in part by tax credits for renewable fuels under President Joe Biden’s Inflation Reduction Act.

While some developers have cancelled or delayed renewable diesel projects due to rising costs, long-term demand for cleaner-burning fuel remains attractive, a factor that likely convinced Bunge to bolster its crushing operations, said Tore Alden, senior agriculture analyst at Fastmarkets, a price reporting agency.

“I think it’s prescient,” he said. “(Bunge) is taking the long-term view that renewable diesel can continue to grow beyond the initial, fervored capacity build-out.”

Soybean oil accounts for 28 per cent of feedstock used to make renewable diesel, and 60 per cent of the feedstock for biodiesel, a biofuel that blends with petroleum diesel, said Matthew Blair, an analyst at TPH+Co.

Viterra’s crushing businesses could face regulatory scrutiny in Canada and Argentina, and elsewhere, analysts said. Both have canola-crushing plants in Eastern and Western Canada, including facilities in southern Manitoba.

Canada’s antitrust regulator will review the planned merger, a spokesperson said. Argentina’s competition bureau has not yet received formal notification of the merger, a government source said.

An EU Commission spokesperson also said the transaction had not been formally notified to the Commission. The Australian Competition and Consumer Commission said it was aware of the plan to merge and is monitoring developments.

— Reporting for Reuters by Rod Nickel in Winnipeg and Karl Plume in Chicago; additional reporting by Divya Rajagopal in Toronto, Julie Payne in Brussels and Lewis Jackson in Sydney.

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The Calgary-based company said the facility will produce 20,000 barrels per day of renewable diesel and is expected to start production in 2025.

Imperial expects regulatory approval for the project, first announced in August 2021, in the near-term.

The facility will use low-carbon hydrogen and biofeedstock combined with a proprietary catalyst to produce the renewable diesel, which Imperial says will reduce greenhouse gas emissions by roughly three million tonnes a year compared with conventional fuels.

The low-carbon hydrogen will be produced with carbon capture and storage technology and supplied by Air Products.

Imperial is developing agreements with third parties for biofeedstock supply. Jon Wetmore, Imperial’s vice-president for downstream, said the project had moved forward quickly to help secure feedstocks such as canola, which needs to be run through crush plants and turned into canola oil before being used.

“Early mover advantage does help, we’re aware at some point there might not be enough crush capacity for all the renewable diesel projects being contemplated in Canada,” Wetmore told Reuters in an interview.

Alberta is already home to canola crushing plants including those of Cargill at Camrose, Richardson International at Lethbridge and ADM at Lloydminster.

Crush capacity is expected to increase also in neighbouring Saskatchewan, where Richardson plans to double its handle at Yorkton, while Cargill and Viterra each plan facilities in the Regina area.

The Strathcona project will be partly funded by credits granted under British Columbia’s provincial Low Carbon Fuel Standard, and a “significant portion” of the diesel produced will be supplied to B.C. to help Alberta’s other neighbouring province meet its emissions targets.

Site preparation and initial construction are underway and the project is expected to create about 600 direct construction jobs.

“We view this as a neutral impact for now given the capital outlay and the long-term adoption, appreciating that Imperial continues to make strategic investments to reduce emissions from its own operations,” National Bank analyst Travis Wood said in a note to clients.

— Reporting for Reuters by Nia Williams and Sourasis Bose. Includes files from Glacier FarmMedia Network staff.

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“For canola crush, in terms of possible capacity growth in the years to come, we could see almost six million tonnes of increased capacity based on facilities that are either under construction today or have been announced,” Chris Vervaet, the association’s executive director, told attendees at Canola Week here.

“That’s significant growth from the current capacity – a 50 per cent increase, in fact.”

While Canadian production of renewable diesel is low now, it should reach one billion litres by 2024, two billion the year after, and almost 4.5 billion by 2027, Vervaet said during an online presentation.

There are a number of projects poised to come on stream, he said.

Parkland Corporation is expanding its renewable diesel production at its refinery in Burnaby, B.C.; Imperial Oil is proceeding with a renewable diesel complex at its refinery near Edmonton that will produce more than one billion litres annually; Federated Co-operatives Ltd. says its similar-sized facility at Regina will be in operation by 2027; Tidewater Renewables is building a facility in Prince George, B.C. able to produce 150,000 litres annually; and a Saskatchewan company called Covenant Energy announced last year that it plans to build a 300-million-litre facility in that province.

Production capacity is growing even faster south of the border, and so is demand for renewable diesel. Unlike biodiesel, it is chemically identical to fossil diesel and can be used in its place, even in cold weather.

[RELATED] AgCanada.com: U.S. EPA proposes revamp of biofuel program to include EVs

Depending on the feedstock and production method, renewable diesel can reduce greenhouse gas emissions by 80 per cent or more, and that’s leading governments to push the green fuel, said Vervaet.

“There are a lot of biofuel policies that are driving demand over the next decade or so,” he said, adding that has already led to a production boom in the United States.

“Two years ago, there was 2.5 billion litres of production capacity. This year, that’s already roughly tripled. We see it now at 7.6 billion litres.”

Feedstocks can be vegetable oils (including soyoil and used cooking oils) and animal fats, but Vervaet predicted there will be a major expansion of canola production in North America, possibly by 50 per cent or more. Some of that could come from expanding into the brown soil zones of Canada and growing winter varieties in the U.S., he said.

“We have a lot of opportunities for productivity gains and acreage expansion. We have a high degree of optimism that we will see canola production grow in North America. Renewable fuels and the demand for renewable fuels is going to grow as well.

“We think there’s a lot of room to grow production and it will keep pace for the canola used in biofuels and the rest of canola will be used in the traditional markets such as food and feed.”

Producers haven’t seen the impact yet but they will, said Charles Fossay, president of the Manitoba Canola Growers Association.

“It’s probably three years away before we will see the full effect of renewable diesel and biodiesel as these fuel standards kick in,” said the grain farmer from Starbuck. “As these new crush plants come online and they start using canola oil to be part of the refining process to produce diesel fuel, it’s another market for producers.

“In the long run, it will maintain good canola prices and add a bit more to the prices that farmers receive from the crops they grow.”

Alberta producer John Mayko echoed those comments.

“Definitely, I think it’s a good news story,” said the grain farmer from near Mundare, east of Edmonton. “I’m not sure how much extra demand will be from the biodiesel side of it. I guess it will depend on what the market forces us to do, whether the processors decide to put the canola oil into renewable diesel or biodiesel. Either of them is good news for us.”

Renewable diesel will also create more stable demand for canola, since producers will be able to sell to the North American market rather than relying on overseas buyers such as China, said Mayko.

Renewable diesel will also enhance the green credentials of farmers, said Fossay.

“I think it’s also showing how agriculture is helping to deal with climate change by reducing nitrous oxide and carbon dioxide emissions,” he said. “It’s just one of the many ways that agriculture is helping deal with those issues.”

And the push to lower greenhouse gas emissions isn’t going to let up, Vervaet said during his presentation.

“Renewable fuels are a proven and viable solution to decarbonize transportation fuels.”

“Transportation fuels in Canada, the United States and globally account for a quarter of all greenhouse gas emissions. It’s a very significant footprint in terms of emissions from transport fuels.

“Renewable fuels are part of that solution, especially renewable fuels from crops like canola, because they have a lower carbon footprint.”

A key hurdle was passed this summer when the federal government released details on its Clean Fuel Regulations. The canola sector had been concerned about the methodology that Ottawa would use to calculate how green a fuel source is, as well as the possibility that canola would require audits or certification. But those fears were largely allayed because the regulations acknowledge farmers’ stewardship efforts such as no-till and minimal till, which contribute to canola’s lower carbon footprint.

When the new clean fuel standard starts coming into effect next summer, the push for greener fuels will intensify, Vervaet said.

“This is a regulation that will mandate lower carbon intensity for the fossil fuels sold and used in Canada,” he said. “The federal Clean Fuel Regulations mandate a 15 per cent lower carbon intensity by 2030.”

– This article was originally published at the Alberta Farmer Express.

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Biden wants to fight climate change by reducing fossil fuel use in America’s transport sector, currently the source of around a quarter of the country’s greenhouse gases.

Under the plan, announced by the Environmental Protection Agency, oil refiners will be required to add 20.82 billion gallons of biofuels to their fuel in 2023, 21.87 billion gallons in 2024, and 22.68 billion gallons in 2025.

Those volumes will include more than 15 billion gallons per year of conventional biofuels like corn-based ethanol, with the rest made up by advanced fuels like those made from switchgrass, animal fats, or methane from dairy farms and landfills.

The U.S. government estimates that the lifecycle greenhouse gas emissions from biofuels can be more than 40 per cent lower than straight gasoline, meaning adding them to the fuel mix can help fight climate change.

The proposal marks the latest chapter for the more-than-decade-old Renewable Fuel Standard (RFS), under which oil refiners are required to blend billions of gallons of biofuels into the nation’s fuel mix or buy tradable credits from those that do.

While Congress set out specific goals for the program through 2022, the law expands the EPA’s authority for 2023 and beyond to change the way the RFS is administered.

Electric vehicles

In addition to boosting mandated volumes, the EPA hopes to use the reset to introduce a pathway for electric vehicle makers to generate credits. That would recognize the possibility that electric vehicles could be charged using power from the grid generated by biofuels like landfill or agricultural methane.

The EPA proposal foresees electric vehicle manufacturers such as Tesla generating as many as 600 million credits called e-RINs in 2024, and 1.2 billion of them by 2025. Under the scheme, one e-RIN would be generated for every 6.5 biofuel-powered kilowatt hours in an EV battery.

The idea got mixed reviews.

“We’re encouraged that the Biden administration continues to recognize the powerful role that the RFS can play in decarbonizing transportation,” said Brooke Coleman, executive director of the Advanced Biofuels Business Council.

He said the proposal could help “unleash years of pent-up innovation in advanced and cellulosic biofuels.”

The Renewable Fuels Association, a biofuels trade group, also welcomed the proposal, saying it “solidifies a role for the Renewable Fuel Standard in future efforts to reduce carbon emissions and enhance our nation’s energy security.”

Geoff Moody, an executive at the refinery trade group American Fuel and Petrochemical Manufacturers, said the EPA’s proposal was flawed.

“For the final rule, EPA must go back and set conventional volumes that are aligned with consumer demand and infrastructure realities,” he said. “It must also hold true to the legacy of RFS as a liquid fuels program — not an electric vehicle program — by rejecting yet another massive regulatory subsidy for electric vehicle manufacturers.”

Meanwhile, a spokesperson for the Alliance for Automotive Innovation said the group supports an e-RIN program, and pointed to a previous comment that the group made that said an e-RIN program will help accelerate the U.S. electric vehicle market.

A Tesla representative was not immediately available.

The EPA’s biofuel mandate for the current year is 20.88 billion gallons, which includes the annual volume requirement of 20.63 billion plus a supplement of 250 million gallons for volumes that were not blended in previous years.

The biofuel industry got a boost this year from passage of the Inflation Reduction Act, which provides significant subsidies to the biodiesel and sustainable jet fuel industries in the form of tax credits.

Refiners such as Marathon Petroleum and PBF Energy Inc have converted units at their oil refineries to produce renewable diesel to take advantage of growing demand and government subsidies.

Lawmakers are also pushing a bill that would expand sales of higher volume ethanol blends of gasoline called E15, something advocates say could help reduce pump prices while supporting farmers.

Reuters previously reported the details of the EPA proposal on Wednesday, citing sources.

Renewable fuel credits traded on Thursday between $1.65 and $1.70 each, down from as high as $1.84 the previous session, traders said.

— Reporting for Reuters by Stephanie Kelly and Jarrett Renshaw.

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Cheap supplies from Russia and elsewhere in the Black Sea are adding competition for U.S. wheat, and prices have slipped to levels low enough to spur technical selling, analysts and traders said.

Chicago Board of Trade most-active wheat fell two per cent to $7.80-3/4 a bushel, after earlier hitting $7.73-1/4, its lowest since Aug. 22 (all figures US$).

Funds were likely extending short positions with wheat prices so low, and modest precipitation last week in parts of Texas and Oklahoma may have improved winter wheat growing conditions, said Terry Reilly, senior commodity analyst at Futures International.

Corn ended mixed, and spread trades involving simultaneous purchases of corn and sales of wheat may have underpinned the grain, Reilly said.

Soybeans gained 1.5 per cent to settle at $14.57-1/4 a bushel, supported by U.S. Department of Agriculture’s report of an export sale of 110,000 tonnes to unknown destinations.

A spike in soyoil prices mid-session also pulled soybeans up. Those gains were related to bullish expectations for the U.S. Environmental Protection Agency’s annual setting of renewable volume obligations for transportation fuel, said Mike Zuzolo, president of Global Commodity Analytics.

Zuzolo said dry weather in central-west Brazil added soybean support.

Global markets including crude oil and equities fell on Monday as widespread and rare protests in China against stringent COVID-19 curbs sparked a wave of selling on concerns about growth expectations.

Competition for U.S. wheat is also hitting prices, said Matt Ammermann, StoneX commodity risk manager.

“Russian wheat continues to be offered at about the cheapest prices in world export markets which is negative for the export prospects of U.S. wheat,” Ammermann said.

“Weather remains positive for export shipping in the Black Sea and we could see large volumes of Russian wheat shipments in December.”

Russian and Ukrainian wheat were bought by Egypt on Thursday.

— Reporting for Reuters by Rod Nickel in Winnipeg and Michael Hogan in Hamburg; additional reporting by Naveen Thukral in Singapore.

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