Canada Mandates Two Percent Biodiesel Blend for On-road Diesel, Heating Oil

Canada's Environment Minister, Peter Kent -- accompanied by federal Agriculture Minister, Gerry Ritz -- announced on Thursday that all diesel fuel and home heating oil sold in Canada after July 1, 2011 will have to contain at least two percent biofuels.

The Conservative government published its Renewable Fuels Regulations on September 1, 2010. Those regulations already require an average of five percent renewable content in gasoline. The regulations contained provisions to require an average of two percent renewable content in diesel fuel and heating oil.

"When we announced our Renewable Fuels Strategy, we were clear that the two-percent requirement would be implemented subject to technical feasibility," said the Minister Kent. "After positive results, we are moving forward with this requirement which will result in further reductions in greenhouse gas emissions and ultimately in cleaner air for all Canadians.'

"We are meeting the commitments we have made to farmers, rural communities and industry to regulate the use of renewable fuels," said Minister Ritz. "The new renewable fuel content in biodiesel and heating oil will give our farmers another market for their crops and demonstrates how agriculture can contribute to reducing Canada's environmental footprint."

When fully implemented, the Strategy's two regulatory requirements combined with provincial regulations will ensure a total volume of renewable fuel that will reduce annual greenhouse gas emissions by up to four megatonnes -- about the equivalent of taking one million vehicles off the road, the government says.

The president of the Canadian Renewable Fuels Association says biodiesel is a cleaner alternative to diesel and 10 times less toxic than table salt.

Gordon Quaiattini said the federal move will "help moderate price by adding to our fuel supply, create new jobs and benefit farmers and drivers alike."

Critics of the plan are already dismissing its environmental benefits, saying it's little more than a plum deal for Canada's farmers.

The executive director of the Sierra Club Canada, John Bennett, called Thursday's announcement "window dressing" that will help farmers more than the environment.

"This could be a small part of an overall climate change plan," he said, "but without targets to cut emissions from industrial emitters, it's not much."

Canadian Truckers Not Impressed

The Canadian Truck Alliance has come out against the plan, too, saying costs vastly overshadow the potential environmental benefits. According to CTA, there is strong evidence, including a 2009 study done by EcoRessources Consultants for Environment Canada, showing the environmental impact of a biodiesel mandate in terms of GHG reduction is negligible and certainly outweighed by the costs.

According to ERC, the total incremental cost to society of the proposed biodiesel regulation for on-road use would be $4.5 billion between 2011 - 2035, whereas the benefits -- in the form of reduced GHG emissions -- are valued at slightly more than $860 million.

Critics say the benefits of biofuels are overestimated because the emissions associated with fertilizing and harvesting the plants to produce it are seldom taken into account.

"It's no wonder other countries are re-thinking their biodiesel policies," says CTA's CEO, David Bradley. "Furthermore, under the proposed U.S. heavy-duty truck GHG reduction regulation, which Canada says it will harmonize with, biodiesel isn't even mentioned as an option for meeting the new standard. If this is about the environment, then it behooves the Minister of the Environment to provide the trucking industry with emission credits for using this product."

Environment Canada's announcement will eventually require that all diesel fuel product sold to on-road customers over a calendar year contain an average of two percent biofuel content. Aside from the lack of environmental benefits, this new fuel standard could pose significant operating challenges for both light and heavy-duty users of diesel engines in winter conditions along with creating possible engine warranty issues, CTA notes.

"CTA made it clear from the outset that we are not opposed to the introduction of alternative fuels that could reduce our reliance on oil-based product, so long as it works in our engines, is in plentiful supply, is affordable and won't impair our engine warranties," says Bradley. "Unfortunately, it seemed from the very beginning that the concerns of the consumer, in this case the trucker and the motor coach operator, were secondary to those of big-agribusiness which stands to gain handsomely from the mandate. The comments from the Minister of Agriculture give only give further credence to this."

The proposed regulatory amendment will be published in the Canada Gazette, Part I in the coming weeks for a 60-day public comment period. The Government of Canada is proposing a coming into force date of July 1, 2011.