Will the future be electric or driven by canola?

New fuel standard will give canola a major boost, but electric vehicles are a rival

“We have a chance to diversify our markets and sell canola to the size of the Japan market right in our backyard.” – Chris Vervaet.
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Biofuels aren’t the only clean energy game in town, and a hoped-for boost for canola as a biofuel feedstock might be tempered by a surge in demand for electric vehicles.

In December, the federal government released details of its Clean Fuel Standard, which ups the amount of biofuel in diesel. That prompted predictions it could boost canola demand by two million tonnes annually.

But just a month later, GM shocked the automotive world by pledging to go all electric by 2035. And that prompted predictions that sales of electric vehicles are poised to soar and use of auto fuels to fall accordingly.

So while the canola sector is hopeful of adding a big new market, the future isn’t easy to predict, says a clean energy expert.

“The Clean Fuel Standard is technology neutral — you can comply with it using biofuels, but there’s also the possibility to comply with it using electrification,” said Michael Wolinetz, a partner at Navius Research, a Vancouver company that does analysis and modelling on energy and the environment.

“There’s a multi-faceted approach to compliance, which potentially means that the policy won’t have as big an incentive on growing the market for biofuels.

“It’s definitely going to help, but it’s not going to be catapulting biofuels into a whole other scale.”

Right now in Canada, roughly 500,000 tonnes of canola are used for biofuels, with federal rules mandating a two per cent blend of biodiesel in diesel and a five per cent blend of ethanol in gasoline. (Some western provinces require even higher blends.) The Clean Fuel Standard could see the blend rate increase to 10 per cent, which would translate into a 2.5-million-tonne demand for canola seed by 2030.

Chris Vervaet. photo: Supplied

“We have a chance to diversify our markets and sell canola to the size of the Japan market right in our backyard,” said Chris Vervaet, executive director of the Canadian Oilseed Processors Association.

“There’s certainly the potential for the Clean Fuel Standard to be a game changer with regards to the demand for biofuels in Canada. The potential is there.”

But the extra two-million-tonne figure is based off current use of diesel, and more electric vehicles will mean less demand for that fuel. Both GM and Ford are introducing electric pickup trucks this year and Tesla is developing its ‘Cybertruck.’

However, there’s room for both biofuels and more electric vehicles in Canada’s clean energy sector, said Wolinetz.

“When we talk about climate change solutions, I don’t think there’s a silver bullet — it’s more of a silver buckshot,” he said. “There’s a need for energy-dense fuels for applications where electrification or even hydrogen are not that attractive, and these aren’t going to go away.

“Demand for aviation, marine, and heavy-duty trucking are an important part of the economy, and having a way of reducing greenhouse gas emissions from those sectors is going to be really important come 2030 and beyond. That’s the role for biofuels.”

California’s case study

Even if Canada doesn’t reach the heights of its 10 per cent blending target, the Clean Fuel Standard will likely create a larger incentive to blend biofuels — and possibly to build the infrastructure to make biofuels.

“It’s really hard to say exactly what this looks like in terms of the build-out of processing,” said Wolinetz. “It could turn into additional processing plants popping up in Alberta, or it could end up being some investment made at the existing refineries that allow them to do it.”

That’s what happened in California following the introduction of its Low Carbon Fuel Standard in 2007.

GM, which is pledging to go all electric by 2035, will start selling its Hummer EV this year while Ford is aiming to have an electric F-150 on the market next year (and a Chevy electric pickup is also in the works). If electric pickup trucks catch on, it could indirectly affect demand for biodiesel. photo: GM website

“A lot of the existing refineries there are starting to retool themselves in order to produce a renewable diesel stream,” said Wolinetz.

“So you might still see the vegetable oil being processed in Canada, but that doesn’t necessarily turn into a new processing plant in rural Alberta. This would probably be located at the existing refineries.”

The largest biodiesel plant is ADM’s facility at Lloydminster, which has a production capacity of 265 million litres annually.

The California example shows what’s possible for Canada if we get it right, said Vervaet.

“With that Low Carbon Fuel Standard being in place in California for the better part of 10 years now, the build-out of biofuel and renewable diesel capacity is really starting to take hold,” he said. “We see that transpiring now at a pretty fevered pitch in the United States, and that’s all centred on this Low Carbon Fuel Standard in California.

“Using that as a proxy, we don’t see any reason why we wouldn’t see those types of similar investments happen in Canada — as long as we get the detailed elements of the Clean Fuel Standard right.”

And that’s the current challenge facing Canada’s canola-processing sector.

The Clean Fuel Standard in its draft form contains sustainability criteria, and if that results in a lot of additional documentation requirements, it would blunt the demand signal, said Vervaet.

“We are already sustainable,” he said. “We don’t see the need for some of this other documentation.”

But it could go the other way and lead to farmers receiving credits, and that would be a win win, said Wolinetz.

“The standard accounts for the greenhouse gas emissions along the supply chain, and it’s going to provide a reward for growers who are already doing things that reduce life cycle greenhouse gas emissions — tilling in a way that preserves soil carbon, optimizing the fertilizer they’re using,” he said.

“It will more broadly provide an incentive for people to be doing those sorts of things.”

Vervaet hopes Ottawa will listen to the canola sector as the details of the new fuel standard are worked out.

“We have some questions that need to be addressed, and there are some issues that still need to be resolved,” he said.

“We still have some concerns as a canola industry that the regulation needs to be tweaked to ensure that it does provide a proper demand signal for canola-based biofuel use in Canada.”

About the author

Reporter

Jennifer Blair

Jennifer Blair is a Red Deer-based reporter with a post-secondary education in professional writing and nearly 10 years of experience in corporate communications, policy development, and journalism. She's spent half of her career telling stories about an industry she loves for an audience she admires--the farmers who work every day to build a better agriculture industry in Alberta.

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