The Ontario government has posted a proposal to restrict biodiesel to Canadian-produced fuel.
It specifically intends to exclude biodiesel from the United States because the Ontario government claims it is subsidized and is driving Canadian competitors out of the market.
In a posting on its regulatory proposals website, the government said:
“Subsidies for U.S. biofuel producers, specifically the 45Z tax credit under the U.S. Inflation Reduction Act, threaten to shut down Ontario’s biodiesel production.
“The U.S. 45Z tax credit provides significant subsidies to American producers of cleaner fuels, such as ethanol, biodiesel, sustainable aviation fuel (SAF), and other transportation fuels. Such subsidies are not available to Canadian producers. The credit is awarded on a per-gallon basis, with the amount varying based on the fuel's lifecycle greenhouse gas emissions and whether a facility has satisfied labour requirements.
“Renewable fuel policies such as the federal Clean Fuel Regulations (CFR) and provincial policies including those in Ontario, BC and Quebec are driving demand for increased volumes of renewable content such as ethanol and biodiesel in Canada. The 45Z tax credit is offering U.S. producers a strong competitive advantage over Canadian producers in this growing market for clean fuels. This is impacting the operational viability of Ontario’s facilities. The continued presence of U.S. subsidies could result in permanent closure of Ontario’s biodiesel facilities and impact Ontario’s resource recovery objectives if no action is taken.
“In this policy proposal, we are seeking feedback on a domestic renewable content requirement for diesel fuel placed in the Ontario market. Ontario is proposing to require three per cent of the renewable content required in diesel fuel to be produced in Canada. This requirement represents 75 per cent of the renewable content that is currently blended in diesel fuel. This enables the continued processing of some Canadian waste feedstock at clean fuel facilities in Ontario.
“Local biodiesel facilities are critical players in sustaining a circular economy in Ontario. A circular economy is one where waste streams can be harnessed to produce value-added products, such as clean renewable fuels. Some feedstocks in biofuel production may be supplied from Ontario’s waste streams (e.g. animal fats, used cooking oil and organics).
“The proposed domestic renewable content requirement would help maintain and sustain a circular economy in Ontario by supporting the continued operations of Ontario biodiesel facilities, which have a key role to play in effectively managing Ontario’s waste streams. This policy could also help recover more waste as a resource and is necessary to enable longer-term innovation and development of Ontario’s circular economy.”
