Photo: Tidewater Renewables.

develop a new biofuel refinery in Prince George.

Canada is well-positioned to benefit both environmentally and economically from a growing biofuel industry, but it faces risks if it increases biofuel production in a sustainable and competitive way, a new report warns by Werner Antweiler of the Sauder School of Business at the University of British Columbia. .

Although biofuels can play an important role in decarbonizing transportation, they can have negative environmental impacts and impacts on food production, Antweiler notes in a statement. new reportt for the CD Howe Institute.

On the other hand, biofuels could benefit farmers in the Prairie provinces through the production of energy crops, such as canola, on marginal agricultural lands, foster new biofuel refining companies, such as the Tidewater Renewables refinery in Prince George, and enable significant reductions in transport emissions. .

Biofuels can be made from food crops like corn, animal fats, biowaste, and non-food crops like wood waste.

Antweiler notes in his report that biofuel production can “either alter or increase agricultural land use, which can have negative impacts, including deforestation, which can reduce natural carbon sinks.” Expanding the boundaries of agricultural production can also trigger new land conflicts with local or indigenous communities.

“On the other hand, it creates a new market with new job opportunities and potential for economic growth, and it can help reduce carbon dioxide emissions. It can also improve Canada’s energy security and stabilize energy prices.

Biofuels could offer Prairie farmers new markets for energy crops like canola, which can be grown on more marginal farmland.

Antweiler noted that China is a major importer of Canadian canola oil, but increasing trade restrictions could result in the loss of that market.

“Chinese imports of canola from Canada are subject to the greatest threat of retaliation, and so developing a new domestic market for canola would really help the industry ensure that it is not subject to trade retaliation “, he said.

Antweiler said there are essentially two generations of biofuels. The former include ethanol and biodiesel. Next-generation biofuels include renewable diesel, biomethane and sustainable aviation fuels.

Biodiesel and ethanol are fuel blends that can reduce the carbon intensity of gasoline and diesel, but cannot replace them entirely, while renewable diesel is a booster fuel chemically identical to manufactured diesel from fossil fuels. These fuels can play a huge role in decarbonizing transportation, Antweiler said.

The low carbon and clean fuel standards that have been implemented provincially – in British Columbia and Alberta – as well as the new federal standards are important climate action tools that, according to Antweiler, are more effective than carbon pricing.

“I feel like carbon pricing hasn’t been particularly effective for the transportation sector,” Antweiler said.

“They (the low carbon fuel standards) are very effective because if you reduce the emissions intensity of fuels by 30% by 2030, that would have a significant effect. Even if you don’t have other policies in place, like carbon pricing, then it’s extremely crucial to have other policies that actually change the intensity of our emissions.

A number of new biofuel refineries are being built or planned in British Columbia and Alberta.

Imperial is building a $720 million renewable diesel refinery in Edmonton at the Strathcona Refinery, which will use canola, soybean, sunflower oils and hydrogen – produced from natural gas with facilities carbon sequestration – to make renewable diesel.

In Prince George, Tidewater Renewables has built a new refinery that will produce renewable diesel from canola, tallow and tall oil (a byproduct of kraft pulping).

“Several projects underway here in Canada will significantly increase R&D production over the coming years,” said Antweiler.

Parkland Fuel Corp. (TSX:PKI) also has a small biofuel facility that makes its fuel from products like animal waste.

In 2022, Parkland announced plans to expand this capacity with a $600 million biofuel refinery, but the project was abandoned in 2023, due to market uncertainty and new U.S. policies that could favor the production of biofuels in the United States, excluding Canadian biofuels.

“For various reasons, mainly due to competition from the United States, they don’t really see that happening in B.C. yet,” Antweiler said.

The U.S. Inflation Reduction Act includes a section that encourages the production of next-generation biofuels in the United States. Canadian producers may not be eligible for these incentives, and it is entirely unclear what the Donald Trump administration will do with these policies.

“The question is: are we confined to the Canadian market or can we also deliver to the American market? » said Antweiler. “That’s the billion-dollar question.”

Antweiler said policy harmonization between the United States and Canada, as well as within Canada, will be necessary to support the Canadian biofuels industry.

Because of the significant impact that biofuels could have as a climate action tool, it is important that the low carbon and clean fuel standards that have been adopted at the federal and provincial levels are not only maintained, but also harmonized.

In the lead-up to the recent provincial election in British Columbia, BC Conservative Party Leader John Rustad pledged to scrap not only B.C.’s carbon tax, but also the carbon standard on low carbon fuels.

Antweiler said he hoped federal Conservative Party Leader Pierrie Poilievre would have “a more nuanced view” of these policies than Rustad.

“I don’t think he fully appreciates the effect of this policy in terms of opportunities for Canadian producers,” Antweiler said. “I think it’s an industry that can create a lot of jobs, so I think people like John Rustad should think about it very seriously, rather than rejecting all climate policies. Some of them actually present considerable market potential for Canada.

“A federal party has said it wants to abandon carbon pricing, at least for the transportation sector, and that means we need different policies that will move us toward a cleaner future. And the opportunities are, firstly, biofuels and, secondly, electric vehicles. They are the game changers.

“If carbon pricing disappears overnight, at least for the non-industrial sector, then we need these two mandates – the biofuel mandate and the zero-emission vehicle mandate – to really move us forward. It’s the two remaining games in town that could really shake things up.