Final Thoughts Growth potential By Ian Thomson, President, Advanced Biofuels Canada Biofuels outlook grows under Canadian Clean Fuel Regulations O n July 1, 2023, Canadian’s access to low carbon fuels will get a boost when the Clean Fuel Regulations (CFR) come into force. The regula-tion will require fossil fuel suppliers to gradually reduce the carbon content of the gasoline and diesel they market. To generate “compliance credits”, they can supply electricity, renewable natural gas, and hydrogen to alternative fuel vehicles, and they can employ technologies such as carbon capture at fossil fuel produc-tion facilities. The option expected to see the largest near-term response to the regulation is the blending of biofuels and renewable synthetic fuels into gasoline and diesel. Annual economic impact from domestic biofuel production could almost triple to $5.3 billion by 2030… The potential impact of the CFR on the biofuels sector can be seen in other markets with similar regulations, such as British Columbia and California. Biofuels create more than 80 per cent of credits in those markets; and, in B.C., the last half decade of the Low Carbon Fuel Standard (LCFS) has seen biofuel blending grow faster than anywhere else in Canada. The B.C. LCFS is expected to represent over 30 per cent of the total reductions under the CleanBC Roadmap to 2030. In the California LCFS, renewable content in the diesel pool is approaching 30 per cent. The B.C. LCFS has directly incent-ed over a billion dollars of investment in new advanced biofuel and feedstock production, including investments by the forestry sector and utilization of new cellulosic feedstocks that are diversifying sources beyond traditional starches, fats, and oils. Advanced Biofuels Canada’s annual capital projects survey (November 2021) portrays the scale and pace at which the sector could grow by 2030 under pro-vincial and federal mandates. Annual economic impact from domestic biofuel production could almost triple to $5.3 billion by 2030, and Canada’s production capacity could move from 2.5 billion li -tres in 2020, to 10 billion litres by 2025, and over 12 billion litres by 2030. The extent to which the CFR will in-cent additional biofuel production and consumption will be impacted by electric vehicle charging and renewable natural gas crediting. For exam-ple, ZEV mandates are expected to bring significant new cred -iting into the CFR as B.C., Quebec, and federal mandates put more EVs on the road. The diesel and gasoline pools have different drivers with respect to prospects for higher biofuel blending. Canada’s overall ethanol blending rate of 7.3 per cent (2021, est.) is consid-erably below the U.S. rate of just above 10 per cent. The compatibility of 15 per cent blends (E15) with every light-duty vehicle produced since 2001, and cred-it values under the U.S. RFS, has seen rapid growth of E15 retail availability in the U.S. By contrast, Canada has no retail E15 availability, despite an identical fleet profile. These data make clear that ethanol consumption can increase substantially in Canada; this outlook is supported by mul-tiple technologies entering the market that will substantially lower ethanol’s carbon intensity (CI) and maintain ethanol’s rel-evance to reducing emissions. Over time, EV adoption will reduce gasoline pool de-mand, but that impact will remain modest through to 2030. Biodiesel and renewable diesel fuels also have significant growth potential under the dual influence of the CFR and provincial mandates. Canadian blending rates for the broad class of biomass-based diesel fuels is at 3.7 per cent (2021, est.), which is closer to the U.S. rate of 4.5 per cent. Given widespread use in some U.S. regions of mid-level biodiesel blends (B6 to 20, and R100 (pure renewable diesel), biomass-based diesel fuels can expand significantly in Canada, especially in sectors with dependence on energy dense liquid fuels such as aviation, rail, marine, and long-haul road transport. In addition, Canada’s carbon price on fuels can substantially improve the economics of biofuel blending. The cur-rent price of $50/tonne adds $0.11/L and $0.13/L respectively to gasoline and die-sel pump prices. Biofuel blends above 10 per cent in gasoline and five per cent in diesel are exempted from the carbon tax; as the carbon tax increases to $170/tonne by 2030, biofuels will get a boost on cost competitiveness. Over the past decade, biofuels in Can-ada have had to overcome significant hurdles to wider adoption, with well-es-tablished supply, fuel quality, and sustain-ability standards now in place. Advanced biofuels have an indispensable role in a net-zero future – see netzerocleanfuels.ca – which bodes well for the sector in the decade ahead and beyond. • For more opinions, profiles, and daily biomass news, visit www.canadianbiomassmagazine.ca 22 Canadian BIOMASS FALL 2022
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