Ontario is considering requiring that domestically produced renewable fuels make up 3pc of the province's diesel pool, an effort to help biodiesel producers struggling to adapt to policy changes in the US.
Ontario late last week requested input on a proposal to supplement existing provincial biofuel blend requirements with a new mandate for Canadian production, similar to a domestic content rule that took force in British Columbia this year. Ontario already requires that renewables like biodiesel and renewable diesel make up 4pc of diesel consumption each year, but this proposal would require that three-fourths of that mandated volume come from biofuels produced in Canada.
The Ontario Ministry of the Environment, Conservation and Parks says the proposal is in response to a new clean fuel tax credit that took effect in the US this year, which can only be claimed by US producers. A US Department of Agriculture report late last year said that there were six remaining operational biodiesel plants in Canada and that the industry has historically sent almost all its fuel into the US, which up until this year treated foreign biodiesel as eligible for a federal tax credit.
At the same time, US biofuels have increasingly entered Canada to meet demand from low-carbon fuel standards federally and in British Columbia. In those programs, higher-carbon fuels that exceed annual carbon intensity limits incur deficits that suppliers must offset with credits generated from approved lower-carbon alternatives.
The Canadian biofuel industry has pushed officials to respond. British Columbia as a result began requiring this year that renewables make up a minimum 8pc of diesel fuels supplied in the province, up from 4pc, and that this mandated volume must come from Canadian producers starting in April. British Columbia-based renewable diesel producer Tidewater Renewables has also unsuccessfully pushed Canada to impose duties on US product.
The Ontario environment ministry said the domestic mandate, if finalized, would be a "temporary, time-limited measure" that would last as long as US subsidies "threaten Ontario's biodiesel industry." The new US tax credit that excludes foreign refiners is currently set to lapse after 2027, but Republican lawmakers have floated using a massive budget bill they want to pass in the coming weeks to extend the incentive through 2031.
While full regulatory text is not available, as is typical for this early stage of the Ontario rulemaking process, it appears the proposal would otherwise keep intact the general structure of the province's biofuel mandate. The program offers more credit to lower-carbon fuels, which led to a slightly lower than 4pc biofuel blend rate for the diesel pool in 2023, according to a report from trade group Advanced Biofuels Canada. The domestic content proposal would also not affect a separate mandate that biofuels make up increasing amounts of the gasoline pool through 2030.
