USDA GAIN publishes annual report on Canadian ethanol industry

By Erin Voegele | December 26, 2014

The USDA Foreign Agricultural Service’s Global Agricultural Information Network has published an annual report on the Canadian biofuels industry. The report highlights the current state of the Canadian biofuels industry.

The report predicts ethanol production in Canada will increase 1 percent in 2014, reaching nearly 1.75 billion liters (460.98 million gallons). The growth is attributed to increased operational efficiencies. Moving into 2015, the report indicates production is expected to hold steady at 2014 levels.

The GAIN report indicates Canada’s ethanol industry currently has 1.8 billion liters of production capacity in place. That level is expected to be maintained in the future unless there is a substantial change in economics.

According to the report, Canadian production is not sufficient to meet domestic blending targets. Since late 2010, the country has had a 5 percent federal mandate for ethanol. Many provinces have equal or higher mandates, with Saskatchewan requiring 7.5 percent and Manitoba requiring 8.5 percent. To meet those mandates, Canada must import more than 2 billion liters of ethanol.

The report also indicates corn and wheat remain the primary ethanol feedstocks in Canada. While commercial-scale production of cellulosic ethanol from wood waste and solid waste is now feasible, the report notes methanol is currently being produced instead for economic reasons at Enerkem’s cellulosic biorefinery in Edmonton, Alberta.

According to the report, environmental objectives, rather than energy security, have been the driving force behind government polices to encourage biofuel production and use. To a lesser extent, renewable fuels policies have also served as means to encourage rural economic development.

As of this year, Canada has 15 first-generation ethanol plans. No additional plants are expected to come online next year. Together, those plants have a nameplate capacity of 1.8 billion liters, with 2014 and 2015 utilization rates expected to reach 97 percent. In addition to fuel, the Canadian ethanol industry is also expected to produce 1.1 million metric tons of distillers dried grains this year, along with 650,000 metric tons of wet distillers grains and 6,000 tons of corn oil.

Approximately 3.25 million tons of corn has been used to produce ethanol in Canada this year, with that volume expected to be maintained in 2015. This year, the Canadian ethanol industry also processed an estimated 1 million tons of wheat. That volume is expected to remain steady in 2015.

Canada is expected to consume 3.106 billion liters of fuel ethanol this year, increasing to 3.110 billion liters next year. The nation’s overall blend rate for this year is expected to reach 7.1 percent, with the blend rate in 2015 expected to drop slightly to 7 percent.

The report explains that the production of corn oil coproducts in Canada has not followed the trend in the U.S. due in part to the fact that Canadian Feed Regulations require that dried distillers grains have a minimum energy content that requires more oil to remain in the feed product.

The report also specifies that in recent years, all bioethanol trade for Canada has been with the U.S. The analysis, however, finds little likelihood that significant increases of trade will occur between the northwestern U.S. and western Canada where U.S. corn-based ethanol is sold in Canada and Canadian wheat-based ethanol is sold in the U.S.