Report: Canadian ethanol production, use forecast up in 2019

By Erin Voegele | August 20, 2019

A report recently filed with the USDA Foreign Agricultural Service’s Global Agricultural Information Network provides an overview of Canada’s biofuel industry and the country’s changing biofuels policy framework.

Canada is currently in the process of developing a Clean Fuel Standard, which will enact a carbon intensity approach when accounting for the quantity of blended renewable fuel. Once finalized, the CFS will replace the volumetric approach currently in place under Canada’s federal renewable fuels regulations.

Environment and Climate Change Canada released the regulatory design paper for the CFS in December 2018. Separate requirements are expected to be put in place for liquid, gaseous and solid fuels. The ECCC released a cost-benefit analysis framework (CBA) for the CFS in February 2019. Information revealed on the CFS regulations to date indicates the program will reduce the carbon intensity of liquid fuels to be reduced by 10 grams of carbon dioxide equivalent per megajoule below the reference carbon intensity (year 2016) by 2030.

“Under the proposed CFS, separate carbon intensity requirements would be established for subsets of fuels in the following sectors: transportation, building requirements, and industry,” said the authors in the report. “The proposed CFS will not differentiate between crude oil types that are produced domestically or are imported. The federal government will maintain national blending mandates in the short-term, establishing an ‘expiration date’ for the volumetric requirements through consultations with stakeholders.”

Proposed CFS regulations for the liquid fuels are expected to be published in mid-2019, with final regulations published in mid-2020. Regulations for gaseous and solid fuel streams will be established at a later date.

Currently, Canada’s federal renewable fuels regulations require fuel producers and importers to have an average ethanol content of at least 5 percent based on the volume of gasoline produced or imported. The federal regulations also require 2 percent renewable content based on the volume of diesel fuel and heating distillate oil fuel producers and importers produce or import.

Several provincial blend mandates are also in place. Manitoba has an 8.5 percent ethanol blend mandate for gasoline, while Saskatchewan has a 7.5 percent mandate and British Columbia, Alberta, and Ontario each have a 5 percent mandate. For renewable blends in diesel, British Columbia and Ontario have a 4 percent mandate, while Alberta, Saskatchewan and Manitoba each have a 2 percent mandate.

Canada will produce an estimated 1.83 billion liters of fuel ethanol this year, up from 1.75 billion liters in 2018. Imports are expected to reach 1.37 billion liters this year, down from 1.39 billion liters in 2018. Fuel ethanol consumption is expected to reach 3.2 billion liters this year, up from 3.14 billion liters in 2018. The U.S. supplies essentially all of Canada’s fuel ethanol imports.  

Canada currently has 13 ethanol plants in operation, a number that has been stable since 2015. Nameplate capacity, however, is up. Capacity is expected to reach 2.15 billion liters this year, up from 1.97 billion liters in 2018 and 1.872 billion liters in 2017. Capacity use is expected to be at 85 percent this year, down from 89 percent in 2018 and 92 percent in 2017.

The overall ethanol blend rate in Canada is expected to reach 6.6 percent this year, up from 6.4 percent in 2018 and 6.2 percent in 2017.

A full copy of the report can be downloaded from the USDA FAS GAIN website.