Canola oil has been approved for use in advanced biofuels under the Renewable Fuel Standard (RFS) program in the US, something that is expected to increase demand for seed.
In a release Thursday, the Canola Council of Canada said the US Environmental Protection Agency (EPA) delivered the final rule that canola oil-derived renewable diesel, sustainable aviation fuel, and other biofuels qualify as “advanced biofuels” under the RFS program. The EPA’s assessment confirmed that greenhouse gas emissions from fuels derived from canola oil far exceeded the 50% reduction threshold when compared to fossil-based fuels.
“This pathway positions canola to do more for the environment and our entire canola sector as it helps diversify markets and support value added processing,” said CCC President Jim Everson.
Chris Vervaet, Executive Director of the Canadian Oilseed Processors Association, said it remains uncertain just how much extra demand the US biofuel market may generate for canola, but suggested it will be “significant.”
Partially fueled by expectations of expanding biofuel demand, Canada’s canola crush capacity is projected to increase by a whopping 50% to 16.8 million tonnes by 2025-26, thanks to new or expansion projects from Cargill, Viterra, Richardson and Federated Co-op.
The CCC worked in coordination with the Oilseed Processors Association on a US Canola Association petition to the EPA in 2020 to approve canola oil as a feedstock for renewable diesel, jet fuel and other biofuels. Vervaet said efforts have been ongoing for years to open the US biofuel market to canola oil, a development that should lessen reliance on China, which has been a big, but often uncertain buyer, of Canadian canola.
Meanwhile, an EPA proposal today raised the US biomass-based diesel blending mandate only slightly for the next three years, rising from this year's 2.76 billion gallons to 2.82 billion in 2023, and 2.89 billion in 2024 and 2.95 billion in 2025. The relatively minor annual increases were considered a major disappointment, with soyoil futures – a key leading indicator for the Canadian canola market - down hard in reaction to the news.
However, Vervaet said he still considers the EPA decision on canola very good news.