The federal government has proposed amendments to Canada's Clean Fuel Regulations (CFR), but farm organizations and the renewable fuel industry say the changes fall short of what is needed to protect Canadian ethanol producers from heavily subsidized U.S. competition.
Announced Tuesday, the proposed amendments include a 1.3-times credit multiplier for Canadian-produced ethanol, below the minimum 1.4-times multiplier sought by Grain Farmers of Ontario, the Farms and Fuels Alliance and Renewable Industries Canada (RICanada).
The changes are intended to improve the competitiveness of domestic low-carbon fuel producers while encouraging investment and reducing greenhouse gas emissions.
Draft regulations will be published in the Canada Gazette on Oct. 30, followed by a 75-day public consultation period.
RICanada welcomed the proposed multiplier as an important step but warned it would not fully offset the competitive advantage enjoyed by American producers through the U.S. 45Z Clean Fuel Production Credit.
"Canada has recognized the competitive disadvantage facing domestic ethanol producers and adopted a mechanism to address it. That's important progress," Andrea Kent, RICanada past president and board member, said in a release. "But recognizing the problem and closing the gap are two different things."
According to RICanada, U.S. ethanol producers are receiving production tax credits equivalent to approximately 35 Canadian cents/litre, compared with an estimated 12 cents in additional credit value under Ottawa's proposed multiplier. The organization is urging the government to increase the multiplier to at least 1.4-times in the final regulations.
The issue is particularly important for Ontario corn farmers, as ethanol production consumes roughly one-third of the province's corn crop.
Industry groups estimate U.S. ethanol exports to Canada could reach approximately 4 billion litres and warn that more than $1 billion in potential Canadian processing investment could be affected by the regulatory decision.
The proposed amendments also include measures supporting sustainable aviation fuel, renewable diesel and other low-carbon fuels.
Ottawa says the CFR credit market has grown to more than $3 billion, supporting investment in renewable fuels, agriculture and clean technology.
However, RICanada cautioned that expanded compliance flexibility could weaken credit values and undermine incentives for new domestic investment.
