RICanada has ‘mixed reaction’ to Ottawa’s $776 million in funding for clean fuels

The recent federal budget is being met with “mixed reactions” by Renewable Industries Canada (RICanada). It noted that Ottawa has included $776 million towards a retooled Clean Fuels Funding program to support renewable diesel (RD), sustainable aviation fuel (SAF), and renewable natural gas (RNG).

However, it said it has “serious concern” over the apparent exclusion of ethanol among the supported biofuel categories.

“The Canadian ethanol industry, a critical component of our national biofuels landscape and a major economic contributor, faces significant risks from this exclusion, particularly in Ontario,” RICanada said in a press release. “Local ethanol production not only supports rural economies but also offers a cost-effective method for significant emissions reductions in the transportation sector.”

Key points from RICanada in light of the 2024 budget

Economic impact: The biofuels sector in Canada generates billions of dollars in economic impact and supports tens of thousands of high-quality jobs, mainly in rural areas of Canada. Ethanol production provides a steadfast market for Canadian farmers, enhancing local agriculture and production facilities, it said.

Competitive disparity: The recent budget’s exclusion of ethanol will likely open the Canadian market to heavily subsidized imports, mainly from the United States, where the Inflation Reduction Act (IRA) incentivizes biofuel production including ethanol. This could undermine Canadian producers and rural economic stability, it said.

Global competitiveness and market stability: Aligning Canada’s biofuel incentives with those of nations like the United States is essential to secure Canada’s position in the global clean fuel market and to prevent outsourcing of potential investments. The omission of ethanol from the incentive framework skews the market in favour of imports, it said.

“RICanada appreciates the recognition from Deputy Prime Minister and Finance Minister Chrystia Freeland in yesterday’s budget, emphasizing the critical role and need to scale up biofuel production and innovation in Canada,” it said. “We are eager to continue our collaboration with the federal government to refine the Clean Fuels Funding program and for the integration of biofuels into Investment Tax Credits (ITCs), in addition to promoting the establishment of incentives for SAF and RD biofuel production infrastructures. These measures are crucial in catalyzing the growth of the industry, generating employment, and expanding economic opportunities throughout Canada.”

About RICanada

Founded in 1984, Renewable Industries Canada (RICanada) is a business coalition representing Canada’s first and foremost biofuel producers. RICanada membership includes the country’s largest and most innovative renewable fuel producers and industry experts. Member companies produce low-carbon ethanol, biomass-based diesels, sustainable aviation fuel, are innovating towards clean hydrogen production, and have $15 billion worth of prospective projects in Canada.