Canadian government "closely monitoring" U.S. ethanol discussion

The issue:

The Canadian government says it is closely monitoring U.S. biofuel policy discussions, but isn’t publicly saying whether it would challenge a proposed policy that the Canadian biofuel industry says would amount to an export subsidy for American ethanol.

As part of the ongoing negotiations between U.S. energy and agriculture interests over the future of the Renewable Fuel Standard, Ted Cruz (R-TX) and refiners are pushing for RINs to be attached to ethanol exports. (RINs or Renewable Identification Numbers are assigned to a batch of biofuel, and can be traded or sold.) Members of the U.S. ethanol industry are concerned this could be interpreted by other countries as a violation of World Trade Organization rules.

From Canada’s perspective:

The problem is Canadian ethanol would be placed at a competitive disadvantage to imports from the U.S. if the American biofuel industry is given additional incentive to export ethanol. Canadian ethanol producers, who buy a significant amount of Canadian corn, would have to compete with cheaper ethanol from the U.S. if there’s a subsidy effect from any change to RFS policy.

“While there is substantial opposition from within the U.S., if implemented, this policy — which is effectively an export subsidy — would unfairly disadvantage Canada’s domestic biofuel producers,” Jim Grey, chair of Renewable Industries Canada — the lobby group of the Canadian biofuel industry, told RealAgriculture last week.

The Canadian government “is closely monitoring developments on this proposal and is seeking more information on the matter through engagement with industry stakeholders and American government officials,” says a statement from Global Affairs Canada, sent on Thursday in response to an inquiry submitted last week.

The department stopped short of saying whether Canada would challenge the policy, should the U.S. go ahead with it.

Canada is one of the top two export markets for U.S. ethanol. In 2017, Canada accounted for around 24 percent of U.S. ethanol exports, second only to Brazil.

Related: Would Canada challenge Ted Cruz’s plan to attach RINs to U.S. ethanol exports?

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