The opportunity of the Clean Fuel Standard all comes down to land use requirements

This week has featured a major debate in farm country regarding the Clean Fuel Standard (CFS), for which regulations are slated to be published this fall in the Canada Gazette. There are many potential outcomes to be excited about regarding the biofuel policy, but there are signifiant concerns from farmers and some farm groups on the land use and biodiversity (LUB) requirements still being negotiated, driven largely by the Ministry of Environment and Climate Change.

As far as our editorial team is concerned, the objectives and possible outcomes of the CFS break down like this:

  • Decrease the overall carbon footprint of fuel used in Canada
  • Increase demand for Canadian agricultural feedstocks from multiple geographies

It’s important to take a step back and break down the CFS from all of the different points of view. By regulating the use of biofuel, including biodiesel and ethanol, the Canadian government is attempting to reduce the carbon intensity of fuel sold here. This could potentially lead to increasing biodiesel inclusion from 2 per cent to 11 per cent and ethanol blended in gasoline from 5 per cent to 15 per cent, which would create a significant increase in biofuel feedstock demand.

Part of the proposal includes land use and biodiversity requirements.

  • The LUB requirements are important to give farmers the road map to comply and provides the industry ways to calculate the reduction in carbon released into the air during the production of feedstocks for different biofuels.

However:

  • If the LUB requirements are set out of sight of reality, Canada may struggle to meet the increased mandates with domestic feedstocks.
  • The biofuel lobby is completely on board with the CFS, but is still working to negotiate the details, which right now is focused on feedstocks and land use requirements.
  • The Minister of Agriculture and Agri-food will be presented with the challenge of possibly being on the opposite side of the debate from the Minister of Environment and Climate Change.
  • There are regional differences in terms of production that need to be acknowledged. Canola has been already working under a sustainability agreement for canola exports to the EU for its biodiesel industry, while crops such as corn have not.
  • The current LUB requirements in the draft present major challenges for feedstocks grown on relatively new farmland to be included in CFS. If left unchanged, it would restrict the use of farmland that was previously wetland, forest, or grassland before a certain date, as well as require land for a certain distance along waterways to be left unfarmed. With urban encroachment paving over good farmland and the inability to clear trees or brush to create more land under the CFS, less qualifying acres would be available every year.

What needs to be avoided:

  • If the cost or bar for meeting the land use rules is too high, we could see an increase in feedstock imports to fulfill the needs of biofuel producers.
  • Bypassing both Canadian feedstocks and ethanol to import ethanol from other countries due to a set of high restrictions.
  • Not recognizing the large bio-fuel industry in the neighbouring U.S. and ignoring the opportunity for parallel regulatory requirements.

What’s next:

  • Government plans to introduce the regulations for the normal 75-day comment period sometime this fall. It will likely be mentioned in the throne speech next week.

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