Ethanol excluded from biofuel production incentives in federal budget, says biofuel industry group

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The development of Canada’s biofuel sector was highlighted in the Canadian government’s 2024 budget announced on April 16th, but ethanol was notably absent from the list of renewable fuel categories that will receive support.

The budget included a commitment of $776 million for a retooled Clean Fuels Fund to drive production of renewable diesel, sustainable aviation fuel, and renewable natural gas, but ethanol was not mentioned.

Renewable Industries Canada (RICanada, formerly the Canadian Renewable Fuels Association) has issued a statement saying it has “serious concern over the apparent exclusion of ethanol among the supported biofuel categories.”

The exclusion creates significant risk for Canada’s biofuel sector, especially in Ontario, and could skew the market toward more imports, says RICanada.

“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,” the biofuel group says. “This could undermine Canadian producers and rural economic stability.”

The group says Canada’s biofuel incentives should be aligned with those in the U.S. to secure Canada’s position in the growing clean fuel market.

The government also said it intends to disburse up to $500 million per year from Clean Fuel Regulations compliance payment revenue to support biofuel production.

While concerned about ethanol being left out, RICanada says it appreciated the recognition from Deputy Prime Minister and Finance Minister Chrystia Freeland in the budget, and is eager to continue working with the federal government to refine the Clean Fuels Fund program, to integrate biofuels into Investment Tax Credits (ITCs), and to promote the establishment of incentives for sustainable aviation fuel and renewable diesel production facilities.

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