The next decade holds plenty of possibilities for the Canadian canola market, but not all of them are positive.
With innovations in the aviation fuel industry and expansion of biofuel refinery capacity, such as Imperial Oil developing a new facility at its Strathcona refinery near Edmonton, Alberta, canola as a biofuel is a game-changer, says Will Holowaychuk, policy analyst for Alberta Canola at Crossroads Crop Conference at Edmonton, Alta.
While the Canadian market for biofuels remains, with the new facility potentially requiring 2.5 million metric tons of canola seed, says Holowaychuk, there is major volatility in the market overall, as the United States implements rules that may deter Canadian canola use.
Section 45Z, the Clean Fuel Production Credit, under the Inflation Reduction Act in the United States, marks a shift from the previous Blender’s Tax Credit to a Producer’s Tax Credit with carbon-intensity and country-of-origin restrictions that has left Canadian canola oil and biofuel producers and refiners on the outside looking in when it comes to exporting this resource. Further clarity was given in early January on what these policies will entail, including what the types of feedstock commodities for biofuel production would be, Holowaychuk says.
“We are, unfortunately, in a time where we are dealing with possibilities and probabilities of those possibilities… we’re now just dealing with the ramifications of a market that is pricing in a different subsidy than what… used to be there,” he says when asked what 45Z might hold for the future of Canadian canola.
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