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Biofuels and the clean fuel standard: a winning combination

By Jim Grey      

Well-designed, the clean fuel standard policy could set a global standard for carbon reduction. If Canada is sincere about wanting to lead the fight against climate change, increasing the existing biofuel mandates is a great place to start.

Natural Resources Minister Jim Carr, pictured. Climate leadership isn’t just about bringing in new policies like the clean fuel standard; it is also about strengthening the policies we already have, writes Jim Grey. The Hill Times photograph by Andrew Meade
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Prime Minister Justin Trudeau has declared that combating climate change is a top priority of the Government of Canada. Once in place, the federal government’s clean fuel standard (CFS) will be the most important weapon in the government’s arsenal in the fight to reduce greenhouse gas (GHG) emissions. It is therefore critical to get the policy right.

The overarching objective of the clean fuel standard is to achieve 30 megatonnes of annual reductions in GHG emissions by 2030, contributing to Canada’s effort to achieve its overall target of a 30 per cent reduction in GHG emissions below 2005 levels by 2030.

The CFS will encompass a broad range of fuels, including liquid, gaseous, and solid fuels, and will go beyond transportation fuels to include those used in industry, homes and buildings. But, with the transportation sector recognized as the second largest emitter of greenhouse gases, it is clear that for Canada to meet the ambitious commitments made in Paris two years ago, much of the progress will need to come from reduced emissions from transportation fuels.

With so much at stake, it is fortunate that a proven solution already exists: policies which mandate the use of biofuels—currently five per cent ethanol and two per cent biodiesel are included in Canadians’ fuel supply—are already contributing significantly to the reduction of GHG emissions from vehicles. In fact, the existing volumetric requirements already have an effect equivalent to removing one million vehicles from Canada’s roads. This substantial gain has been realized without imposing increased fuel costs for consumers or requiring any change to drivers’ behaviour or existing infrastructure.

Surprisingly, many countries such as South America’s largest countries and parts of Africa have higher blend requirements than Canada. China, faced with rapidly escalating GHG emissions and widespread air quality problems, recently indicated it would move to a 10 per cent blend by 2020. The U.S. (which employs a slightly different policy) has seen its requirement for use of renewable fuels go from eight billion gallons in 2008 to an estimated 25 billion gallons this year—a 300 per cent increase in 10 years. It is projected that U.S. biofuel consumption will increase to 36 billion gallons in 2022.

Here at home, thankfully, some provinces are showing leadership. Just last week, Ontario increased its ethanol mandate for gasoline to 10 per cent by 2020. Meanwhile, Quebec is poised to implement ambitious biofuels policies which seem certain to exceed the federal mandates on ethanol and biodiesel.

While Canada has had renewable fuel mandates in place for almost a decade, the initial requirements have never been increased. Once a leader in biofuel use, Canada now finds itself lagging behind over 40 countries, including all of Europe, that require higher blends of clean-burning renewable fuels than Canada.

In a September 2017 report, the Conference Board of Canada suggested a CFS should include mandates for biofuels. An October 2017 economic analysis showed that Canada’s domestic producers—already a $3.5-billion industry—would respond to a phased-in increase in renewable fuel mandates by investing in increased capacity. The benefits include more jobs, economic growth and reductions in GHG emissions.

Climate leadership isn’t just about bringing in new policies like the clean fuel standard; it is also about strengthening the policies we already have. It should be clear to government that renewable fuel mandates are an essential condition for a successful, comprehensive buildout of Canada’s biofuels industry, and that complementary measures, such as intensity based-regulations, can further amplify the buildout of this sector.

The CFS framework is weeks away. Well-designed, the policy could set a global standard for carbon reduction. If Canada is sincere about wanting to lead the fight against climate change, increasing the existing biofuel mandates is a great (and easy) place to start.

Jim Grey is chair of Renewable Industries Canada and CEO of IGPC Ethanol Inc.

The Hill Times 

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