Two years ago biodiesel was all the rage and the canola industry had great hopes for the development of a profitable canola biodiesel processing industry in western Canada. The price of oil was well over $100 per barrel and the price of the feedstock, canola oil, was in the range of $800 per tonne. Biodiesel producers could easily pencil out a profit. Then the price of oil crashed, the price of canola oil went through the roof, reaching over $1200 per tonne, and the economics of biodiesel, especially canola biodiesel, no longer worked.
It was easy to rally the industry when the profits were clear. It is much harder when the margins are negative and the markets are thin. In the U. S. and Europe, over 65 per cent of the biodiesel plants are idle.
Even though there is little fanfare these days, the canola industry, the Canola Council of Canada and the Canadian Canola Growers Association, continue to push for the regulations and policies that we need for the development of a canola biodiesel industry in Canada.
Canada consumes approximately 15 million litres of biodiesel, primarily in B. C. and Ontario. Biodiesel will be an important market that we need for the growth and development of the canola industry overall, but most importantly, for supporting profitable farmers and contributing to a better environment.
So where are we now? First on the scene will be B. C. with a five per cent (B5) requirement for biodiesel by January 1, 2010. Next will be federal regulations that will set a five per cent requirement for biofuels (including biodiesel) by 2010 based on the gasoline pool, followed by a two per cent requirement specific for biodiesel in 2011 or 2012.
In Alberta, the Alberta Canola Producers Commission and the CCC supported a provincial renewable fuel standard that will require two per cent biodiesel blends by July 1, 2010. In addition, Alberta has also extended its biorefining production incentive.
The CCC has continued to work through the Canadian renewable fuels association to have the federal biodiesel producer support program modified to meet the needs of the industry in current economic times. There is still work to be done on this, especially for canola biodiesel plants, and we are working with the federal government to get these changes made.
So in spite of the current economics and the lack of fanfare, things are happening on the biodiesel front. Will canola biodiesel become a reality in Canada? Definitely. Will it be a smooth ride? No. But we will be successful and we will make a difference by developing another market for canola growers and improving the environment.
JoAnne Buth is president of the Canola Council of Canada.