Wedoany.com Report-Jun 24, The U.S. Environmental Protection Agency (EPA) has proposed new Renewable Fuel Standard volume obligations, prompting mixed reactions from Canada’s canola industry, according to Chris Vervaet, Executive Director of the Canadian Oilseed Processors Association. The biomass-based diesel mandate, covering biodiesel, renewable diesel, and sustainable aviation fuel, is set to increase significantly to 5.61 billion gallons in 2026 and 5.86 billion gallons in 2027, up from 3.35 billion gallons in 2025. This growth benefits Canadian canola farmers and processors by expanding market opportunities.

However, the EPA’s proposal to assign only 50% of Renewable Identification Number (RIN) credits to foreign biofuels and feedstocks compared to U.S. counterparts poses challenges. Vervaet noted: “That’s unfortunate. They’re proposing a 50 per cent haircut, if you will.” This could limit Canadian canola oil’s competitiveness in the U.S. market, despite the EPA recognizing canola oil as a reliable feedstock. Vervaet remains optimistic, stating: “We have to remember this is a proposed rule. There is still time to influence some of the final content in this rule.”

Separately, the U.S. Senate Finance Committee’s draft of the One Big Beautiful Bill extends the 45Z clean fuel production tax credit through 2031, offering up to $1 per gallon for biodiesel and renewable diesel and $1.75 for sustainable aviation fuel. Both Senate and House versions exclude indirect land use change from greenhouse gas emission calculations, ensuring canola-based fuels qualify. The House version supports feedstocks from the U.S., Mexico, or Canada, while the Senate version reduces credits by 20% for non-U.S. feedstocks starting January 1, 2026. Vervaet prefers the House approach, saying: “Our markets are so integrated already, where you have millions of dollars of feedstock and finished fuels crisscrossing our border.”

Ian Thomson, former president of Advanced Biofuels Canada, expressed concern, stating: “We’re worse off than we were before.” He highlighted the disparity in credits, with U.S. soybean oil renewable diesel receiving $0.53 per gallon compared to $0.22 for Canadian canola oil under the proposed rules. Thomson suggested Canada might need to promote domestically produced biofuels, noting: “Could Canada do likewise? It could.” British Columbia’s recent updates to its Low Carbon Fuels Act, requiring an 8% renewable diesel mandate with Canadian-sourced content, could serve as a model.

The proposed U.S. policies create both opportunities and challenges for Canada’s canola industry, with stakeholders advocating for adjustments to maintain market access and competitiveness.