If Canada and its provinces want to grow the use of biofuels as a tool to reduce carbon pollution, governments will need to implement new and stronger policies to make it happen.

Every time you fill your vehicle’s tank, a portion of the fuel you buy comes from plants, not fossil fuels.

That’s because, since 2005, provincial and federal policies in Canada have required gasoline and diesel fuel to include some liquid biofuel.

Our latest research shows those policies are working. Biofuels adoption is up—accounting for five per cent of all gasoline and diesel used in Canada in 2014 (3.9 billion litres). That’s enough fuel to power 1.6 million cars in Canada over a year. These fuels also help cut carbon pollution: in 2014, biofuel use avoided carbon pollution by 4.3 million tonnes (on a life-cycle basis)—equivalent to taking one million cars off the road.

The challenge

It’s good news, but there’s a catch: Canada will likely need more biofuels if it hopes to meet its climate targets, and that will require new and stronger policies. According to a report on Pathways to Deep Decarbonization in Canada, biofuels will need to grow from less than five per cent of the energy that fuels Canada’s vehicles to 20 per cent by 2030 – and 55 per cent by 2050 – if Canada stands a chance of meeting its long-term climate targets. That’s after pursuing a mix of solutions, like increasing electric vehicle use, expanding transit networks, designing more efficient cities and encouraging walking and biking.

Biofuels will need to grow from less than five per cent of the energy that fuels Canada’s vehicles to 20 per cent by 2030—and 55 per cent by 2050—if Canada stands a chance of meeting its long-term climate targets.

The challenge is that most existing provincial and federal renewable fuel standards have already been met (the exceptions are B.C.’s low-carbon fuel standard and Ontario’s Greener Diesel requirement). So if Canada and its provinces want to see biofuel use grow as part of a mix of tools to reduce carbon pollution, governments will need to implement new and stronger policies to make it happen.

Based on that research, biofuels policy should:

  1. Drive greenhouse gas avoidance. While biofuels production can have other benefits, such as economic development and rural revitalization, cutting carbon pollution should be the main objective of renewable fuel policies. And rather than simply setting volume requirements for certain fuels (which don’t reduce carbon pollution as effectively as they could) it’s more effective to set specific life-cycle emissions intensity targets for each fuel (gasoline, diesel, etc.) and make the requirements more stringent over time. Finally, ensuring that policies, compliance tracking and enforcement are consistent across jurisdictions can prevent “fuel shuffling”—where a high-carbon fuel is sent from a regulated jurisdiction to an unregulated one—so that carbon pollution isn’t just produced elsewhere, but is reduced overall.
  2. Support investment in low-carbon fuel production, use and innovation. Biofuel production will need to become more advanced, and the volume produced will have to increase dramatically, for renewable fuels to play a significant role in meeting Canada’s long-term climate targets. Uncertainty is a major investment risk, so biofuel policies need to send a clear and lasting signal to the market to reinforce the demand for sustainable biomass supplies, high-quality fuel production technologies, and efficient production and distribution systems as Canada works to reduce carbon pollution from transportation with biofuels. Other policies that support technological innovation, or identify and address barriers to renewable fuel adoption, are instrumental in supporting the growth of this sector.
  3. Support sustainability criteria for renewable fuels. A common concern about biofuel production is that it will impact on other sustainability goals like food security and maintaining biodiversity. To mitigate this concern, governments can include sustainability criteria as part of renewable fuel standards. For example, The Energy Independence and Security Actof 2007 in the United States includes specific requirements for renewable biomass. The European Union’s Renewable Energy Directivedoes not allow biofuels made from raw materials from virgin forests, protected areas or otherwise important habitat for endangered species. It also requires fuels and the raw materials that made them to be tracked from farm to tank and reporting on issues like food security, land conversion and labour practices. Alberta also requires that specific biofuel sources like palm not result in deforestation.
  4. Ensure affordability of fuel supplies. Policies should be designed to avoid extremely high compliance costs, which would translate into high fuel costs. To help keep costs reasonable, regulations can allow trading between the businesses they cover. Those businesses with an ample supply of cheaper, cleaner fuels can sell credits to those businesses with fewer options. Governments can also set a price ceiling with unlimited credits. For example, B.C.’s low-carbon fuel standard includes both a trading system and unlimited compliance credits at $200 per tonne CO2eq.
  5. Improve compliance data reporting and transparency. It’s challenging to assess how effective biofuel policies are when the compliance and reporting requirements vary across jurisdictions in Canada. Transparent and consistent data would help regulators identify and adopt the most effective policies. Policy compliance should be reported quarterly with all fuel volumes, feedstocks, carbon intensities, and estimates of carbon pollution for each fuel type.

Biofuels have and will continue to play a role in reducing transportation-related emissions—complementing other strategies to clean up our vehicles, fuels and other options for getting around.

As governments across Canada work to drive down carbon pollution, we hope they will consider these policy principles when designing the next generation of renewable fuel requirements.


For more information on our analysis and research see Biofuels in Canada: Tracking progress in tackling greenhouse gas emissions from transportation fuels.