Report details Canada’s advanced biofuel, wood pellet markets

The USDA Foreign Agricultural Service recently released a Global Agricultural Information Network report on the Canadian renewable fuel industry, which reviews the country’s renewable fuel mandates/policy and progress toward meeting them, as well as biofuel and wood pellet market development, imports and exports.

Canada’s federal mandate currently requires 5 percent of the national gasoline pool to be renewable (ethanol) and 2 percent renewable content in diesel fuel.  In addition, many provinces have their own renewable mandates, some similar and some more ambitious, and some that extend beyond liquid renewable fuel, such as phasing out coal.

While the report noted Canada is still not a significant producer of advanced biofuels, it highlighted several cellulosic ethanol plants built by Enerkem Inc. since 2009. There is interest in Atlantic Canada in building cellulosic fuels from waste, it said, and points to biogas as an area of increased interest and investment. “Much of the work on biogas is being done at the municipal level, and for the most part is at the pilot project level,” the report said, noting that two of three bioenergy projects that received funding under Alberta’s Biorefining Commercialization and Market Development Program and the Bioenergy Infrastructure Development Program are focused on development of biogas-based energy projects.

The majority of the biodiesel produced in Canada—an estimated 550 million liters in 2016—is exported to the U.S. to benefit from the U.S. biodiesel blenders’ tax credit and renewable identification numbers under the renewable fuel standard (RFS), according to the report, which states that Canada does not produce any renewable diesel, but for the past several years, has imported approximately 250 million liters annually in order to help meet its own federal mandate.

For wood pellets, the report states that the Canadian wood pellet industry’s production capacity far exceeds domestic demand, most of which is being exported. In 2015, about 2 million metric tons of the 2.15 million tons wood pellets produced in Canada were exported, with 74 percent going to the United Kingdom. In 2016, according to the report, year to date data indicates there is increased demand from Japan as it seeks to reduce emissions in its heat and power sectors.

The report also finds that while Canadian pellet consumption has remained relatively steady over the past several years, in 2015-’16, low oil prices have reduced residential demand. However, government initiatives involving the use of wood pellets as a coal replacement is likely to make domestic consumption jump in 2016 and 2017.