This week’s guest commentary comes from Lorne Small of the Christian Farmers Federation of Ontario
The recent Ontario budget outlined changes to the tax treatment for biodiesel. Biodiesel has been exempt from fuel tax since 2002 to encourage increased renewable content. The federal government’s renewable content mandate came into effect last year. As a result, Ontario’s fuel tax exemption no longer serves its purpose and will be eliminated next year. The province is considering a provincial mandate which will both increase renewable fuel content and reduce greenhouse gas emissions.
According to Environment Canada, a 2% mandate can be expected to result in about 500,000 tonnes of greenhouse gas emissions reductions annually in Ontario. A 5% standard is expected to result in about 1.25 million tons of greenhouse gas emissions reduction annually in Ontario.
Biodiesel mandates are common across North America, many provinces have a 2% mandate British Columbia has a 4% mandate. The extent of the mandate also varies, B.C. includes all diesel and home heating oil while the federal mandate exempts home heating oil. The state of Minnesota has a relatively high mandate and requires that the substitute must have 50% fewer greenhouse gas emissions than conventional diesel.
CFFO has been involved in the consultations with stakeholders that the Ontario Government has undertaken. We had three questions: does engine performance suffer? Does it affect the life expectancy of the engine? And is there a gel problem in winter storage or operations? Apparently these issues have been well researched. The forestry industry in northern British Columbia has not had a problem with operations during very cold weather. Minnesota farmers are not having any problems during the winter months. The Canadian trucking industry is not experiencing any performance or engine issues in their trucking fleets. The indications are that any blend up to 10% is not an issue for the trucking, forestry or agriculture industries.
How will a mandate in Ontario affect Ontario farmers? If the mandate requires the biodiesel to be made from Canadian feedstock such as soybeans and canola and not imported palm oil, then there will be an impact on farmers. There would be upward pressure on the price of oilseeds which is positive news for oilseed producers. The expanded crushing capacity and the resulting expanded production of oilseed meal would put downward pressure on the price of commodities like soybean meal. That means there is a win for livestock producers.
As farmers we are never enthused with more regulations, but this one might be welcomed by farmers. We could get better returns for oilseed producers and lower costs for livestock producers. The result is a clear win for farmers. But there is also a win for society, the reduction in greenhouse gas emissions is a win for all of society.