NCI Everything Ethanol Webinar Series | Featuring Andrea Kent

Andrea Kent, Vice President of Industry & Government Affairs at Greenfield Global.

The Northern Crops Institute (NCI) recently hosted a new entry in its “Everything Ethanol” webinar series. This monthly webinar program is dedicated to advancing global ethanol market development, and topics that will be explored throughout the series include ethanol marketing factors, global policies, and more. This month’s presentation featured speaker Andrea Kent, Vice President of Industry & Government Affairs at Greenfield Global. She spoke on Canada’s use of ethanol and ethanol’s contribution to meeting climate objectives, among other topics.

Kent began her presentation by introducing Renewable Industries Canada (RICanada), the largest biofuel organization in Canada. RiCanada is a business coalition of producers of renewable fuels, products, and technology committed to raising consumer awareness and policy-building regarding renewable fuels. It’s served as the leading “voice” of Canada’s domestic biofuel industry over the last 35 years, and its membership includes companies on the cutting edge of the biofuel industry (including Greenfield Global).

Canada’s 2020-2022 domestic ethanol production, month by month.

Canada’s ethanol market is very full-fledged. However, with its estimated consumption of ethanol per year of 793 million gallons and a production capacity of only 475 million gallons, its necessary for them to import enough ethanol to fill that discrepancy. 100% of its ethanol imports arrive from the U.S., and rebounded in 2021 after a collapse in demand during the pandemic. Current federal regulations require at least 5% ethanol to be blended into gasoline mixtures, though actual blending is typically closer to 7 or 8%. Ontario specifically recently mandated that 15% ethanol be blended into regular gasoline sold there (up from 10%), and Quebec also enacted this policy change, though theirs won’t take effect until 2030. These and other policy changes are set to increase demand for ethanol by 740 million gallons by 2030.

These changes have been long in the making. Significant events contributing to this advancement have occurred every year since 2015, when Prime Minister Justin Trudeau was first elected. Under his leadership and promise of addressing the ongoing climate crisis, Canada signed the Paris Climate Agreement in 2016, which signaled their commitment to reduce GHG emissions by 30% by 2030. The next year, Canada’s federal government began consultations for developing a national Clean Fuel Standard, or CFS. In 2018, Ontario enacted the ethanol blending requirement increase described above, as did Quebec. 2019 saw the beginning of the National Carbon Price, and in 2020, a major shift is observed: a drive to net-zero carbon emissions by 2050 along with an increase in the National Carbon Price and new draft regulations for the CFS (renamed to Clean Fuels Regulations, or CFR). With Trudeau’s reelection in 2021, CFR consultations began quickly, as did new Net Zero commitments. Finally, this year, the final CFR was published in July, paving the way for future regulations to come.

Canada’s projected compliance level with CFS requirements, 2023-2030.

With the addition of new policies, the CFS now makes up a small portion of the larger overall group of regulations that are referred to as the CFR. The big focus of the CFS specifically is to lower the carbon intensity (CI) of fuels. This makes it similar to LCFS standards in British Columbia and California. Under these policies, producers and distributors of fossils fuels would be required to reduce the CI of their products by 3.5gC02e/MJ starting in July of 2023 and by 14gC02e/MJ in 2030. Under the CFS, biofuels are predicted to be a key compliance tool to adhere to these new regulations.

Moving over to the CFR, this is also a policy based on fuel carbon intensity. The CFR is performance-based, meaning that it sets CI limits on liquid fuels but provides complete freedom to primary suppliers to determine how to best achieve these limits. Using these policies, the CI of a fuel is measured on what Kent referred to as a “wheels-to-wheels” basis, which means it will sum up all emissions from the process used to create the liquid fuel. Additionally, qualifying low-CI feedstocks obtained from forestry or agricultural activities are required to meet a land use and biodiversity quota. Finally, the CFR credit system allows for primary suppliers to either create or obtain credits from registered creators to use to meet their CI compliance obligations. Each of these credits represents one lifecycle reduction of one ton of GHGs, and they may be created by switching to or blending low-CI fuels (like ethanol) into higher-CI fuels. According to the CFR, all suppliers and creators must register, report all credit transactions, and include credit verification requirements.

Canada’s anticipated top credit generation sources in 2030.

For these suppliers, there are four categories of compliance options to adhere to the CFS requirements: 1) increasing efficiencies in oil extraction; 2) using low carbon biofuels; 3) switching to electricity, hydrogen, or other energy sources from liquid fossil fuels; and 4) purchasing credits from a compliance fund. Fuel suppliers are given the freedom to choose which path will work best for them to achieve compliance with these CFS regulations, with few restraints. While capital investment will likely be what determines which category sees the most adoption, it’s predicted that category 2 will outperform the others due to being readily available. Additionally, out of the credit sources shown on the graph, it’s predicted that, once again, biofuels will offer the greatest credit generation in 2030.

Kent’s final point was that, in order for these policies to work, they can’t stand alone. Collaboration between many nations is what’s required to make true changes to avert the climate crisis. She likened it to an “all-hands-on-deck” approach. Implementing policies and targets like those described in the CFS and CFR means that fuel and energy producers must receive correct market signals and then operationalize them in order to make them work. Really, in short, working together as one is the best path forward to achieving a net zero carbon emission level, rather than as separate nations.

The Northern Crops Institute greatly appreciates Andrea Kent’s professional input and involvement in this webinar series. At NCI, we continue to fulfill our mission to support regional agriculture and value-added processing by conducting educational and technical programs that expand and maintain domestic and international markets for northern grown crops.          

For more information about future webinars offered at NCI, click here.         

To view the webinar, click the recording below.