Market Snapshot: Regulations and market conditions driving Canada-U.S. biofuel trade

Release date: 2016-11-09

New federal Renewable Fuels Regulations were enacted in 2010 for gasoline and 2011 for diesel. These require gasoline to have an average renewable content (typically ethanol) of at least 5%, and diesel to have an average renewable content (typically biodiesel) of at least 2%^Footnote 1 although producers can add more. Canadian consumption and imports of liquid biofuels increased significantly as a result.

Because Canada lacks the productive capacity to meet domestic renewable fuel demand, Canadian ethanol imports increased from five thousand litres per day (L/d) in 2006 to a peak of 3 326 thousand L/d in 2013 before decreasing to 2 876 thousand L/d in 2015. Biodiesel imports increased from 14 thousand L/d in 2006 to a peak of 1 504 thousand L/d in 2013 before decreasing to 1 315 thousand L/d in 2015. All Canadian biofuel imports are from the United States.

Canada also exports small volumes of biofuels (primarily biodiesel), all of which go to the U.S. Canadian biofuel exports increased from 6 thousand L/d in 2006 to 81 thousand L/d in 2015. Exports peaked in 2014 and 2015 due to higher prices for biofuels in the U.S. This helped to moderate Canada’s biofuel trade balance (exports minus imports) from its peak deficit of 4 447 thousand L/d in 2013 to a smaller deficit of 3 424 thousand L/d in 2015.

Finally, even though overall Canadian gasoline demand increased slightly in 2014 and 2015, Canadian biofuel consumption actually declined in those years. This was due primarily to less discretionary blending of ethanol in gasoline.

Date modified:

2023-11-28