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Study on Canadian Biodiesel Mandate Finds Costs Outweigh Benefits

The societal costs of a Canadian two per cent biodiesel mandate would outweigh the benefits by factor of five, according to a study conducted in 2009 by EcoRessources Consultants (ERC) for Environment Canada.

The Canadian Trucking Alliance has been lobbying the federal government to raise awareness of how a biodiesel mandate would affect the trucking industry, and part of the lobby campaign was the call for a cost-benefit analysis.

In December 2006, the federal government introduced a notice of intent in Canada Gazette to develop a federal regulation requiring two per cent renewable diesel fuel content no earlier than 2010 and no later than 2012 pending confirmation that this fuel will not have a detrimental impact on truck engines.

According to ERC, the total incremental cost of the proposed biodiesel regulation for on-road use would be $4.5 billion between 2011 and 2035, whereas the benefits, in the form of reduced greenhouse gas emissions, are valued at just over $860 million. On a regional basis, Western Canada would take the biggest cost hit at about $1.8 billion, followed by Ontario at $1.3 billion and Quebec at more than $450 million.

The report also found that the mandate could cause higher and more volatile fuel prices in the first few years after introduction, until the supply infrastructure is established. In terms of the growth of supply, the consultants pointed out that current biodiesel production in Canada comes mainly from yellow grease and animal fats, which they caution are in relatively small supply and located mainly in urban areas.

ERC also pointed out that current biodiesel has lower energy content than conventional diesel, so over the 25-year period, about 604 million liters of additional diesel purchases would be required.

David Bradley, CTA's president and CEO, said the study only adds to the questions that exist over why the federal government would pursue a biodiesel mandate.

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