OTTAWA—The Canadian government’s existing ethanol blend mandate has played a key role in reducing the carbon intensity in gasoline, while providing market access and economic stability for Canada’s ethanol industry, according to a new Conference Board of Canada report.
The Conference Board says greenhouse gas (GHG) emissions from the use of Canadian-produced ethanol are as much as 60 per cent lower than from gasoline use, and that federal regulations mandating ethanol use reduce national GHG emissions by 2.1 million tonnes per year (just over 1.5 per cent of road transport emissions).
“Road transportation is the single largest source of GHG emissions in Canada and lowering the carbon footprint of the fuels we use will play an essential role in reducing GHG emissions,” said Len Coad, research director, The Conference Board of Canada. “Blend mandates already ensure that gasoline includes a low-carbon component.”
Blend mandates were introduced in Canada as part of a renewable fuels strategy, and set a minimum renewable fuel content in gasoline and diesel sold to consumers. These go hand-in-hand with Clean Fuel Standards (CFS), which set a maximum carbon content in fuel and allow suppliers to determine how to meet the standard.
To date, British Columbia is the only Canadian province with both a blend mandate and a CFS. B.C., Oregon and California are the only such jurisdictions in North America, but the report finds renewable fuels are producing between 75 and 99 per cent of the GHG emission reductions in these jurisdictions.
Ontario has recently explored developing new standards that would reduce GHG emissions by 5 per cent by 2020, on top of the province’s existing blend mandate of 5 per cent ethanol in gasoline that came into force in 2007.
Quebec also announced recently its intention to introduce a 5 per cent ethanol requirement for gasoline.
Federally, there is a 5 per cent blend mandate for gasoline and a 2 per cent mandate for diesel: regulations aimed at increasing the retail availability of renewable fuels, supporting Canadian ethanol production expansion, encouraging farmers to participate in the renewable fuels industry and accelerating the commercialization of new technologies.
In addition to current federal regulations, Environment and Climate Change Canada is considering introducing CFS requirements to further reduce carbon emissions from transportation fuels, setting a maximum carbon content on gasoline and diesel. These regulations typically include trading mechanisms that allow suppliers, whose fuels are cleaner than the standard, to sell allowances to suppliers who are otherwise unable to meet the standard—a form of cap and trade.
Other jurisdictions around the world have introduced much more ambitious requirements than Canada. There is a 27.5 per cent ethanol mandate in Paraguay, 27 per cent in Brazil and 10 per cent in the U.S.
The Conference Board says CFS targets are almost impossible to meet without mid- to high-level ethanol blending, and that given the nature of wholesale fuel distribution, an unequivocal mandate is required to establish the infrastructure needed to enable this process.
Not only is transportation is the largest source of GHG emissions in Canada, but transportation demand is projected to grow with our population and GDP. As such, lowering emissions with the help of ethanol—the only low-carbon, renewable alternative for gasoline currently available commercially—is seen by the Conference Board as critical to a greener future.
The report finds blend mandates provide market certainty and a stable investment environment for expanded domestic ethanol capacity and continued technology development, reducing competitive pressures on new ethanol plants and ensuring market access for ethanol and other renewable fuels.
According to the Conference Board, the full societal benefits of ethanol, such as GHG emission reductions and rural economic development, would be lost without blend mandates.