Canola Can Fuel Canada’s Economic and Energy Future

Canada’s canola industry has long been a driver of rural prosperity and trade, contributing more than $43 billion annually to the economy and supporting over 200,000 jobs. But recent developments, including the closure of the Chinese market and volatility in other key markets, underscore our need to diversify canola’s markets and end-uses. The good news is that one of the most promising growth opportunities lies right here at home.

Canada’s biofuel policies are driving demand for low-carbon alternatives such as biodiesel, renewable diesel, co-processed fuels, and sustainable aviation fuel (SAF). Canola oil is a proven, high-quality feedstock for all four, offering Canadian farmers a reliable new outlet for their crop while contributing to national energy security.

The growth potential is significant. By 2030, Canada’s demand for biofuels is projected to rise to 10 billion litres annually, up from 6.5 billion today. Yet domestic production is lagging as more than 60% of the biofuels consumed in Canada are imported. In 2024, Canadian bio-based diesel capacity stood at just 1.7 billion litres – far short of the four billion litres per year needed by 2030.

The case for canola extends beyond biodiesel and renewable diesel. SAF, which is chemically identical to jet fuel, can also be made from canola and is already being adopted by airlines in Canada and around the world. At the same time, co-processing – which allows renewable feedstocks like canola oil to be processed alongside petroleum feedstocks in existing refinery operations – could scale up to nearly two billion litres of lower-carbon gasoline, diesel and jet fuels annually with modest facility upgrades. Together, these opportunities represent millions of tonnes of additional canola demand, enough to offset much of the canola seed currently shipped to China.

But Canadian biofuel producers face competitive headwinds. In the U.S., federal incentives such as the 45Z Production Tax Credit give American producers a cost advantage, enabling them to sell biofuels in Canada at prices Canadian producers can’t match.

To level the playing field and unlock Canada’s potential, we need supportive federal policies – including production tax incentives – that give investors the confidence they need to build new facilities, upgrade existing infrastructure, and ensure canola competes fairly with other feedstocks.

In the face of global trade challenges, Canada has the chance to create new markets for a critical crop, strengthen rural communities, and grow its energy independence. With the right policies, canola can fuel both our economy and a cleaner energy future.