by Janiece Walsh

CFA Statement to the Standing Committee on Environment and Sustainable Development

 |  Uncategorized

Good afternoon, Mr. Chair and members of the committee.

Thank you for the opportunity to participate in this study.

I would like to begin by acknowledging that the land I am on today is the traditional unceded territory of the Algonquin Anishinaabeg People.

My name is Lisa Stilborn and I am the Vice President of Public Affairs for the Canadian Fuels Association.  Joining me by Zoom is Dave Schick, Vice President Western Canada, Innovation and Regulatory Affairs.  

Our members provide 95% of the gasoline, diesel, marine and aviation fuels Canadians use every day. To put that in perspective, that’s over 100 billion litres of liquid transportation fuels per year. Our members also produce over 25% of the biofuels used in Canada.

We believe all transportation energy alternatives will be needed to achieve Net Zero and low-carbon fuels – and notably biofuels could contribute over 50% of emission reductions in the transportation sector by 2050. 

Our members are at the forefront of innovating solutions to accelerate large-scale production and distribution of these fuels – leveraging our existing energy infrastructure including refineries, terminals and retail. Maximizing this pathway is also the key to maintaining energy reliability, security and affordability as we continue to diversify our energy mix on the road to Net Zero.

Two years ago, we released ‘Driving to 2050’ which spoke to the foundational contribution our sector can make to Canada’s climate goals. Since then, we have been tracking member projects from coast to coast to coast.  These are just a couple of examples:

  • In Varennes Quebec, Shell, Suncor and their partners are investing 850 million to produce next generation biofuels from wood waste and other residual products.
  • Parkland’s Burnaby refinery began co-processing biogenic feedstocks in 2017 to produce renewable fuels – and by 2021 the environmental benefit was equal to taking 80,000 cars off the road. With the support of the Province, the Refinery is planning another $600 million investment to expand production capacity.

These and all member projects will yield significant economic benefits through the fuel value chain – from feedstock suppliers to retailers – including tens of thousands of construction jobs and thousands more to operate new facilities into the future. Increasing Canadian production of biofuels will also contribute to energy security by reducing our reliance on imports – But in this, we have a long way to go.

Canada is already a net importer of biofuels, and policies such as the Clean Fuel Regulations will significantly increase domestic demand.

So why are we so reliant on imports?

The North American Fuel Market is fully integrated which means that Canada competes with the U.S. for investment.

The U.S. has a number of well-established programs, notably the Blender’s Tax Credit, that have created a robust biofuels production industry. And earlier this summer, the U.S. Inflation Reduction Act ‘doubled down’ with a suite of new measures, effective in 2025, including a Production Tax credits for biofuels such as ethanol, biodiesel, renewable diesel and sustainable aviation fuel.

Investment parity with the U.S. is key to unlocking Canada’s full potential as a biofuels producer and ensuring Canadian agriculture and forestry feedstocks are used to reduce emissions right here in Canada.

And with investment decision-making underway to meet market demand and compliance obligations, parity with the U.S., including comparable Canadian incentives, is needed now.

That’s why we are recommending that the federal government introduce a Low-Carbon Fuel Producer Tax Credit in Budget 2023 for a period of ten years.

  • This credit would apply to all low-carbon fuels produced in Canada.
  • Like the tax credit introduced by Quebec in its last Budget, the rate would vary according to carbon intensity reduction with the highest reductions receiving a tax break of 0.34 cents/litre –equivalent to the US. production tax credit of $1/gallon.

There are other ways in which governments can play a role in attracting investments, including:

  • Fostering a stable, predictable regulatory environment that recognizes the urgency of low carbon investments.
  • Promoting alignment of federal and provincial policies to accelerate low-carbon fuel technologies including sustainable aviation fuel, hydrogen and electrification.
  • Paced regulations and timely permitting to promote rapid adaptation of existing fuel supply chain infrastructure, including refineries, terminals and retails stations.

In closing, we believe there is a tremendous opportunity for low-carbon liquid fuels to be produced right here in Canada to the benefit of our environment, economy and energy security.  We strongly encourage the committee to support our proposals as our sector works with stakeholders including all levels of government toward a low carbon future.

Thank you and we look forward to your questions.

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