Truckers Oppose Mandate for Biodiesel in Canada

This story appears in the May 24 print edition of Transport Topics.

Canadian truckers called on their federal government to junk its plan to implement a national 2% biodiesel mandate, saying that a government study found the cost of the mandate would be nearly five times greater than the benefit.

The Canadian Trucking Alliance said in a May 14 statement that the proposed biodiesel requirement should be scrapped because the study shows that from an environmental perspective “there is little to be gained from a biodiesel mandate,” and the “impetus for such a policy is really to create a new market for farmers.”

The Canadian opposition relates to stalling the biodiesel industry in the United States over trucking’s resistance and the lapse of a federal tax credit.

The Canadian study said that requiring a 2% renewable content in trucking’s primary fuel would cost trucking, the fuel industry and society C$4.5 billion between 2011 and 2035.

During that time, according to the study, the monetary benefits “in the form of avoided” greenhouse gas emissions would be only C$862 million.

CTA also cited parts of the study, commissioned by the government, that concluded consumers would “bear the greatest brunt” of the cost of a mandate.

There would be environmental benefits to a mandate, the study said, because biodiesel is expected to reduce greenhouse gas emissions, which would help in “reducing the impact of climate change.”

An independent consultant conducted the study commissioned by Environment Canada, the Canadian counterpart of the U.S. Environmental Protection Agency.

The study is dated December 2009 but was not unveiled until April 10 when the Canadian federal government published a notice of intention to adopt a 2% biodiesel regulation by 2011.

CTA President David Bradley said Canada would get a “much bigger bang for its buck by working with” trucking on CTA’s environmental initiative, which urges such fuel-saving measures as aerodynamic truck design, more efficient engines and speed limiters.

In the United States, meanwhile, the biodiesel industry is anxiously waiting for Congress to renew the tax credit for biodiesel producers.

“The biodiesel industry right now has suffered a severe setback with the lapse of the tax incentive,” said Michael Frohlich, a spokesman for the National Biodiesel Board.

The credit, which expired in 2009, was designed to boost biodiesel sales by keeping the fuel’s prices competitive with regular diesel.

“We estimate we were supporting 23,000 jobs as of Jan. 1, 2010,” Frohlich said. “We estimate [that] somewhere between 8,000 to 11,000 of those jobs have now been lost since the lapse of the credit.”

Much of the job loss, however, would not be permanent if the tax credit is renewed retroactively, Frohlich said.

Some biodiesel plants have been bankrupted by the loss of the tax credit. Others, however, are merely idle or running at reduced capacity and can “flip the switch back on” once the tax credit is renewed, Frohlich added.

Congress is expected to pass the tax credit this month, Frohlich said, adding that support for the credit always has been strong, but Congress has been searching for a way to offset the cost of the lost tax revenues to the government.

The United States does not have a federal biodiesel mandate for retail sales of fuel.

The nation’s Renewable Fuel Standard program, however, is slowly introducing biodiesel to the commercial marketplace by requiring that “obligated parties” such as oil refiners participate by adding biodiesel to their product, Frohlich said.

Advocates of renewable fuels have tried to persuade states to adopt biodiesel mandates but only seven have done so: Louisiana, Massachusetts, Minnesota, New Mexico, Oregon, Pennsylvania and Washington.

Resistance to the blended fuel is strong, even in the farm states that form the heartland of the biodiesel industry.

For the second year in a row, Iowa lawmakers recently rejected a proposal that pitted truckers objecting to any mandate against farmers who grow the crops that contain the oils necessary to make biodiesel.

The handful of states that have adopted biodiesel mandates tied the start dates and the renewable-fuel levels to the levels of biodiesel production in those states.

Washington and Oregon reached the production levels mandated by their biodiesel statutes, so, their 2% mandates have gone into effect.

Minnesota’s biodiesel production is sufficient under its biodiesel statute that the levels triggered the state’s move in May 2009 to a 5% biodiesel requirement.

Under Minnesota’s statute, by 2015, diesel in Minnesota will be required to have a renewable content of 20%. Pennsylvania’s bio-diesel mandate kicks in at 2% on June 1 now that in-state biodiesel production there has reached the statutory trigger of 40 million gallons, said Nicole Bucher, spokeswoman for the state’s Department of Agriculture.

The statutory mandate in Massachusetts for 2% biodiesel will take effect in July 2010. Biodiesel mandates adopted in Louisiana and New Mexico have not yet taken effect.