Regulations behind the Clean Fuel Standard have left farmers in the dark

The new Canadian Clean Fuel Standard could have significant implications with regards to how corn is marketed in Ontario. Considering that corn is the largest volume grain crop produced in this province and that nearly a third of the production is used to make ethanol, we need to at least recognize the potential that the proposed legislation will have on the grain market.

In order for renewable fuels, (such as ethanol or biodiesel), to be eligible for carbon credits under the new Clean Fuel Standard, the feedstock grains used in the process would have to meet certain land use criteria including setbacks from watercourses or wetlands, and also feedstock production would be forbidden on land cleared after 2019. These land use restrictions would change the way that biofuel manufacturers source grain from being based on sourcing from the entire supply of crop in the marketplace to only being able to contract crop grown on acres certified as eligible for biofuel production. Essentially, the corn market would be sub-divided into two pools: one which is eligible for biofuels, and a second pool of supply which could be marketed anywhere else.

You don’t have to spend a lot of time touring around Ontario’s agricultural country to notice that watercourses and wetlands appear at the boundaries of a lot of farmed fields. Certainly not every acre which we currently farm will be eligible to produce crop for clean fuel compliant ethanol which means that not every bushel each farmer has to market could be directed towards a renewable fuel processor. Since the regulations have yet to be released, we don’t yet know if farmers will be able to register parts of fields that border on a wetland or watercourse, or whether crop grown in eligible and ineligible acres can be co-mingled on-farm or at elevators for drying and storage, or whether the crop from acres certified for renewable fuel production will need to be managed as an Identity Preserved inventory.
At this point we know for certain that with every field having to be mapped and certified as compliant, and then every bushel of production from those acres having to be recorded and tracked through to its end use destination, the amount of paperwork required by farmers and grain handlers is going to increase monumentally.

With regulation comes cost. As a corn producer, I really can’t imagine that I would go to the effort of having all of my corn acres, which are compliant under the Clean Fuel Standard land use regulations, certified for the program and then market my crop to an ethanol plant unless the ethanol market was paying an appropriate premium to the bid at feed mills or export terminals. Unfortunately, the ethanol industry does not have an unlimited pool of cash to spend buying corn.

Canada is already a net importer of ethanol (particularly Atlantic Canada, British Columbia, and Quebec). Canadian biofuel manufacturers are already competing with American ethanol, so regulations which would drive Canadian processing costs up, could actually result in financial harm to our domestic renewable fuel manufacturers. The obvious answer would be to place a trade restriction on U.S. ethanol imports into Canada, but considering the myriad of opens which the United States would have in terms of trade retaliation on Canadian exports, the smartest course of action would be to not needlessly drive up feedstock costs for Canadian biofuel processors.

It’s fascinating to read the Clean Fuel Standard information which the Canadian government has posted online. They’re proud to report that the Ministry of Environment and Climate Change has been consulting with stakeholders on this subject since 2017, but every reference to the number one feedstock in the documents uses the word “maize” and I’d bet if Canadian agriculture was actively involved in the dialogue we’d at least see it called “corn.”

The carbon life-cycle of a renewable fuel such as ethanol is an enormous improvement over traditional crude oil refined to gasoline. With biofuel, a living plant removes carbon from the air during the growing season, which is then re-released when the fuel is burnt essentially recycling the same carbon in a one-year loop. When we burn fossil fuels the carbon released had been safely sequestered away deep beneath the earth’s surface for millions of years.

The average voter in Canada likely doesn’t care if farmers or grain handlers might have to dry and store corn in separate bins, or the costs associated with doing that. But they almost certainly respond favourably to the message that agriculture can capture soil energy through healthy crops and be a part of a renewable fuel solution which is good for the environment and helps Canada reach its reduced carbon emission targets going forward.
Clean fuel is important. A clean environment is even more important. Farming for energy through renewable fuels is a key piece of an emerging green economy going forward. Our challenge in Ontario agriculture right now is to get some constructive participation in the writing of the actual regulations so that the green economy doesn’t get bogged down in red tape.