Thank you for the opportunity to comment on Environment and Climate Change Canada
(ECCC)’s discussion paper to inform the draft targeted amendments of the Clean Fuel
Regulations (CFR), as well as the opportunity to address specific questions to help focus what is
being considered. We appreciate ECCC’s past collaborative efforts on the CFR and welcome
those continued efforts as our members continue to contribute to the success of the program.
Growth Energy is the world’s largest association of ethanol producers, representing 97 U.S.
plants that each year produce 36 billion liters of low-carbon, renewable fuel; 130 businesses
associated with the production process; and tens of thousands of ethanol supporters around the
country. Growth Energy represents the leading exporters in the ethanol industry, helping to
support nearly two billion gallons of ethanol exports to over 60 countries around the world.
Of those exports, over 2.6 billion liters of U.S. ethanol was supplied to Canada in 2024 that
helped to lower consumer prices and improve the emissions footprint of Canada’s transportation
sector. The U.S. also imported nearly 481 million liters of ethanol in 2024, including 122 million
liters from Canada valued at $117 million. Additionally, significant inputs into the U.S. ethanol
production process are sourced from Canada, including yeasts.
As one of our strongest partners, Canadian biofuels and feedstocks have and continue to be
eligible to participate in the U.S. Renewable Fuel Standard (RFS) as well as other state low
carbon fuel standards (California, Oregon, Washington, and soon New Mexico). Canada also
uniquely benefits from land use eligibility under the RFS through aggregate compliance, which
is the same as U.S. biofuels. While there is a proposal pending to decrease credit value for
imported fuels and feedstocks under the RFS, Growth Energy supports continued full value and
equal treatment of North American feedstocks and fuels.
Canada is one of our strongest trading partners for biofuels and their inputs. While we recognize
the current trade situation between the United States and Canada is complicated, formalizing
restrictions on U.S. ethanol in the CFR could be an unnecessary complicating factor affecting
both U.S. and Canadian industries and the environment. Given the fact that efforts were taken to
ensure equal treatment of Canada’s agricultural feedstocks when compared to those produced in the United States under our own regulations, we ask ECCC to do the same and not include U.S.
ethanol in the scope of these targeted amendments. We also request ECCC’s assistance to
similarly remove U.S. ethanol from the scope of provincial regulations that would restrict the
participation and use of American ethanol.
Response to Questions on Regulatory Approach
We support Canada’s efforts to help expand their domestic production and provide support for its
ethanol and biofuels producers; however, the proposed amendments in this discussion could
undermine the intended support for Canada’s ethanol producers and consumers. Additionally, we
do not think either proposed option would meet the objective of the CFR—lowering greenhouse
gas (GHG) emissions and increasing the use and production of low carbon fuels. Restricting
supplies and overly complicating the fuel supply chain with regulatory requirements could limit
the amount of credit generation under the CFR, devalue credits for emissions avoided, limit
production expansion and use of low carbon fuels, or have unintended economic consequences to
Canada’s consumers that may also lead to fuel supply instability and decreased support of the
CFR if the price consumers pay for blended gasoline is affected.
Any amendments stemming from this discussion paper should be temporary in nature and
decrease over time—particularly as the provincial actions and proposed federal actions are cited
as being in response to U.S. Clean Fuel Production Tax Credit (known as 45Z), which expires in
2029.
The discussion paper highlights provincial action on domestic content. However, Ontario’s
compliance for 2025 has been delayed to the end of 2026 and British Columbia (BC)’s
requirement for ethanol has only taken effect on January 1, 2026. As noted in the discussion
paper, these two provinces’ domestic content requirements account for 75 percent of the overall
ethanol produced in Canada. Prior to any movement forward on a nationwide requirement, it is
imperative to get better data and observational effects of these provincial domestic content
requirements for a significant period of compliance, which has not happened yet. This is
particularly important for BC’s market given the fact that it has a low carbon fuel standard like
the CFR and it is not yet known how the domestic content requirement could affect the issuance
of credits, supply, and economics as it relates to carbon emission reductions of the fuel.
Better data and understanding of Canada’s ethanol production process and supply chain will also
be required in very granular detail prior to any expansion of the two current provincial mandates.
Discussions related to Canada’s ethanol production have been about total production, without
clarifying the type of ethanol (industrial, beverage, or fuel), where that ethanol goes (such as
exports to the European Union or the United States), economic differentials, as well as how that
product would move within Canada’s existing infrastructure. As the CFR aims to lower
emissions, significant changes to the supply chain could also alter how ethanol is transported to
end users, which could further increase emissions in the fuel’s transport.
The credit multiplier approach also has the potential to undermine the integrity of the goals of the
CFR: reducing carbon emissions and accelerating the use of clean fuels. The language outlining
the credit multiplier references a generalized number as the set multiplier example, rather than
adjusting to the emissions of individual pathways. The credit multiplier proposed also assumes that 45Z is guaranteed for all ethanol producers; however, a 50 percent emissions reduction is
required to receive the 45Z tax credit. The noted credit multiplier does not identify emissions
thresholds as a requirement for eligibility. If ECCC further develops a credit multiplier approach
for ethanol, we suggest that any proposal would not result in more credits being generated for a
higher emission fuel than a lower emission fuel simply as a result of the fuel’s origin within
North America.
A federal credit multiplier or a federal domestic content requirement, in addition to the
provincial domestic content requirements, could further complicate compliance by obligated
parties. Rather than improving the competitiveness of Canada’s ethanol sector, this could
undermine the demand for ethanol, result in unequal distribution of consumer costs, and suppress
support for low carbon fuels. Federal proposals, such as these amendments, should be carefully
coordinated with provincial governments to avoid added compliance hurdles that could
negatively affect consumer finished gasoline prices.
We greatly appreciate that ECCC is not proposing to discount credits for U.S. ethanol in these
amendments. We ask that ECCC maintain this omission and exclude it from consideration as a
regulatory option.
Movement forward on domestic content requirements or a credit multiplier approach is largely
based on concerns for how foreign feedstocks are treated under 45Z. However, the statutory
language from the “One Big Beautiful Bill” excluded Canada from the provision restricting
foreign feedstocks. Specifically, 45Z allows fuel that was “exclusively derived from a feedstock
which was produced or grown in the United States, Mexico, or Canada.” Feedstocks from
Canada and the United States are provided equal treatment under 45Z for the production of low
carbon fuel. The CFR continues to be very successful for North American producers and
Canadian consumers and as such, there is currently no need for a regulatory approach for
ethanol. Alternatively, we suggest ECCC adopt similar language to 45Z as it relates to fuel
produced in North America.
Response to Questions on Scope
We ask ECCC to remove U.S. ethanol completely from the scope of these proposed
amendments. As noted above, a large motivating factor cited in these domestic content
provisions is because of 45Z. However, provincial domestic content requirements and the
proposed CFR amendments do not account for what 45Z is – a tax credit if, and only if, the fuel
producer can demonstrate that its GHG emissions are at least 50 percent lower than its baseline
fuel. These credits provide financial incentives necessary for biofuels producers to invest in
expensive technologies to lower carbon emissions of fuels, which help to meet the goals of the
CFR. There is no limitation on feedstocks from Canada for this fuel production. Thus, the scope
of these amendments overly punishes U.S. ethanol for a perceived harm by 45Z.
Concerns over 45Z also stem largely from that of biomass-based diesel and its related
feedstocks, and less so from concerns over ethanol and its related feedstocks, yet these proposals
do not distinguish between overarching concerns on specific fuels/feedstocks despite them being very different in production and end use. Rather than any “one-size fits all” approach, we suggest
these proposals address specific fuel concerns in their respective pathways, emissions, harm, etc.
Comparing Annex I and Annex II in the discussion paper, there do not appear to be major
discrepancies in the amount of ethanol used to produce CFR credits (Annex I) with the annual
production and production capacity of Canadian ethanol (Annex II). While we are not negating
potential effects in other fuel sectors, the data shows Canada’s 12 ethanol facilities producing at
94 percent capacity, which is higher than that of the United States and implies Canada’s ethanol
production does not seem affected by the current fuel situation in the United States.
The Canadian government’s Biofuels Production Incentive does not have ethanol within its
scope. The exclusion of ethanol in Canada’s production incentive helps justify the omission of
U.S. ethanol within these amendments. However, we would support expanding this incentive to
include Canadian ethanol in lieu of including U.S. ethanol in the scope of these targeted
amendments.
We are very concerned that proposals outlined in this discussion paper could upset both the spirit
and the provisions of the United States-Mexico-Canada Trade Agreement (USMCA), as well as
the free, fair trade that our respective biofuels industries have benefited from between the United
States and Canada. Accordingly, should ECCC include ethanol in these targeted amendments,
we ask that any restrictions on ethanol be limited to only non-USMCA compliant fuels. As
noted, this would replicate how the United States treats Canadian feedstocks under 45Z. We
continue to support equal treatment for North American fuels and feedstocks in the United States
and hope to see a similar return to that equal treatment of U.S. ethanol in Canada at the
provincial levels and within these targeted amendments.
Thank you for your consideration of these comments as you look to draft targeted amendments
to the CFR to support the further development of Canada’s biofuels industry. Growth Energy
looks forward to working further with you to build on our mutually beneficial trade relationship
and support of the North American bioeconomy.