Advanced Biofuels Canada welcomes federal biofuels production incentive coming into force

Canada’s biofuel production incentive took effect Jan. 1, providing what Fred Ghatala, the president of the Advanced Biofuels Canada association, said is immediate support to protect Canadian biofuel production capacity and strengthen Canada’s energy security.

The biofuels production incentive was announced by the Canadian prime minister, Mark Carney, Sept. 5 and its going into effect Jan. 1 “marks the shift from policy intent to delivery,” Ghatala said.

“Canadian producers have been operating at a competitive disadvantage since the introduction of the United States’ Inflation Reduction Act and the clean fuel production credit (45Z), which significantly lowered U.S. production costs and reshaped North American capital flows,” he said.

Ghatala noted that the new incentive supports Canadian jobs, feedstocks and fuel supplies, helping keep clean-fuel investment and production anchored in Canada amid ongoing trade and policy uncertainty.

Biofuels are an immediately deployable solution that reduces emissions while supporting rural economies, well-paying jobs, domestic feedstocks like canola and greater energy security, he said.

Advanced Biofuels Canada represents producers of biodiesel, ethanol, renewable diesel, renewable gasoline and sustainable aviation fuel (SAF).

“While the biofuels production incentive is a positive short-term measure for 2026 and 2027, it does not fully close the gap with U.S. production subsidies,” Ghatala said, adding that long-term competitiveness will require complementary, structural measures that provide certainty for investment in Canadian renewable fuel production and feedstock supply chains. “The federal-provincial-territorial table on low-carbon fuels is already established, and it is the next critical step to align long-term policies that keep Canadian biofuel production stable, thriving and anchored in Canada, rather than leaving Canada’s supply and competitiveness exposed to foreign policy decisions.”

Ghatala said provinces have a central role to play in ensuring Canada remains attractive for capital investments in biofuel production, feedstock processing and renewable fuel infrastructure, while ensuring that farmers and rural communities capture the long-term jobs, revenues and value-added benefits these supply chains generate.

“Advanced Biofuels Canada encourages provinces and territories to engage actively at the federal-provincial-territorial table to deliver durable, long-term investment-ready solutions,” he said. “Coordinated policy action will protect existing facilities, attract new capital and keep biofuel investment and production in Canada.”

Ghatala added that implementation of this new incentive is important groundwork but added that the focus now must be on durable policy frameworks that allow the sector to grow.