Renewable diesel growth provides signal upstream to expand crush capacity
Canada’s largest agribusiness, Richardson International Ltd., is doubling canola crush capacity at its processing facility in Yorkton, Saskatchewan. In addition to doubling capacity to 2.2 million metric tons, the company said it will optimize operational efficiencies and modernize the plant to meet growing demand. Construction will begin immediately and is expected to be complete by early 2024.
Renewable diesel projects recently announced in Canada leveraging canola oil as feedstock, including standalone and coprocessing projects by Tidewater Midstream and Infrastructure Ltd. and a proposed facility in southern Saskatchewan by Covenant Energy, add to the growing momentum of similar projects across the globe. Renewable diesel development in the U.S. is reminiscent of the biodiesel project boom of the mid- to late 2000s, but on a much grander scale, creating familiar concerns over feedstock availability and price increases.
Earlier this month, the Canola Council of Canada announced the launch of its revitalized market access strategy. The plan consists of four main strategies, one of which is to enable market growth, increased value and trade diversification through biofuel and sustainability approvals.
Biobased Diesel Daily spoke to Chris Vervaet, executive director of the Canadian Oilseed Processors Association, about the canola industry in Canada and where it fits into the world of high-demand feedstock for a growing renewable diesel industry.
“There’s quite a bit of interest in biofuels, with the LCFS in California driving demand for renewable diesel and for feedstock going into increased production of renewable diesel,” Vervaet said. “We see that trend firing in the U.S., and we hope that what we see in the U.S. is replicated here in Canada through the Clean Fuel Regulations.”
Vervaet said North American canola planting far surpasses 20 million acres a year.
“There are a lot of acres being planted,” he said. “When we see renewable diesel production increase across North America, this starts a chain reaction. It provides that market signal for more crush capacity.”
Vervaet said it has been nearly a decade since the Canadian canola industry updated its market access strategy, and a lot has gone on since then—restricted market access on seed exports to China, to name one major change.
Seed exports to China have fallen from $2.8 billion in 2018 before the restrictions, to $800 million in 2019 and $1.4 billion in 2020. Experts suggest this has cost the industry between $1.54 and $2.35 billion from lost sales and lower prices between March 2019 and August 2020.
With fewer whole canola seeds going abroad and more demand for oil from crushing by renewable diesel projects, an opportunity exists to add value to canola domestically instead of shipping that value overseas for processing elsewhere. But in order to capitalize on the booming U.S. renewable diesel market, the hydrotreated biofuel made from canola oil must be approved by U.S. EPA.
Getting EPA to approve the pathway for canola oil renewable diesel in order to qualify as “biomass-based diesel” under the federal Renewable Fuel Standard is an all-hands-on-deck endeavor, according to Vervaet. He said a petition was submitted in March 2020 and the Canadian and U.S. canola associations are working in tandem with renewable diesel stakeholders to get U.S. government approval.
“We are hopeful,” Vervaet said.
In order to do this, canola oil renewable diesel must be able to demonstrate at least a 50 percent reduction in greenhouse gases compared to the petroleum baseline.
“Our calculations show canola-based biofuels—both biodiesel and renewable diesel—demonstrate GHG reductions in the range of 80 to 90 percent,” Vervaet said.
Vervaet said the North American canola and renewable diesel coalition that has been assembled to help approve the pathway is currently working through technical aspects of the process. He added that he hopes to see progress in the coming months.