Ottawa, Ontario – A proposed federal mandate on biodiesel will raise the price of diesel fuel, which in turn may affect higher prices on all goods, warns the Canadian Trucking Alliance (CTA).
On July 1, 2011, the federal government proposes to mandate that on-road diesel sold in Canada must contain an average two per cent biofuel content, which the CTA said will raise the price of the fuel overall. Trucks, which overwhelmingly use diesel fuel, move 90 per cent of all consumer products and foodstuffs, which could lead to higher prices.
In the U.S., where the biodiesel market is somewhat more mature, prices are running at one to eight cents per litre above the price of regular diesel fuel, depending on the level of biofuel blended into the diesel. For Canadian truckers, this could mean annual fuel cost increases in the range of $2,100 to $6,000 per truck, depending on where biodiesel price increases fall in Canada.
According to CTA, canola, a leading feedstock to be used in producing biodiesel, is already at record high prices despite record volumes. The government’s Regulatory Impact Analysis Statement, recently published in the Canada Gazette, acknowledges that biodiesel will cost consumers more but underestimates the impact, the CTA said.
Biodiesel is also costly to produce and there is a severe shortage of biofuel production and blending capacity in Canada, which may have to import 85 per cent of its biodiesel to comply with the mandate.
The Analysis Statement reports that the federal government has provided over $2 billion in subsidies to the renewable fuels industry in recent years, and there will be a net cost to taxpayers of about $2.4 billion over the next 25 years due to the mandate, with only an incremental reduction in greenhouse gas emissions.
“It really makes you wonder why we’re doing this,” said David Bradley, CEO of the CTA. “All of these things add up to one thing, higher prices for consumers. The only question is by how much. The biodiesel mandate is only going to make things worse. They can’t even guarantee us that the stuff won’t gum up most truck engines at the kinds of blend rates we are likely to see at certain times of the year in various parts of the country. There is no protection for the consumer.”
Bradley said that the CTA is not opposed to the introduction of alternative fuels into the trucking industry, but “we need to make sure the fuel we put in our tanks works, it has to be in plentiful supply and it should not cost us more than regular diesel.”