Biofuels

Diversifying markets for Canadian canola is critical, especially with increasing trade volatility for an export-dependent crop. One key component of CCGA’s market diversification strategy is the use of canola oil as a high-quality, sustainable feedstock in the domestic biofuel industry, as well as in other markets like the U.S. and the EU. 

It is estimated that one in three acres of Canadian-grown canola ends up in a biofuels market in either Canada, the U.S., or the EU.

Biofuels: A growing market for your crop 

Since the implementation of the Clean Fuel Regulation (CFR) in 2023, Canada’s biofuels industry has been supporting processing capacity growth and driving demand for increased volumes of canola oil. Now, the biofuels market is a growing market for canola farmers that supports rural economic development through job creation and value-added processing.

By the end of 2026, it is anticipated that Canada will have the potential to process 15 MMT of canola seed through the expansion of canola processing on the prairies. This expansion is valued at over $2 billion dollars in facility investments and new builds, all due to growing demand for feedstocks, like canola, in biofuel production in North America.

Domestic biofuel policy has a significant impact on farm profitability, as the current government works towards reducing emissions from vehicles running on gas and diesel.

Top Five Canadian Canola Oil Destinations in 2025

Canadian canola oil is consumed in two major markets: the U.S. and Canada. Canada’s canola oil consumption is significant. In 2025, domestic consumption rose nearly 60% compared to 2021 due to domestic biofuel production. 

The value to farmers in numbers.

In a recent study by Canadian Canola Growers Association (CCGA), data shows Canada’s current domestic biofuel policy is estimated to bring nearly $600 million in value to farmgate prices in the 2025/2026 crop year—that’s $27 per tonne or $0.62 per bushel. 

In another study commissioned by CCGA in 2023, the data shows that crusher basis levels are consistently at a premium over elevator bids. In other words, crushers are drawing in more farmer deliveries due to higher demand, often resulting in better prices for farmers. 

The report further states, “It is reasonable to anticipate the significant expansion of crush capacity in Western Canada will have a positive impact on basis levels for farmers, particularly in regions where new plants get built that don’t already have a significant crush presence, although there are various factors that will influence this.”
 

Advocating for biofuel policy that supports farmers.

CCGA has been advocating for the federal government to view feedstock suppliers, such as canola farmers and processors, as a critical first step in the production of low-carbon fuel supply chains. Prioritizing North American feedstock within domestic policy will help create a strong demand signal for further growth and investment in the industry and ensure a sustained supply of sustainably produced feedstock. 

The CFR proposed amendments are part of support measures announced by the federal government in September 2025 to assist Canada’s canola industry, including the farmers who grow the crop, through recent trade disruptions.

The canola industry submitted comments to the federal government to advocate for three areas of improvement:

1. Only allow fuels made from domestic or North American feedstocks to be eligible for new programs that support domestic biofuel production within these amendments.
2. Provide a strong market signal that expands domestic biofuel production volumes, resulting in increased demand for local feedstock.
3. Reduce the risk of fuels made from potentially fraudulent foreign used cooking oil (UCO) from entering the Canadian clean fuels market.

Foreign UCO impacts canola’s market share in domestic biofuel production.

CCGA is advocating for the federal government to restrict biofuels made with potentially fraudulent foreign UCO from generating credits under the CFR until such time that it can be determined that foreign UCO is not adulterated with virgin oils, like palm oil.

These policy positions have been shared with Agriculture and Agri-Food Canada, Environment and Climate Change Canada, and Natural Resources Canada through multiple meetings and submissions over the past year. CCGA will continue to advocate to ensure that Canadian and North American feedstocks are not competitively disadvantaged by potentially fraudulent feedstocks.