Biodiesel costs to outweigh benefits by $2.4 billion

March 23, 2011
by MM&D staff

OTTAWA :The costs of the federal biodiesel mandate set to come into effect on July 1 this year outweigh the benefits by $2.4 billion over 25 years. This finding is part of a regulatory impact analysis published in the Canada Gazette.

The 4,500 member Canadian Trucking Alliance (CTA) says based on this fact the Government of Canada needs to re-think its approach to the national biodiesel mandate. The CTA wants the government to introduce measures to protect consumers of biodiesel from higher fuel prices, a loss of fuel efficiency and engine and warranty problems from sub-standard fuel.

According to the CTA, consumers and taxpayers will pay the price for a massive subsidization of big agribusiness (more than $2.2 billion) and alternative fuel producers for very little return in terms of reduced GHG emissions. 

In addition to the $2.4 billion cost over 25 years; the mandate will only contribute to a marginal reduction in greenhouse gases (one tonne of CO2 per year); and will cost consumers through higher pump prices and reduced fuel efficiency.

Moreover, CTA says that there is nothing in the RIAS that addresses its members’ long-standing concerns over the lack of quality standards for biofuel or the impact that biofuel at certain blend levels allowed under the regulation, could have on the operability and durability of their engines and therefore the warranties covering those engines.

“There is no protection for the consumer, either from higher fuel costs as a result of the mandate, or from low-quality biofuel or blending processes that could gum up our engines,” says David Bradley, CEO of the trucking alliance. “The biofuel producers are getting literally everything they want—regulatory certainty, a captive market and massive subsidies—all of which they can take to the bank, whereas the consumer, mainly truckers, will get even higher fuel prices that we currently have at a time when trucking companies are just finding their financial legs after being ravaged by the recession, higher engine maintenance costs and the potential for their engine warranties to be voided.”

Bradley insists CTA is not opposed to the introduction of alternative fuels into the trucking industry. “We have been consistent on this point; why wouldn’t we want to reduce our reliance on oil? But, we need to be 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,” he said. 
“As it stands now, the way the government is approaching the biodiesel mandate fails on all counts. It’s clear this is not about the environment—there are ways to achieve significantly greater GHG reductions in trucking for a lot less.”

The CTA continues to talk to the federal government and has tabled proposals which it says would provide a level of comfort to the truckers, but it remains to be seen whether the government will adopt them. “When you consider what the government’s own regulatory analysis says about the mandate as currently planned, one would hope that the reasonable thing to do would be to have a bit of a re-think, but time is tight,” Bradley concluded.