Canada’s Farms and Fuels Alliance (FFA) is urging the federal government to quickly act on its earlier commitment to strengthen the Clean Fuel Regulations (CFR) and introduce measures that would safeguard Canada’s domestic biofuels industry, including a proposed credit multiplier for Canadian-produced ethanol. The alliance is calling for implementation this summer, arguing that urgent policy adjustment is needed to restore competitiveness in a market increasingly dominated by subsidized imports.
The appeal references Prime Minister Carney’s September 5, 2025, commitment to amend the CFR to better support domestic clean fuel producers. According to FFA, delivering on that promise through a concrete policy mechanism—specifically a minimum 1.4x credit multiplier for Canadian ethanol—would help correct a growing imbalance that is undermining investment in Canada’s renewable fuel sector.
At the heart of the issue is the role ethanol plays in Canada’s fuel supply. Produced primarily from field corn, ethanol is widely used as a renewable blending component in gasoline, helping reduce greenhouse gas emissions while supporting agricultural markets. Canada’s ethanol sector has made significant capital investments over the years, building advanced production facilities and sustaining thousands of jobs in rural communities. It also provides a key market for farmers, purchasing roughly one in every three bushels of Ontario corn.
Despite this domestic foundation, industry leaders say Canada is increasingly relying on imported ethanol. Current estimates suggest that about 70 per cent of ethanol blended into Canadian gasoline is sourced from outside the country, a sharp increase from less than half just five years ago. FFA and industry stakeholders argue that this trend reflects a structural competitiveness issue rather than a lack of domestic capacity or demand.
A major factor cited in this shift is U.S. policy support for ethanol production. Under the 45Z Clean Fuel Production Credit, American ethanol producers receive federal incentives that can amount to as much as 36 cents per litre. This program, extended through 2029 under the One Big Beautiful Bill Act, effectively lowers production costs for U.S. exporters. Canadian industry representatives say that when this subsidized ethanol enters Canada, it benefits from the same credit treatment under the CFR as domestically produced fuel, placing Canadian producers at a disadvantage in their own market.
FFA argues that the CFR framework was developed before such large-scale foreign subsidies existed and therefore does not adequately account for the current competitive landscape. As a result, domestic producers are losing market share despite strong production capacity, environmental benefits, and established supply chains within Canada.
The alliance maintains that adjusting the CFR through a credit multiplier is a targeted, policy-consistent solution. A 1.4x multiplier for Canadian-produced ethanol would effectively enhance the value of domestically produced clean fuel credits, helping to offset the advantage provided by U.S. subsidies without requiring new direct government spending. Supporters of the proposal say it would simply recalibrate the system to reflect present-day market conditions and ensure fair competition between domestic and imported fuels.
Industry leaders also point to a significant pipeline of stalled investment. According to FFA, more than $1 billion in private-sector ethanol projects—particularly in Ontario and Quebec—are currently on hold. These projects are described as “shovel-ready,” meaning they could proceed quickly if policy certainty is restored. Companies, however, are waiting for a clearer and more predictable regulatory signal before committing capital, citing uncertainty around long-term returns under current CFR conditions.
Farms and Fuels Alliance Urges Government to Act on Clean Fuel Commitment for Canadian Ethanol This Summer
Executives within the sector emphasize that the request is not for subsidies or new government programs, but for policy alignment with previously stated government commitments. Kevin Norton, CEO of Alco Energy Canada, noted that the adjustment being sought is intended to ensure the CFR functions as originally intended, supporting domestic clean fuel production and investment stability without requiring additional fiscal outlays.
Agricultural stakeholders are also highlighting the importance of ethanol demand for farmers. Grain producers, particularly in Ontario, rely heavily on ethanol plants as a consistent and large-scale buyer of corn. Industry representatives argue that strengthening domestic ethanol production would have a direct positive impact on farm income stability, rural economic activity, and long-term agricultural resilience.
Jeff Harrison, Chair of Grain Farmers of Ontario, emphasized that farmers are prepared to meet growing demand for low-carbon fuels, but require a policy environment that allows domestic producers to compete effectively. He noted that feedstock supply is not a limiting factor and that Canadian agriculture is well positioned to support an expanded biofuels sector if market conditions are favorable.
FFA concludes that the solution is straightforward: incorporate a minimum 1.4x credit multiplier for Canadian ethanol into the upcoming Canada Gazette Part I amendments to the Clean Fuel Regulations. According to the alliance, doing so this summer would restore balance to the system, unlock stalled investments, and ensure that Canada’s clean fuel policies support domestic production while continuing to advance emissions reduction goals.
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