SASKATOON — Canada’s oil refiners are working on a new technology that could consume millions of tonnes of canola oil per year.
Patrick Bergermann, associate vice-president, energy roadmap, with Federated Co-operatives, says Canadian refiners are keenly interested in co-processing, which is a more efficient way to produce biofuel.
It allows refiners to use existing production facilities to make biofuel, rather than building expensive biodiesel or renewable diesel plants.
Co-processing enables refiners to simultaneously run canola oil and crude oil through their existing facilities and generate carbon credits from the resulting fuel.
The more traditional approach is to use separate facilities to create regular fuel and biofuel and blend the two together.
WHY IT MATTERS: Proponents say increased domestic demand for canola reduces Canada’s reliance on fickle export markets like China.
“I don’t think that there is a refiner in Canada that isn’t at least testing (co-processing),” said Bergermann, who recently delivered a presentation on biofuels at the Seeds Canada 2026 annual meeting.
The co-processing feedstock of choice is refined, bleached and deodorized canola oil.
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“It’s clean, it’s easy to utilize and it’s fairly good on some of the units,” he said.
Refiners must invest in dewaxing catalysts, but that’s about it for extra costs.
“Most of our peers in Canada’s refining sector share our view that this represents a far more capital-efficient way for the country to build renewable diesel production,” said Bergermann.
If refiners in Ontario and Western Canada used 10 per cent co-processing in their catalytic cracking units and five per cent in their hydrotreater units, it would create a brand-new market for 2.7 million tonnes of canola oil per year.
“That’s the equivalent of about five crush plants,” said Bergermann.
The only thing holding refiners back from commercializing the technology is the high cost of canola oil compared to crude oil.
“The difference there is big enough that the CFR (Clean Fuel Regulations) credit values would need to rise a bit more to be able to justify turning it on full-time,” he said.
After indefinitely shelving plans last year for a stand-alone renewable diesel plant fed by a joint-venture canola crush plant, Federated Co-operatives, operator of the Co-op Refinery Complex at Regina, has completed co-processing trials on its existing catalytic cracking and hydrotreater units.
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FCL.crs
That is why farm organizations, biofuel groups and oil refiners are lobbying Environment Canada to amend the CFR to include a multiplier that would give refiners extra credits for using Canadian feedstocks such as canola oil.
The multiplier would narrow the gap between crude oil and canola oil prices.
“If those pieces fall in place, you’re going to see some movement on co-processing in a significant way,” said Bergermann.
Some refiners are already using co-processing technology, but many more are waiting for a market signal from government.
“Certainly, in the next couple of years, there would be a lot of movement that would happen if the right policy framework is in place,” he said.
Co-processing has already been approved as a legitimate pathway under the CFR. Refiners just need to apply to Environment Canada to have their assets and feedstocks certified.
Bergermann said Canada can’t afford to make the same mistake it made with ethanol policy, where 64 per cent of the domestic demand is being met by imported product.
Chris Vervaet, senior associate with T. Bjornson and Associates Inc. and former executive director of the Canadian Oilseed Processors Association, said canola crushers have done their part to prepare for this potential new source of demand.
They invested $2 billion to expand Canadian crush capacity by 40 per cent. Three-quarters of the country’s canola production is now being processed at home.
Vervaet said Canada’s biofuel policy added nearly $600 million to the farmgate value of canola in 2025-26, which amounted to an extra $0.62 per bushel.
A minor feedstock
However, the returns should be better than that. Canola accounted for only 29 per cent of the feedstock share for biodiesel and renewable diesel in 2024. Used cooking oil and tallow contributed 53 per cent by comparison.
“In our own backyard we’re not even the dominant feedstock, which is disappointing,” he said.
Co-processing has already been approved as a legitimate pathway under Canada’s Clean Fuel Regulationsfor refiners such as Regina’s Co-op Refinery Complex to produce biofuels in future.
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Chinaface/iStock/Getty Images
The other thing that concerns him is the “stroke-of-pen risk” for Canadian biofuel policy.
Biofuel is a non-partisan issue in the United States, but that is not the case in Canada.
Conservative party leader Pierre Poilievre considers the CFR to be a “second carbon tax,” driving up the cost of living for Canadian consumers.
Bergermann said the first renewable fuel standard mandate happened under a Conservative government, but today, the CFR is very much viewed as a Liberal policy.
“That’s one of the biggest things we need to change in the agriculture industry is to make sure it becomes a non-partisan issue,” he said.
Bergermann noted that when the Republicans are in power in the United States, biofuel is heavily promoted as being good for rural economic development.
When the Democrats are in power, the lobbyist narrative quickly shifts to emissions reduction and environmental benefits.
Production ‘insufficiently incented’
Canada and the U.S. have taken opposite approaches to biofuel policy. In Canada it has always been about creating biofuel demand, while the U.S. has focused on production incentives.
“The U.S. has the capacity built and they’re looking for a market, and we’ve built a market but have insufficiently incented the production to fill that market need,” he said.
Bergermann hopes the promised CFR amendments address that shortcoming and create policy that drives production.
“Production is where the jobs are,” he said.
In the meantime, FCL has completed its co-processing trials on both its catalytic cracking and hydrotreater units and is pleased with the results.
“We’ve got some adjustments we’re going to make based upon the trial results, but it looks really promising.”