Canola plants on a farm near Cremona, Alta., in July. Beijing announced 75.8-per-cent duties on Canadian canola seed Tuesday.Jeff McIntosh/The Canadian Press
Canada’s canola industry is asking Ottawa to limit imports of used vegetable oils to shore up domestic demand as it loses its most important market for seed exports.
On Tuesday, Beijing announced 75.8-per-cent duties on Canadian canola seed.
The move comes toward the end of a one-year anti-dumping probe. China’s Ministry of Commerce argues that Canada’s canola sector benefited from extensive government subsidies and preferential policies that distort markets.
It is an escalation of previous trade barriers on canola. In March, Beijing imposed 100-per-cent tariffs on canola oil and meal (a byproduct of processing the seed). All Canadian canola products are now effectively barred from the largest global vegetable-oil consumer.
Reeling from this loss, the canola industry is requesting that Ottawa stop handing domestic market share to foreign industry by incentivizing imports of used cooking oil.
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In 2024, 23 per cent of the feedstock used to create a key clean fuel – renewable diesel – was used cooking oil.
The used oil is classified as less carbon-intensive under Canada’s clean-fuel regulations than canola oil, driving producers to use the feedstock.
But this product has dubious origins. Investigations from the United States and European Union suggest used cooking oil – largely sourced from Asia – might contain palm oil, a product tied to deforestation.
Ottawa therefore needs to rethink how it treats imports of used vegetable oil, said Chris Davison, president and chief executive officer of the Canola Council of Canada.
“We believe it is important for the federal government to level the playing field,” he said.
The timing has rarely been more pressing, said Chris Vervaet, executive director at the Canadian Oilseed Processors Association. A policy to curb imports of used cooking oil so canola seed could capture just half of the market would use 2.5 million tonnes of canola seed, 42 per cent of the total volume exported to China in 2024.
“Used vegetable oil is really eating the lunch of the canola industry,” Mr. Vervaet said. “But we can be the masters of our own destiny.”
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Clean fuels use vegetable oils from canola as feedstock. The seed is crushed and turned into oil, which is then refined.
The federal government incentivizes production through the Clean Fuel Regulations. Fuels that measure below the carbon-intensity mandate earn credits, and the lower the intensity, the more credits earned. The environmental impact of the feedstock affects the score and the credits received.
The Clean Fuel Regulations came into force in 2023 and have driven substantial investment in the canola industry, Mr. Vervaet said.
Since 2021, several grain giants – Richardson International Ltd., Cargill and Louis Dreyfus Co. – have invested approximately $2-billion combined in Canadian crush plants (where the seed is broken down into oil, which is then sent to refineries).
By 2026, Canada will have the crush capacity to process 75 per cent of the canola crop grown in the country, he said. The three newest plants alone will have the ability to process 3.5 million tonnes of canola seed, he said.
Major investments in the second stage of processing are also coming online.
In July, a $720-million Imperial Oil facility finished construction and began operations. At full capacity, the site can churn out 20,000 barrels a day of renewable diesel and could process 2.5 million tonnes of canola seed annually.
Other companies – such as Parkland Corp., which operates a sustainable aviation fuel facility in Burnaby, B.C. – are exploring co-processing. This system blends renewable feedstocks such as canola oil using existing infrastructure.
The canola industry is not asking for complete market share, Mr. Vervaet said, adding that a diversified supply for feedstock is important. However, the clean-fuel standards are handing much of the gains from these investments to foreign producers, he said.
Used cooking oil is a popular feedstock among fuel producers because it has the lowest carbon-intensity score, meaning producers get high carbon credits for using it.
But used cooking oil is hard to trace. It comes from countless restaurants and other food establishments across the world.
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In August, 2024, the U.S. Environmental Protection Agency launched an investigation that audited the supply chain for specific imported feedstocks, including used cooking oil. The EU has also launched investigations into the feedstock.
The concern is that used cooking oil is not a waste product, and instead includes palm oil, said Fred Ghatala, president of Advanced Biofuels Canada.
Since launching their investigations, the U.S. and the EU have responded to these concerns by disincentivizing used cooking oil under their own clean-fuel regulations.
Under U.S. President Donald Trump’s Big Beautiful Bill, which became law in July, no feedstock from outside North America can qualify for the credits.
Canada should also prioritize domestic production, Mr. Ghatala said, adding that if it does not, the situation could worsen as product intended for the U.S. market might come north of the border.
Sourcing feedstock from foreign markets also defeats one of the primary objectives of the clean-fuel regulations, he added.
“If you look around at renewable-fuel policies globally, you’ll find them returning to their original raison d’être, which is to provide a market for excess production that is insulated from foreign interference.”
The Liberal government pledged to examine measures to reduce Canada’s reliance on imported clean fuels during the election campaign, Annie Cullinan, director of communications for the Office of the Minister of Agriculture and Agri-Food, said in a statement.
The minister remains focused on these objectives, she added.