Canadian Biofuel Companies Looking South

Whether it’s a new movie franchise for Keanu or nightly shows on the Vegas strip for Celine, America has a history of luring high-profile Canadians south of the border.

The latest casualty of the ever-lucrative US market: green energy projects.

What happened: A group of Canadian biofuel producers are threatening to move biodiesel and renewable natural gas projects southward to take advantage of President Biden’s recently implemented Inflation Reduction Act (IRA).

• The IRA is widespread, but contains large subsidies for green energy projects, including $500 million in grants for biofuel infrastructure and extended a $1 per gallon tax credit on biodiesel.

Without similar incentives, it will be difficult for Canadian producers to be competitive with their subsidized American neighbours.

Mo Money, Mo Fewer Problems

It’s estimated that nearly $10 billion (that’s Canadian pesos) of biofuel investments are at risk of crossing the 49^th parallel if the Canadian federal government doesn’t counter with a plan to get biofuel producers to keep their projects in its backyard.

• Biofuels are exempt from the Canadian federal carbon tax, but incentives on the scale of the IRA don’t yet exist in Canada.

Experts will be waiting patiently to see if any biofuel subsidies are included in the next fiscal update this fall.

Zoom out: With the goal of net zero by 2050 on the horizon, investments in biofuels are a critical step in reducing carbon emissions along that path. Keeping biofuel projects in Canada might be a difficult yet necessary road for Prime Minister Trudeau to traverse, but maybe he can ask Ryan Reynolds or Sandra Oh for some pointers on retaining Canadian talent.