Canola’s Role at the Biofuels Table

Prairie farmers are beginning to connect the dots between biofuels and canola prices. And for good reason. The growth of renewable diesel and sustainable aviation fuel is quickly becoming one of the biggest demand drivers for Canadian canola.

Canola producers are well-positioned to benefit. But many growers still do not fully see how biofuels are directly driving market demand for their crop.

WHAT ARE BIOFUELS AND WHY DO THEY MATTER?

Biofuels are fuels made from renewable biological materials such as crops, plant oils, and organic waste, rather than fossil fuels. Common examples include ethanol, renewable diesel, and sustainable aviation fuel.

Because these fuels offer lower lifecycle greenhouse gas emissions and can be used in today’s engines, biofuels are increasingly being adopted by transportation sectors looking to reduce their environmental footprint.

For canola farmers, that shift is creating real demand.

THE RELEVANCE OF BIOFUELS

The reality is that the demand for Canadian canola oil is insatiable, but most Canadians do not realize what need these crops eventually fulfill. Most farmers understand that more crush demand can support canola prices, but where the story sometimes gets fuzzy is what happens to the oil after crushing.

Trade flow data from the 2024 canola crop year suggests that nearly 1 in 3 acres of Canadian canola ended up as feedstock for biofuels production in either Canada, the United States or the European Union.

Biofuels markets also open doors that traditional food markets sometimes restrict. For example, limits on GMO crops in parts of the EU can constrain food use, but canola oil remains a viable biofuels feedstock in those markets.

Industrial transportation sectors, including aviation, rail, and marine, are in search of ways to minimize their environmental impact. However, their fleets of internal combustion engine planes, trains, and vessels will not simply be shuttered on a random date on a calendar. Instead, they are looking to transition to fuel sources that allow the fleets of today to operate for their entire life. This is why the global demand for refined biofuels like renewable diesel or sustainable aviation fuel will continue to rise over the coming years.

One of the biggest global bottlenecks for biofuels is access to reliable feedstocks.

Current options include:

• Corn, wheat and cellulosic fibres for ethanol
• Soybean, canola oil, waste fats and used cooking oil for biodiesel

Many of these sources are either limited in supply or still face economic and technical hurdles at scale.

In North America, canola oil stands out as one of the most readily available and scalable feedstocks for renewable diesel production. That reality is a major reason behind the wave of new crush investment across the Prairies.

BIOFUELS OFFER A PATH TO PRICE STABILITY

In March 2019, China suspended canola seed imports from major Canadian exporters, so the canola industry made a concerted effort to change the demand sources for the biofuels industry. This resulted in the last seven years seeing substantial capital investment into increasing our canola crush capacity across the Canadian prairies from 10.5 million metric tonnes (MMT) to 15 MMT by the end of 2026. That will allow the industry to crush upwards of 75% of the canola that is grown in 2026 and into the future.

Crushers have been clear: biofuels demand is a major driver behind these investments.

WHY WE NEED CANADIAN BIOFUELS AND THE IMPACT OF A CANADIAN BIOFUELS INDUSTRY

Few projects illustrate the scale of demand better than Imperial Oil’s renewable diesel refinery in Strathcona, Alberta. The recently commissioned refinery will have the capacity to produce 1 billion litres of renewable diesel using canola oil. That facility at peak production will demand 1MMT of canola oil, or 2.5MMT of seed to be crushed and used in Alberta.

LeftField Commodity Research recently completed a study into the economic value of the Clean Fuels Regulation (CFR), a current domestic biofuels policy. Their findings show that if the CFR had disappeared in the 2025 growing season, Canadian canola farmers could have lost out on a collective $600 million of value for their canola seed in just the last crop season.

“Nearly one in three acres of Canadian canola ended up as feedstock for biofuels last year, and that demand is only growing.”

Up to this point, Canada’s demand for biofuels has been met by exported fuels like ethanol and bio-based diesel from the U.S. However, investments like Imperial’s Strathcona renewable diesel refinery will help to change that. In our current political climate, Canada is searching for major project investments that will strengthen our economy, reduce U.S. dependency and offer security and resiliency.

THE BOTTOM LINE

Canada is looking for major projects that strengthen the economy, improve energy security, and reduce reliance on imported fuels. Biofuels check all three boxes. For canola farmers, the message is straightforward: biofuels are no longer a side story. They are becoming a core pillar of long-term demand.

Understanding that connection helps explain why crush capacity is expanding, why new refineries are being built, and why policy debates around clean fuels matter at the farm gate.

WHY THIS MATTERS

• Biofuels are driving long-term demand for canola.
• More crush capacity supports stable, stronger prices.
• New refineries create domestic markets and reduce dependence on exports.
• Policies like the Clean Fuels Regulation impact farm gate value.

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