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.
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