Are U.S. corn growers benefitting from Canada’s biofuel policies?

‘Buy Canadian’ is the national trend of 2025, as millions of people are making patriotic choices at grocery stores and shopping malls across the country.

An exception to that trend is in the gas tanks of Canadian vehicles.

About 60 percent of the ethanol in gasoline, at gas stations from Yarmouth, N.S. to Langley, B.C., comes from ethanol manufactured in America.

Last year, Canada imported about 2.4 billion litres of ethanol. The 12 ethanol plants in Canada produced around 1.8 billion litres.

“Canada is the second largest ethanol importer in the world, and nearly all these imports come from the United States,” says a U.S. Department of Agriculture Biofuels Annual report, published in December.

The report notes that U.S. ethanol exports to Canada have doubled over the last few years:

• From 2017 to 2021, Canada imported 1.2 billion litres of ethanol from America
• In 2023 and 2024, imports were approximately 2.4 billion litres

“Fuel ethanol imports grew significantly due to the CFR (Canada’s Clean Fuel Regulations) early credit creation mechanism that took effect in 2022 and CI-reduction (Carbon Intensity) requirements that came into effect in 2023,” says the USDA report.

“Imports increased 39 percent year-over-year in 2022, and another 40 percent in 2023.”

The data suggests that U.S. farmers and ethanol producers are benefitting from Canada’s clean fuel policies.

It’s not that simple, however, as Canada doesn’t produce enough corn and ethanol to supply the domestic market.

Canada’s 12 ethanol plants can produce about 1.8-1.9 billion litres of ethanol, per year.

“It (capacity) is under two billion litres. We really haven’t added to ethanol capacity, for years,” said Ian Thomson, past president of Advance Biofuels Canada.

The biggest plants are in Ontario, but ethanol production is also scattered across the Prairies.

America has a massive advantage in ethanol production, mostly because of corn.

U.S. farmers grow 92-96 million acres of corn, while Canadian acres are approximately 3.7 million.

“We don’t have a lot of spare corn kicking around. (In) Ontario, some of the corn that goes into ethanol in Ontario is imported,” Thomson said.

“The feedstock in (the Prairies) is mostly wheat, (which) is not as effective as feedstock as corn…. Even ethanol plants on the Prairies import U.S. corn for production.”

America also has advantages around the scale of their ethanol plants, population density and the distance from corn production to ethanol plants.

“The Americans just have a more cost-effective set up,” Thomson said. “You look at a state like Iowa, the (ethanol) numbers are eye popping.”

Iowa has 42 ethanol plants and the state can produce 4.1 billion U.S. gallons (15.6 billion litres) annually, says www.iowacorn.org.

The jump in exports of ethanol to Canada, from states like Iowa, does mean that Canadians are supporting American farmers when they fill up their tanks with gasoline.

At the Commodity Classic trade show, held in Denver March 2-4, a few speakers mentioned the importance of the Canadian ethanol market for U.S. corn growers.

However, if Canada doesn’t have the necessary feedstocks, the country shouldn’t invest billions in additional ethanol production.

“Because ethanol is a low cost compliance option (for clean fuel regs) … Canada has been willing to import (it) to meet the environmental objectives,” Thomson said.

“Would it be good if we had more ethanol production in Canada? Unquestionably. But then we’re back to our conversation about feedstocks (and lack of corn).”

What makes more economic sense, are regulations and policies that support the conversion of canola seed to biofuels in Canada.

“In the case of canola, we’re a canola powerhouse,” Thomson said. “(Developing) more home-grown markets for canola is a complete no-brainer. The provincial and federal governments should be tripping over themselves to ensure that we’re using more domestic canola in domestic biofuel production.”

This is the ideal time to increase domestic production of renewable diesel and biodiesel, given the threat of U.S. tariffs on Canadian canola oil and Chinese tariffs on canola meal and oil, Thomson said.

“Canada really needs a strategic, domestic canola utilization policy,” Thomson said. “Am I saying we should have protectionist, made in Canada policies? No. But in the current context with trade rules out the window… Canada has to look as to how to protect its own interests.”

Tags: ethanol, exports, corn, United States, Canada, Production, imports