No proof of fuel savings with biodiesel: experts report

OTTAWA – A recent fuel-cost analysis suggests there would be no savings for diesel fuel consumers if the government goes ahead with a proposed biodiesel mandate commencing July 1.

The analysis, by Kent Marketing Services Limited, also counters claims made by the Canadian renewable fuels industry that Canadians would be paying dramatically higher gas prices if not for the ethanol mandate that came into force last year.

“It is entirely likely that a more robust ethanol renewable fuel standard (10 per cent for example) might lead to higher gasoline prices, particularly if existing incentives and tax exemptions were removed, since ethanol is a relatively expensive gasoline additive,” the report states. “The same may very well hold true for biodiesel, once better price/cost transparency is established for this product.”

The analysis was conducted for the Canadian Trucking Alliance (CTA) by Michael J. Ervin, vice president of Kent Marketing Services, a London, Ont.-based consultancy which specializes in petroleum industry issues.

The results have led CTA to urge federal environment minister Peter Kent to rethink the mandate and call upon industry minister Christian Paradis to ensure that the impact of renewable content on the price for gasoline and diesel fuel forms part of the work of a parliamentary committee that will be reviewing pricing methods.

The federal government’s own Regulatory Impact Analysis Statement on the proposed biodiesel mandate concluded that biodiesel will be more expensive than regular diesel (albeit by differentials that are lower than what empirical evidence from the U.S. suggests is actually the case) and fuel economy will be lower. It also concluded that the net cost to taxpayers from the mandate will total $2.5 billion over the next 25 years.

CTA has been critical of the proposed biodiesel mandate, saying it provides no consumer protection from higher fuel costs or damage to engines and offers virtually no environmental benefit.