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Report on the Technical Feasibility of Integrating an Annual Average 2% Renewable Diesel in the Canadian Distillate Pool by 2011

5  Market Acceptance

5.1  Introduction
5.2  Stakeholder Feedback on the Technical Feasibility of the Intended Regulation
5.3  Analysis

Market acceptance means that fuel users are consulted on demonstration projects and have indicated no further need for demonstrating the use of an average 2% blend in their operations. An assessment to confirm market acceptance includes consulting fuel users in the on-road, off-road and heating oil sectors to obtain feedback on issues to be addressed through demonstration work with regard to the use of B2 average in their industries. Following the demonstration of such issues, fuel users have provided their feedback on the use of an average B2 blend in the distillate pool in Canada and the resulting likelihood of issues in their sector.

5.1  Introduction

From Fall 2008 to June 2010, the NRDDI consulted with end-users in the on-road, off-road and heating sectors, as well as petroleum and biodiesel producers, on the technical feasibility of the intended regulation to require an average 2% renewable content in the distillate pool. These consultations identified outstanding questions regarding renewable diesel use in Canada and resulted in the development of seven NRDDI demonstrations to address these questions (see Exhibit 1). The results of these projects have been described in the preceding sections.

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5.2  Stakeholder Feedback on the Technical Feasibility of the Intended Regulation

With the knowledge and experience gained through the seven NRDDI projects and from other sources, the NRDDI once again consulted with end-users and producers on the technical feasibility of the intended regulation. Feedback received from these stakeholders is detailed below in Table 1.1. In cases where the Table provides an excerpt of the full response, the complete statements can be found in Appendix 2.

Table 1.1

End-Use Sector Association/
Organization
Feedback on the Technical Feasibility of the Intended Regulation
Heavy-duty on-road engines Canadian Trucking Alliance (CTA), Canadian Petroleum Products Institute (CPPI), Canadian Renewable Fuels Association (CRFA), Engine Manufacturers Association (EMA) and several members NRCan held a multi-stakeholder meeting on February 20, 2009 to discuss renewable diesel use in the Canadian on-road sector. The objectives of the meeting were to achieve agreement on any remaining work to be done to address questions about renewable diesel use in the on-road sector in advance of a regulation and to identify a path forward for completing any work in a timely manner.

The following are conclusions from the record of discussion that was approved by participants:

“Participants generally agreed that up to B5 is technically feasible with the following caveats:

1) Proper blending/handling
2) Blended fuel meets CGSB B1-B5 standard

There were no remaining technical issues for which a demonstration could be utilized (including 2010 engine models).”
Trucking CTA “Given the fact that heavy truck engine manufacturers will not provide assurances that fuel with biodiesel content over 5% will not cause problems with most of the engines currently in use, recent changes in the biodiesel marketplace, newly reported European research which appears to clearly show that biodiesel could actually increase GHG emissions, and the fact that some provinces have already moved into this regulatory arena, we have difficulty understanding why the Government of Canada would still pursue a national biodiesel regulation.

If it is still the federal government’s position that it should proceed with a biodiesel mandate, then:

  • The averaging provision should be removed and it be prescribed that no diesel fuel shall be sold into the general heavy commercial truck marketplace above the B5 level to reduce the risk of operability and durability problems for all heavy trucks and to protect all truck owners’ engine warranties.
  • The regulation should include a provision that will require the identification of regions and calendar dates in which biodiesel blends should not be used due to extreme cold weather.
  • Regulated quality assurance is essential.
  • Improper blending practices, even with proper quality standards, can lead to problems. Environment Canada must develop regulatory controls regarding proper blending processes.
  • A properly conducted regulatory impact statement must also be conducted to clearly isolate the cost impact of biofuel on the price of on-road diesel fuel.
  • Environment Canada should establish an office to monitor and analyze problems associated with the biodiesel mandate and to establish a help-line to receive information and provide answers to heavy-duty engine users during the introduction of biodiesel into their fleets and beyond.”
[Excerpt from the statement submitted to NRCan May 2010]
Urban Transit Canadian Urban Transit Association (CUTA) CUTA surveyed their membership in May 2010 and provided the following results (25 transit systems out of a total of 67 responded to the survey):

  • “7 respondents currently use biodiesel blends up to 10% and reported issues with cold weather mixing and use of biodiesel blends in winter blocking the filter systems. Filters were added at filling stations and they did ongoing maintenance and replacement of filters on buses and filling stations.
  • 2 respondents indicated that they had used biodiesel in the past, but do not use it now due to its higher cost.
  • 16 respondents indicated they have not used biodiesel; 11 due to fuel availability, 7 due to fuel cost and 9 due to maintenance requirements; there was a general lack of knowledge among this group of effects on warranty and older engines and cold weather operations.”
Cummins is the only manufacturer of new heavy-duty engines for the transit industry. Cummins is a member of EMA (see EMA statement below) and supports up to B5 in their engines, but recommends care and management in using blends from B6-20. Blends greater than B20 are not recommended.

[Excerpt from the statement submitted to NRCan June 2010]
Engine Manufacturers EMA “An average annual 2% renewable content in diesel fuel is technically feasible for existing heavy-duty engines and anticipated 2010 heavy-duty engines in Canada, as long as: (i) the renewable diesel fuel and petroleum diesel fuel components comply with recognized national or international diesel fuel standards; (ii) mono-alkyl esters (biodiesel) used for blending must comply with ASTM D6751 or EN 14214; (iii) fuel blended with mono-alkyl esters (biodiesel) meets CAN/CGSB-3.520 ”Automotive Low-Sulphur Diesel Fuel Containing Low Levels of Biodiesel Esters (B1-B5)”; (iv) proper blending/handling practices are implemented so as to achieve a homogeneous blended fuel containing no free water; and (v) finished fuel blends meet the requirements of CAN/CGSB-3.517 “Automotive (On-road) Diesel Fuel” or recognized international diesel fuel standards.

Any fuel not meeting the aforementioned requirements must be appropriately labelled so that operators can make an informed choice.”

[Submitted to NRCan on April 14, 2009; reconfirmed statement April 16, 2010]
Commercial and Residential Heating Canadian Oil Heat Association (COHA) “While COHA acknowledges the environmental benefits of renewable fuels, COHA also wants to ensure the quality and operability of any new fuels blended with traditional #2 heating distillate oil. COHA supports the introduction of the renewable fuels regulations in Canada subject to the approval of the appropriate CAN/CGSB standard.”

[Excerpt from the statement submitted to NRCan May 2010]
Agriculture Canadian Federation of Agriculture (CFA) “The CFA is encouraged by the results of the NRDDI projects. The available results from these projects indicate that a 2% biodiesel blend is technically feasible for the operation of machinery in the agricultural sector. From the limited sample size within the research, it appears that biodiesel can be integrated easily into farming operations and that the quality of the fuel and equipment performance can be maintained at current standards. However, if the 2% mandate is to be successful, the CFA feels that increased focus must be placed on quality control and management of diesel supply chain, particularly the cloud point of biodiesel blended fuel. If the regulations are to be successfully implemented, it is essential that the many independent dealers that farmers rely on for their fuel are given the knowledge, tools and diesel fuel necessary to ensure that biodiesel blends meet cloud point specifications.”

[Excerpt from the statement submitted to NRCan May 2010]
  Canadian Canola Growers Association “The Canadian Canola Growers Association (CCGA) strongly encourages the government of Canada to adopt a low-level biodiesel mandate in Canada. Numerous studies have shown that biodiesel blends are effective in every season, and in a wide range of equipment that is powered by diesel engines, including equipment used in transportation and agriculture.

We recognize there are small switch over costs for diesel engine operators, for example changing fuel filters which may become clogged due to the engine cleaning properties found in biodiesel. However, these transition costs and minor delays are tiny compared to the long term benefits created for the environment and the economy when biodiesel use is mandated in Canada.”

[Excerpt from the statement submitted to NRCan June 2010]
  Canola Council of Canada “Feedback we have received from our growers is that they are aware of biodiesel and its properties and where it has been available in the Canadian market have used the product at different blend levels with success. The confidence in the use of biodiesel by agriculture equipment manufacturers is reflected in their engine warranties. Some manufacturers allow up to B100 to be used, while almost all now approve the use of a B20 blend.

At the same time, actual in the field use by farmers and measured studies of biodiesel use by independent research organizations like PAMI and the SRC have confirmed there have been no operability issues with canola based biodiesel in the agriculture sector.

We believe there are no technical reasons why a B2 blend can’t be successfully used across Canadian agriculture.”

[Excerpt from the statement submitted to NRCan June 2010]
  Grain Growers of Canada “We wish to express our strong support for the adoption of a low-level biodiesel mandate in Canada. Studies have shown these blends to be effective in every season and in a wide range of diesel equipment used in agriculture.

While we recognize there may be some minor transition costs for diesel engine operations, they are small compared to the economic and environmental benefits we gain from increased use of all biofuels, including biodiesel.”

[Excerpt from the statement submitted to NRCan June 2010]
Rail Rail Association of Canada (RAC) “Natural Resources Canada (NRCan) funded a biodiesel demonstration that was lead by Canadian Pacific Railways (CP). The demonstration was conducted in a cold weather environment, on a specified CP service between Calgary and Edmonton. The biodiesel blend that was used was 5% (B5). With regard to the demonstration, CP summarized the preliminary findings as: no service interruptions; no adverse impact to locomotive engine performance or components. It should be noted that fuel efficiency has not been assessed to date. The demonstration results are promising; however, there are a number of concerns that require resolution.

First, the supply of biodiesel is not mature or sufficient in Canada. It is the opinion of the RAC that commercial scale distribution infrastructure is not available to meet the demands of the Canadian railway industry including quality, volume and geographic availability. It should be noted that CP had a limited response to a Request for Proposal to supply B5 blend fuel that met CP’s fuel specification (particularly cloud and pour points) and the applicable ASTM/CGSB standards in the Calgary/Edmonton market place. Fuel blending infrastructure was also not available resulting in less than desirable “splash blending” being used for the demonstration, which does not lend itself to providing a consistent and controllable blend.

Secondly, there is a risk that higher blends than B5 may be required in some markets for fuel suppliers to meet the pool average of 2%. Blends of higher than B5 have not been approved for use in locomotives and may pose an unacceptable risk to railway operations. In fact the RAC is aware that GE Transportation is not supporting any biodiesel blends greater than B5 for their locomotives under warrantee. In addition, the GE warrantee, for their locomotives, requires the use of biodiesel which meets the ASTM 6751-09 standard.”

[Submitted to NRCan June 2010]
  General Electric (locomotive engine manufacturer) GE’s published position statement regarding the use of alternative fuels in their locomotives:

“The results of testing indicate that a blend rate of 5% (B5) will not have a detrimental impact on the ability of the locomotive to produce its rated horsepower and comply with current US EPA regulatory requirements for emissions. Furthermore, the impact on fuel consumption at this blend level will be minimal. At this point in the biodiesel validation effort, GE is able to approve the use of biodiesel in GE’s family of locomotives powered by FDL and Evolution engines at a maximum blend rate of 5% (B5) by volume, providing the biodiesel fuel used is fully compliant to ASTM D975 - 09a Standard Specification for Diesel Fuel Oils, and the biofuel (B100) used to make the B5 meets ASTM D6751 – 09 Standard Specification for Biodiesel Fuel Blend Stock (B100 for Middle Distillate Fuels.”

[Excerpt from the position statement dated May 2010]
Mining Mining Association of Canada (MAC) “Given the fact that the government is aware of the cold temperature gelling issues, and that engine manufacturers are supportive of a biodiesel blend, the Mining Association of Canada is comfortable that a 2% biodiesel blend should not present technical issues for the mining industry. MAC supports the concept of new cleaner fuel standards being applied across the breadth of Canadian society.”

[Submitted to NRCan on May 12, 2010]
Marine Canadian Shipowners Association “Our members are not concerned about the 2% regulatory standard and do not feel that additional demonstration of these fuels will be necessary for our business sector.”

[Submitted to NRCan on June 2, 2009]
  Shipping Federation of Canada “The Shipping Federation of Canada would like to acknowledge the work undertaken by NRCan as part of the NRDDI … We would like to think that biodiesel offers a promising avenue in reducing air emissions and greenhouse gases from the marine sector, and we are pleased to see that the body of research on this topic is growing.

Unfortunately, the work did not include any experiments on oceangoing vessels, which would have addressed some of the concerns we have with respect to the operations of such vessels. While there have been several studies involving biodiesel on-board ships, none of these experiments are transferable due to the differences in engine sizes and overall operational environments. We have stated in our comments to Environment Canada that the proposed regulations lack specific information as to how the regulations would be applied to the marine sector. More specifically, the proposed regulations do not offer insight as to whether their provisions would be aligned with the ISO Petroleum products – Fuels (class F) – Specifications of marine fuels, which has been developed to ensure fuel quality.

The newly completed standard, ISO 8217:2010 Petroleum products – Fuels (class F) – Specifications of marine fuels published on June 15, 2010, specifically excludes biodiesel products … Working Group 6 under the Technical Committee 28/SC4, which specifically addresses marine fuel standards, recommends that the possibility of including biodiesel in marine fuels be debated at the next revision.

It is of the utmost importance to our industry that fuel purchases are tested for compliance with these specifications, since non-conformity will effectively void the warranty on the ships’ engine. … Given that biodiesels were excluded from the new ISO 8217 norm … we cannot endorse a 2% renewable diesel use for use in the Canadian marine sector.”

[Excerpt from the statement submitted to NRCan June 2010]
  Chamber of Shipping of B.C. “The only concern expressed by our members has been one of the biodiesel content potential price differential, however this does not currently appear to be a factor. In researching this subject I did come up with the following article on ISO standardization which was a concern well expressed by the Shipping Federation of Canada during the recent teleconference.”

See feedback from the Shipping Federation of Canada above with respect to the ISO standardization issue.

[Excerpt from the statement submitted to NRCan June 2010]
Construction Canadian Construction Association “Our Environment and Research and Innovation Committees were treated to a presentation by FPInnovations on their study: Demonstration of the Potential Use of Biodiesel for Off-Road Machinery in Canadian Highway Construction and Forest Operations. The study focused on biodiesel use in off-road operations and found no technical issues exist with regard to widespread substitution of B2 for conventional diesel fuel. While the use of higher content biodiesel presented some performance issues (such as poor engine performance due to the solvent properties of biodiesel and the circulation of dislodged build-up throughout the fuel system), these performance issues were overcome with thorough fuel tank cleanings prior to biodiesel use. Long-term storage of higher content biodiesels in remote areas were also raised as a potential concern, however, given that most remote construction occurs on a seasonal basis (spring to fall), any storage challenges (even in remote areas) can be overcome by a change in fuel procurement policies. Therefore, CCA’s concerns with regard to the mandated use of B2 are not technical in nature.”

[Excerpt from the statement submitted to NRCan June 2010]
Forestry Forest Product Association of Canada (FPAC) “The forest products industry is a sizable consumer of diesel fuel, particularly in the forestry and logging operations, but also for some on-site mill operations. We are pleased that FPInnovations has been able to identify no technical operational barriers to the potential substitution of biodiesel alternatives in the forest products industry. There are two other considerations to realize this potential. An assessment of the market supply chain dynamics in remote and rural areas where the industry operates is needed. An important consideration of that supply chain could be the industry’s future ability to produce its own biofuels, as evidenced in FPAC’s recent Future BioPathways report. Also, the Renewable Fuels regulations as currently proposed restricts the regulated pool of distillates to diesel substitutes and domestic home heating fuels which is excessively narrow and may slow the development of a number of potentially impactful industrial biofuel applications. Including industrial applications would also enhance the socio-economic impacts the government hopes to generate by implementing these regulations.”

[Submitted to NRCan June 2010]
Fuel Producers/
Marketers
Association/
Organization
Feedback on the Technical Feasibility of the Intended Regulation
Petroleum Products CPPI CPPI and its members have participated to a series of programs under the National Renewable Diesel Demonstration Initiative, led by Natural Resources Canada. During the course of the programs, valuable insight has been gained, on the impact of various biodiesel types and renewable diesel blends, under Canadian conditions. In some cases, the gap between experimentation and practical application remains substantial and must be adequately addressed in the final decision-making to ensure a seamless introduction of biodiesel blends into the market place.

Those findings need to be taken under consideration by the Standards setting organizations, such as CGSB, to develop and adopt the required standards that will ensure consumers that the new products are fit for intended purpose, when introduced into the market. CPPI does not support the introduction in the market place, of a new fuel product, without the appropriate standard.

The introduction of Renewable diesel and Biodiesel blends requires extensive and careful planning, as it impacts on many segments of the supply chain, from Refinery to storage, blending and distribution. Sufficient time must be available, from regulatory certainty, to allow proper infrastructure design, construction and commissioning. … The NRDDI Biodiesel Distribution Infrastructure Analysis is expected to provide additional insight on these important aspects. CPPI members have provided detailed information on the specific requirements and associated timelines and therefore shall be considered a key element in assessing the technical readiness.

In closing, CPPI stresses that these three aspects must be taken into consideration; that is:
  • understanding the conditions and limitations,
  • having appropriate standards in place, and
  • providing sufficient time to implement the necessary infrastructure.
Only when those three aspects are present, one can consider the supply chain is technically ready for a seamless transition to the end consumer.”

[Excerpt from the statement submitted to NRCan June 2010]
Renewable Fuels CRFA “The CRFA believes that all of the NRDDI projects have successfully demonstrated the full operability of renewable diesel fuels under Canadian conditions in a variety of applications that are representative of the renewable diesel fuels are likely to be used in Canada. In many cases these projects were designed to test the fuels in operating conditions far more severe than most users will experience and yet no significant issues were identified in the programs.

The CRFA supports the use of renewable fuels that are commercially proven, produced under industry best practices, and distributed under established fuel specification standards. All of these criteria have been well documented for biodiesel use in Canada and there are no reasons not to proceed with the 2% renewable requirement in the Canadian distillate pool.”

[Excerpt from the statement submitted to NRCan June 2010]

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5.3  Analysis

5.3.1  On-road vehicles

Heavy-duty engine manufacturers have publicly endorsed the use of up to B5 in their engines. In February 2009, the CTA, representing the Canadian heavy-duty trucking industry, agreed that up to B5 is technically feasible as long as the fuel is properly blended and handled and the blended fuel meets the CGSB B1-B5 standard. The CTA has, however, proposed modifications to the intended regulation to address their concerns about blends above B5, use of B5 in extreme cold weather conditions and consistent fuel quality. The heavy-duty trucking sector represents about 56% of distillate fuel use in Canada (see Figure 2).

5.3.2  Off-road equipment

Industry associations representing stakeholders in the forestry, construction, mining, rail and agriculture sectors have indicated they have no further technical concerns related to an average 2% renewable content in diesel fuel mandate. These sectors represent a further 23% of Canadian distillate users.

Distillate use in the marine sector is approximately 3% of the total pool and is used by some of Canada’s domestic fleet to power their main propulsion engines, as well as in on-board power generators of many domestic and international carriers. The Canadian Shipowners Association, representing the domestic marine industry, has no concern regarding the proposed 2% mandate and sees no further need for demonstrations given the results of previous demonstrations of low-level biodiesel blends in domestic marine vessels. International marine carriers, represented here by the Shipping Federation of Canada and the Chamber of Shipping of BC, use bunker fuel for their main propulsion systems, which is not covered by the proposed regulation. However, they have noted that there is coming Canadian legislation that may require them to use distillate fuel for their main propulsion system when in Canadian waters, through a North American Marine Emissions Control Area, and that the current international fuel standard for marine fuel does not allow for biodiesel content due to remaining questions about impacts on these large marine vessels. They are, therefore, asking for a coordinated approach between the requirements of this regulation and the proposed marine emissions control area regulations. A demonstration to determine any potential impacts of biodiesel use in large ocean-going vessels is expected to conclude in 2012.

5.3.3  Stationary equipment

Heating oil furnaces use about 14% of the Canadian distillate pool. The oil heat sector, represented by the COHA, has indicated its support for the introduction of the renewable fuels regulations in Canada subject to the approval of the appropriate CAN/CGSB standard. The heating oil standard is currently being revised to allow up to B5 in Type 2 heating fuel oil and is expected to be published in 2010/11.

5.3.4  Fuel producers

CPPI members and other independent petroleum fuel producers would have to comply with the intended regulation once it comes into effect. CPPI has developed a consensus statement that sets out three areas that its members believe need to be addressed before the supply chain will be technically ready to seamlessly implement the regulation: 1) understanding the conditions and limitations; 2) having appropriate standards in place; and 3) providing sufficient time to implement the necessary infrastructure. While the NRDDI has contributed to the body of knowledge about the use of renewable diesel blends under Canadian conditions, CPPI believes that, in some cases, there is still a substantial gap between experimentation and practical application of renewable diesel blends in the marketplace. With respect to appropriate standards, CPPI is supporting the development of a Canada-specific B100 standard with tighter requirements for cold flow properties. This standard is expected to be ready for balloting at CGSB in 2010. CPPI has also stressed the importance of providing adequate lead time for installation of the appropriate infrastructure to ensure a seamless transition to renewable diesel blends.

CRFA represents many of the leading Canadian producers of biodiesel. They have stated that the NRDDI projects have demonstrated that there are no operability issues with the use of renewable diesel blends in Canada. They believe that it has been well documented in Canada that the use of renewable diesel is commercially proven and renewable diesel is being produced under industry best practices and distributed under established fuel specification standards. As such, they have stated that there should be no delay in implementing the intended regulations.

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