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National Renewable Diesel Demonstration Initiative

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

Executive Summary

Context
Comparison to Ethanol
Purpose of this Report
Technical Feasibility of the Proposed Regulation
Conclusion

Context

The Government of Canada is committed to expanding the production and use of a range of cleaner, renewable biofuels, including renewable diesel. The intent is to reduce greenhouse gas (GHG) emissions resulting from fuel use and provide new market opportunities for agricultural producers and rural communities. In December 2006, as part of its renewable fuels strategy, the Government announced its intention to regulate an annual average of 2% renewable content in diesel fuel and heating oil by 2012, upon successful demonstration of renewable diesel use under the range of Canadian conditions. In 2009, the Government announced that it would be advancing this date to 2011 or earlier, subject to technical feasibility.

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Comparison to Ethanol

As a result of provincial ethanol mandates that have been in force for several years (Saskatchewan, Manitoba, Ontario, and more recently in British Columbia), Canadian refiners and marketers have a considerable amount of experience with blending ethanol into the gasoline pool. Lessons learned and blending taking place as a result of provincial mandates will help to reduce the risk associated with implementing a federal mandate requiring an average 5% renewable content in the gasoline pool.

Experience with biodiesel is much more limited in Canada (Manitoba’s mandate came into force on November 1, 2009, British Columbia’s on January 1, 2010, and recently Alberta’s mandate on July 1, 2010). Due to flexibility included in the provincial regulations, biodiesel blending in these jurisdictions has been limited to date. As a result, industry will not have the same opportunity to build on lessons learned and existing provincial mandates as they have had with respect to ethanol.

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Purpose of this Report

Due to Canada’s cold and variable climate, a number of stakeholders raised the issue that the introduction of biodiesel into the domestic marketplace could prove challenging.

To address this and other questions about the technical feasibility of renewable diesel use in Canada in advance of the intended regulation, in 2008 the Government of Canada launched the National Renewable Diesel Demonstration Initiative (NRDDI). The NRDDI actively communicated with fuel producers and end-user organizations to determine their remaining questions and identify opportunities to address them. In consultation with Environment Canada, Agriculture and Agri-food Canada and Transport Canada, seven demonstration projects were delivered by stakeholders with funding assistance from the NRDDI. A study of the readiness of Canadian petroleum distribution infrastructure was also conducted.

It is important to note that the NRDDI demonstrations were designed by industry proponents to respond to their sector’s questions about renewable diesel use in their Canadian operations. The projects were not exhaustive in their scope and in many cases were done under controlled conditions. Multi-stakeholder steering and/or technical committees helped develop and implement the projects, as well as interpret and report on the results.

The results of the NRDDI projects and other applicable research and experience in Canada and the United States have been included in this report to inform the development and implementation of the proposed regulation by Environment Canada.

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Technical Feasibility of the Proposed Regulation

The technical feasibility of an average 2% renewable content in diesel and heating oil mandate in Canada has been assessed using four key factors:

The following is a summary of the key findings of the NRDDI projects and other applicable research with respect to the four key factors. More detailed information can be found in the body of the report.

Fuel technology readiness

Renewable diesel blends can be made to conform to the latest industry accepted standards for a large variety of Canadian conditions.

Fuel supply is an ever-evolving field. With decreasing traditional fuel sources and increasing interest in reducing transportation's carbon footprint, future fuel sources will become increasingly diversified. As such, there is a constant need for continuous evolution of our understanding of fuel technologies to address new and emerging issues. All stakeholders, including fuel suppliers, users and regulators, have a role to play in ensuring the fuels being sold in Canada are fit for purpose.

Technology/End-user application readiness

Under the specific conditions encountered in the studied projects, operation on a 2% to 5% blend level (B2-B5) was not shown to cause any significant loss-of-service incidents for the on-road, off-road, and stationary genset sectors. Results for stationary furnaces indicate negligible impact on operation and performance with fuel up to B10.

End-user application issues such as biodiesel’s cleansing effect and incompatibility with some materials are known and predictable and can be mitigated through adequate training and maintenance. Older equipment and vehicles may contain materials that are not compatible with biodiesel. It is difficult to precisely estimate the extent of the negative effect on these materials due to low-level biodiesel blends. Any potential negative effects on materials due to low-level biodiesel blends are not expected to be extensive nor sudden.

Infrastructure readiness

The most significant infrastructure requirements for biodiesel blending will be found at the refinery and terminal points in the network. Transportation of diesel will also be affected.

The lead times for the required upgrades to a terminal or refinery site are as little as one year in regions where provincial mandates have been finalized. In other regions of the country, these upgrades could take up to three years. Significant logistical and infrastructure planning must be undertaken to ensure that consumers are not affected by the transition to biodiesel blends. In cases where permitting is required before construction can begin, permit approval processes will have a significant impact on timing.

Due to the nature of the required infrastructure, accelerating lead times in order to meet a mandated regulatory start date can lead to significantly increased costs and may not be possible in some cases.

Market acceptance

For the most part, fuel producers and end-users have not identified any remaining questions regarding the technical feasibility of the use of an average B2 blend in middle distillate in their operations. Almost all engine manufacturers endorse up to B5 in their engines as long as the fuel meets the appropriate quality standards.

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Conclusion

The technical information and experience gathered through the NRDDI projects and other cited research and experience in Canada and the United States provide a useful assessment of the technical feasibility of the intended regulation.

This information demonstrated the possibility for renewable diesel to meet industry accepted standards. It also provided the necessary data for industry representatives from most Canadian end-use sectors to provide their views on the technical feasibility of a 2% mandate. Stakeholders are generally satisfied that technical issues related to an average B2 blend in distillate fuel in their operations have been addressed. In order for a seamless transition to renewable diesel blends in the Canadian marketplace, it is important to provide adequate lead times for infrastructure upgrades, as well as flexibility should unexpected complications arise.

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