The Impact of Trade Barriers on Mandated Biofuel Consumption in Canada
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In 2008 the Canadian government passed amendments to the Environmental Protection
Act requiring five percent ethanol in transportation fuels sold in Canada by 2010 and two percent renewable content in diesel and heating fuels by 2012. Agricultural
commodity and other groups have lobbied for further marketplace intervention that
would ensure the biofuel needed to meet the legislated requirement be produced from
domestic sources. Indeed, many of these special interests would like the biofuels
content increased from five to ten percent and for the increase to be met by domestic
firms only. The objective of this study is to compare the relative economic impacts in
Canada of achieving a ten percent biofuel content either through increased imports or
by substituting domestic production in place of increased imports.