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The Canada Border Services Agency (CBSA) announced on Thursday, March 6, that it is opening an investigation to determine if the US is unfairly subsidizing and dumping renewable diesel in Canada; changing US biofuel policy seems to be a contributing factor in this investigation.
The Blender’s Tax Credit (BTC), which expired on December 31, provided a $1-per-gallon tax credit for biodiesel and renewable diesel blended into the US transportation fuel pool. The BTC was available to both domestic and foreign fuel producers exporting to the US.
The BTC was replaced by the 45Z Clean Fuel Production Credit (CFPC) on January 1. The 45Z tax credit provides a lesser credit than the BTC; it is determined by the carbon intensity of the feedstock used to create the fuel and is only available to US domestic producers.
Canadian firms, along with other countries that had been incentivized under the BTC to ship renewable diesel and biodiesel to the US, are no longer eligible to receive a tax credit. This has reduced the amount of US biodiesel and renewable diesel imported by the US, causing trade flow and market share concerns for some companies that had been dependent on a reciprocal US relationship.
Conversely, US firms can collect the taxpayer-funded 45Z credit on fuel exported to other countries. This reduces the price at which the exported fuel can be sold.
Learn more about our biofuel prices and tax credit data
A lack of clarity surrounding the 45Z credit has also caused US blending of biodiesel and renewable diesel to slow, resulting in US firms looking to the export market to resolve supply issues, Fastmarkets has heard.
A complaint by Canadian firm Tidewater Renewables alleges that an increase in dumped and subsidized US renewable diesel imports has caused the company a loss of market share and sales, leading to price depression and reduced profitability.
According to Tidewater, the “CBSA confirms that Tidewater Renewables provided satisfactory evidence to support its allegations that US renewable diesel imports were subsidized and dumped, causing harm to Tidewater.”
The CBSA said in an email to Fastmarkets, “The CBSA and the Canadian International Trade Tribunal (CITT) both play a role in the investigations. The CITT will begin a preliminary inquiry to determine whether the imports are harming Canadian producers and will issue a decision by May 5, 2025. Concurrently, the CBSA will investigate whether the imports are being sold in Canada at unfair prices and/or are being subsidized, and will make preliminary decisions by June 4, 2025.”
Tidewater anticipates “provisional duties will be imposed at the Canada-US border within 90 days. Final duties, which would be in place for five years and can be renewed every five years thereafter, could be imposed by September 2025, following a ruling by the CITT. If final duties are imposed at the levels expected by management, valued between $0.50 and $0.80 per liter of renewable diesel imported from the United States, these duties would support long-term market stability for Tidewater Renewables’ renewable diesel production and its related emission credits.”