UPDATE 3-US approves Canada crops for biodiesel use

Thu Sep 29, 2011 8:27pm GMT
 

* More Canada canola seen moving into US
    * Canada assures EPA won't bring new land into farm use
    * ICE canola futures close up 1.9 percent

    By Rod Nickel
    WINNIPEG, Manitoba, Sept 29 (Reuters) - The U.S.
Environmental Protection Agency approved the use of Canadian
crops such as canola and corn in U.S. biofuels on Thursday, a
move that lifted Canadian canola prices and may help the U.S.
meet its ambitious targets for biofuels.
    The EPA's designation of Canadian crops as a renewable
biomass will allow U.S. biofuel makers to collect tax credits
for using them, said Canola Council of Canada president JoAnne
Buth.
    "I suspect we will see more canola moving into the U.S.
now," Buth said in an interview.
    ICE Canada canola futures closed up 1.9 percent
exceeding gains in other related markets.
    Canada becomes the first country outside the United States
to receive approval under the EPA's land use test on an
aggregate basis, said Ben Evans, spokesman for the U.S.-based
National Biodiesel Board.
    That means Canada has provided assurances that overall it
is not bringing more net farm land into production, so farmers
don't have to individually prove the same thing to qualify
under the U.S. biodiesel mandate.
    The U.S. Congress has set a goal of blending 36 billion
gallons of renewable fuel into transportation fuel by 2022 and
that target is large enough that there's little risk of
Canadian crops displacing U.S. feedstocks like soybeans from
the biodiesel mix, Evans said.
    "I don't think you'll see a huge flood, but a gradual
increase" of canola entering the U.S. biodiesel industry, Evans
said in an interview. "It's a positive development."
    In 2010, soybean oil made up half of the feedstock used in
production of U.S. biodiesel.
    The U.S. Canola Association also supports the decision,
said Dale Thorenson, the association's assistant director.
    The U.S. biofuels mandate attempts to boost production of
fuels that generate less greenhouse gas emissions than
conventional gasoline and diesel, while also balancing concerns
about making fuel from food crops like corn.
    U.S. biodiesel production, which is dwarfed by ethanol
output, got a major boost earlier this year after Congress
reinstated its tax incentive. Biodiesel production in the first
half of 2011 surpassed the total from all of the previous
year.
    Ethanol is mostly made from corn, which is trading at
prices much higher than traditional levels, while biodiesel has
a diverse list of sources including soy, canola, animal fats
and recycled cooking grease.
    Last year, the EPA placed canola oil on an equal footing
with soyoil, ruling that it emits low enough greenhouse gas
levels to qualify for the U.S. mandate to increase renewable
fuel production.
    That decision allowed biodiesel makers to get credits for
using U.S. canola, but Canadian crops did not qualify.
    Canada is the world's top exporter of canola, a rapeseed
variant that is used mostly for vegetable oil and livestock
feed. Top Canadian canola crushers include Cargill Inc, Viterra Inc , Bunge Ltd , Richardson
International Limited, Louis Dreyfus and Archer Daniels Midland .
    Canada is normally a net importer of corn.
    LINK to EPA decision:

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