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Abstract

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.

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