New Report for CTA Identifies Potential Problems with Adding Biodiesel Mandate to Existing Fuel Storage, Blending and Distribution Infrastructure

Final Report MJ Ervin and Associates

(OTTAWA: November 17, 2008) -- During the Harper Governments first term in office, commitments were made to introduce a biodiesel mandate for all on-road fuel. Since that time CTA has been lobbying against the introduction of such a mandate until questions related to operational capability with post 2007 trucking equipment along with cost/benefit analysis were conducted. In December 2006, the federal government introduced a notice of intent in Canada Gazette to develop a federal regulation requiring two per cent renewable diesel fuel content no earlier than 2010 and no later than 2012 pending confirmation that this fuel will no have a detrimental impact on truck engines.

In addition, CTA is concerned over problems that might occur in the process of integrating the biodiesel mandate into the current fuel distribution system which is based solely on conventional fuels. In order to get a handle on the issues, CTA engaged fuel experts, MJ Ervin & Associates of Calgary for their opinion and analysis. The report from this investigation, entitled Discussion of the Potential Impact of a National Renewable Fuel Mandate on the Canadian Distillate Market identified a host of potential issues relating to the storage, blending and transportation of biodiesel including:

•        Storage -- Because biodiesel is not compatible with certain materials, has high solvency rate and must be free from water, a dedicated storage tank system will have to be created in the various regions. These tanks will also have to be heated to prevent biodiesel gelling.

•        Blending -- The choice of blending technique used to achieve a desired biodiesel blend has important implications with respect to product quality, particularly in cold weather. In-line blending at the terminal rack (into a tanker truck) is the best way of producing a biodiesel blend. However, most Canadian terminals are currently not likely to be equipped with such equipment

•        Transportation -- In Western and Central Canada, pipelines are the principal method of transporting petroleum product. (In Atlantic Canada marine is the main method of transportation). Biodiesel cannot be pipelined because of cross contamination concerns. This will mean a much greater reliance on insulated heated tanker trucks, rails cars or marine tankers to move product normally moved by pipeline. Furthermore, tanks used to transport biodiesel will have to be either totally or partially dedicated to moving this product alone.

While the report suggests the fuel industry will be motivated to address these issues, recent experience – diesel fuel shortages in Central Canada (2007) and more recently in Western Canada – CTA suggests the trucking industry needs more assurance.

“It is essential that the issues identified in the report are dealt with prior to the implementation of a biodiesel mandate,” says CTA’s CEO, David Bradley. “This will take extensive, multilateral planning with all stakeholders, including the customer which in this case is the trucking industry.” Ultimately, says Bradley the consequences of lack of preparation, planning and communication between all stakeholders in the fuel supply and distribution chain will ultimately be felt by the trucking industry.

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