While consumption of biodiesel is increasing substantially on both sides of the border, U.S. subsidies for biodiesel are unmatched on the Canadian side, meaning that Canadian-priced biodiesel is uncompetitive. Without matching subsidies to keep Canadian prices competitive, Canadian biodiesel producers may abandon the market, leaving Canada with no domestic source of biodiesel. 

Although the Government of Canada has invested substantially in domestic biodiesel production, the lower price of subsidized U.S. biodiesel is pricing it out of the market. Without a competitive subsidy program, the domestic industry may cease to exist in short order, leaving Canada fully dependent on U.S. biodiesel production.

In 2024, the U.S. biodiesel and renewable diesel sector saw substantial growth, with consumption surpassing 5 billion gallons for the first time. The U.S. government has implemented significant subsidies to support biodiesel production. The Inflation Reduction Act introduced the Clean Fuel Production Credit (45Z), replacing the previous $1-per-gallon blenders tax credit. This new credit provides variable incentives based on the carbon intensity of the fuel, aiming to promote cleaner biofuels. 

Canada has prioritized the growth of its biodiesel industry through substantial government investments. In January 2025, the federal government announced nearly $1.8 billion to support the biofuels sector. This includes $776.3 million allocated between 2024 and 2030 via the Clean Fuels Fund to support clean fuel projects. 

However, Canada lacks comparable federal subsidies for biodiesel production. U.S. subsidies effectively lower production costs, allowing suppliers to offer biodiesel at more competitive prices compared to their Canadian counterparts. 

The GNCC recommends that the Government of Canada offer subsidies to Canadian biodiesel and biofuel to bring their prices in line with U.S. competitors. 

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