"From a preliminary or initial assessment, there are things to like in terms of supporting Canadian Canola's access to the U.S. biofuels market moving forward for sure," Davison says. A central update confirms that feedstocks from U.S.-Mexico-Canada Agreement (USMCA) countries are considered domestic for the purposes of the credit. Davison called that clarification "one of the key updates as part of the guidance that is favourable in our case to Canadian Canola."
"Chris Vervaet of T. Bjornson and Associates pointed to another major shift: the removal of the indirect land use change penalty. "That penalty actually is what disqualified canola from 45Z in 2025," he said. "So to see that removed gives us a competitive opportunity to participate in the marketplace." Davison added that fuels made from Canadian canola are now listed as approved pathways for multiple fuel types, calling that inclusion "very clearly spelled out" in the guidance."
Updated U.S. tax credit guidance under section 45Z improves market access for Canadian canola by treating USMCA feedstocks as domestic and listing canola-derived fuels as approved pathways for multiple fuel types. Removal of the indirect land use change penalty restores eligibility that had disqualified canola in 2025, creating competitive opportunities. Remaining uncertainties include undefined proof-of-origin requirements under a proposed North American ring-fence and anticipated further modelling guidance. Stakeholders are being asked to provide input on origin verification. Attention has shifted to the U.S. Renewable Fuel Standard and pending renewable volume obligations, including potential RIN value adjustments for non-U.S. fuels.
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