In October 2025, one month after Prime Minister Carney announced Canada would strengthen the Clean Fuel Regulations (CFR) because Canadian biofuel producers "are at risk due to new changes in U.S. subsidies and policy," U.S. ethanol shipments to Canada jumped 38% to 343 million litres, an all-time record. The signal didn't slow a thing. Canada imported more U.S. ethanol than ever before.

Canada is now the largest export market for U.S. ethanol, accounting for 36% of all U.S. exports in 2025, a record 3.0 billion litres. Nine months into this year, imports have already reached 93% of last year’s total. For American ethanol producers and the corn growers supplying them, exports to Canada are up 135% over the past five years.

This isn’t a market problem; it’s a policy gap. Canadian ethanol blending continues to grow, but U.S. imports now supply most of that market growth. While Canadian production and investment remain flat, American producers also benefit from the 45Z production tax credit, worth up to roughly 36 Canadian cents per litre. That imbalance should be top of mind for policymakers on both sides of the border.

Policy shouldn’t make open trade and building prosperity at home an either-or choice. And when others accelerate, the risk of falling short only grows.

Canada’s proposed CFR amendments include a credit multiplier for Canadian ethanol. Ottawa has floated a multiplier as low as 1.2x. Canada’s ethanol industry has called for a minimum 1.4x. The CFR is a niche policy, but a broad test: will Canadian policy actually drive growth and investment at home, or will it just gesture at it while the capital continues to move elsewhere?

Canadian ethanol producers don’t have a U.S. 45Z-equivalent production tax credit. This isn’t about moving away from an integrated North American market. It’s about ensuring Canadian producers can compete within it. A properly calibrated CFR multiplier would provide the long-term certainty to invest, grow and continue to innovate in a fundamentally changed North American landscape.

This matters as much politically as it does economically. Unlike the United States, where ethanol support crosses party lines, Canadian biofuels policy is missing that political consensus. In the last election, opposition branded the CFR a “tax,” with no distinction made for home-grown ethanol, despite ethanol-blended gasoline being 7.4 cents a litre more affordable than gasoline without ethanol.

Recent federal policy decisions have also prioritized other fuels. The $370 million production incentive tied to the CFR review is earmarked for renewable diesel and biodiesel only, while Ottawa’s biggest recent CFR commitment went to carbon capture, not ethanol. A CFR that grows ethanol demand but leaves domestic production uncompetitive is one election away from potentially being scrapped. That’s a bigger risk to anyone selling ethanol into Canada than any CFR credit multiplier will ever be.

A CFR credit multiplier for ethanol set at 1.4x doesn’t stop imports. But it does make Canadian production more competitive in its own market, helping grow domestic supply and making higher ethanol blending, and the cost savings that come with it, more durable in Canadian communities.

The test for Canadian policymakers isn’t whether they can survive change. It’s whether they can harness it.

Almost a year after the September announcement, it’s time for the regulatory consultations to stop. America’s producers have already shown they’ll meet growing Canadian demand. The question now is whether Canadian policy will ensure Canadian producers can grow with it.

Andrea Kent, Past-President and Board Director, Renewable Industries Canada