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A new plant planned for the Regina area will include a $360-million canola crush facility, which will process seeds of canola, seen growing above, allowing the oil to be used as a feedstock for renewable diesel.Jeff McIntosh/The Canadian Press

A $2-billion facility to produce renewable diesel being planned for the Regina area is the latest in a growing list of projects aimed at reducing greenhouse gas emissions in the push to reach net-zero.

The joint venture between Federated Co-operatives Ltd. and AGT Food and Ingredients Inc., announced Monday, is still at the memorandum-of-understanding stage, but it underscores a growing appetite for renewable diesel across North America.

Renewable diesel is produced from various biomasses, including vegetable oils, animal fats and crop waste. The new plant will include a $360-million canola crush facility, which will process the seeds so the oil can be used as a feedstock for the diesel.

With about one-third of the emissions intensity of regular diesel, the fuel is increasingly being seen as a way for producers and consumers to lower their environmental footprint.

A host of other companies in Western Canada have announced renewable-diesel projects over the past year, including Imperial Oil Ltd. at its Strathcona refinery just outside Edmonton, Canary Biofuels Inc. near the southern Alberta city of Lethbridge, Tidewater Midstream and Infrastructure Ltd. for its refinery in Prince George, B.C., and Covenant Energy near Estevan, in southern Saskatchewan.

The biggest driver of that growth is a focus on lowering greenhouse gas emissions, and a rising consumer demand for lower-carbon fuel options. Archer-Daniels-Midland Co., one of the largest grain processors in the United States, estimates that two to three billion gallons of renewable diesel will come online in the next three years in that country.

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Government policies, such as Canada’s clean-fuel standards, are also prompting a shift toward greener fuels.

But pursing renewable diesel is about more than regulatory requirements, said Scott Banda, the chief executive officer of Federated Co-operatives (FCL).

The transportation fuel business is changing rapidly, “and we need to prepare for the future,” he said Monday. “From Federated’s perspective, we’ve made our commitment to reduce our emissions by 40 per cent by 2030, and this is a huge, huge piece of that puzzle.”

FCL’s massive refinery on the outskirts of Regina has already dialled back production, he said, and every litre of renewable diesel produced at the new plant will mean one less made from crude oil.

“The renewable-diesel plant, it can be a complete replacement for fossil-fuel diesel. So that’s significant, and critical in terms of our commitment to reduce our greenhouse gas emissions and transition to a low-carbon economy,” he said.

The partnership between FCL and AGT Foods is a 51-per-cent and 49-per-cent split, with FCL holding the majority ownership stake.

The canola-crush part of the joint venture will supply about half of the oil feedstock FCL will need to make 15,000 barrels of diesel per day at the new plant, which is due to open in 2027. Mr. Banda said FCL is also looking at other feedstock options, including animal tallow.

Critics of renewable diesel argue that using canola and other seed oils in fuel consumes valuable, high-yield land that should be used to grow crops to put on humans’ plates, rather than in their gas tanks.

But AGT Foods president and chief executive officer Murad Al-Katib said the canola meal produced at the crush will ultimately be put back into the food chain.

Mr. Al-Katib said protein extracted from the canola meal can be combined with proteins from various pulses produced in Saskatchewan and used in other food products. It’s also suitable for aqua feed for farmed salmon, tilapia and shrimp.

“We don’t feel we’re taking it out of the food system. We feel, in fact, we’re leveraging it and bolstering the availability of that food stock for the human food system,” he said.

For Saskatchewan Premier Scott Moe, the new joint facility signals a shift in thinking in the Prairie province.

Traditionally, he said, Saskatchewan agricultural mentality has been based on the notion that producing more food is simply about increasing growing acreage, thereby bolstering crop yields.

Where the province used to talk about “farm gate to plate,” with a focus on producing and consuming food locally, that’s shifted to “seed to tank,” he said Monday.

“This is a gain not only on the fuel side and on the environmental side, but it’s a gain on the food side as well.”

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