Parkland Corporation has cancelled plans to construct a stand-alone renewable diesel facility at its refinery in Burnaby, B.C., citing an uncertain economy and the impact of the U.S. Inflation Reduction Act.

The cancellation was announced in Parkland's Q4 and 2022 financial report, in which the Calgary-based fuel and petroleum supplier said it “will not proceed with its plans to build a stand-alone renewable diesel complex at the Burnaby Refinery at this time.”

The company (PKI-T) is one of the largest fuel retailers in Canada, operating gas stations under brands like Chevron, Pioneer and Ultramar. It has presence in Canada, the U.S., the Caribbean and South America.

Parkland has been expanding its presence in the sustainability industry, investing in renewable fuel, electric vehicle charging stations and a carbon offset business.

It aimed to continue this trend with a stand-alone renewable diesel facility inside the Burnaby Refinery, which already includes a facility using animal fat and canola as feedstock for renewable fuel production.

Renewable diesel is produced through refining organic feedstocks like oils and fats, and produces less greenhouse gas emissions than petroleum-based diesel.

Parkland’s designs for the Burnaby Refinery

In May 2022, Parkland announced it would spend around $600 million to boost existing renewable fuel production at the Burnaby Refinery to approximately 5,500 barrels per day – an initiative which will continue – in addition to the new diesel facility.

The stand-alone renewable diesel complex was to be capable of producing approximately 6,500 barrels of renewable diesel per day. Parkland said it was being designed to not increase emissions from the Burnaby Refinery.

Parkland’s website says the Burnaby site refines 55,000 barrels per day of crude and synthetic oil into gasoline, diesel, jet fuels, asphalts, heating fuels, heavy fuel oils, butanes and propane.

The release states the Burnaby Refinery co-processed over 111 million litres of bio-feedstocks in 2022 – equal to taking over 113,000 cars off the road.

Parkland said the renewable fuels produced from its plans would have one-eighth of the carbon intensity of conventional fuels and would reduce related greenhouse gas emissions by approximately two megatonnes per year.

Most of the capital investment was expected to be deployed in 2024 and 2025. Parkland had received support from the B.C. government for over 40 per cent of the project costs in the form of B.C. Low-Carbon Fuel Standard Compliance Credits.

At that time, Parkland did not have a commitment for federal funding.

Why Parkland cancelled the biodiesel facility

In Parkland's decision to not proceed with the renewable diesel facility, it cited “rising project costs, a lack of market certainty around emerging renewable fuels and the U.S. Inflation Reduction Act of 2022, which advantages U.S. producers.”

Worries about the U.S. outcompeting Canadian businesses in the clean energy space led the Canadian government to propose several measures in the 2022 Fall Economic Statement to maintain competitiveness.

Parkland said it “remains committed to its low carbon journey”.