Calgary-based Imperial Oil announced it will invest $720 million to build Canada’s largest renewable diesel facility at its refinery near Edmonton. The company aims the plant to produce more than one billion liters of fuel per year using vegetable oils from canola and soybean. Preparations and initial construction are under way for the 20,000 barrels per day facility, which will start operations in 2025, the company said.

“Imperial supports Canada’s vision for a lower-emission future, and we are making strategic investments to reduce greenhouse gas emissions from our own operations and to help customers in vital sectors of the economy reduce their emissions,” chief executive Corson said in a statement. “The investment at our Strathcona refinery will deliver immediate benefits to the local economy, creating jobs and contributing to a lower-emission energy future for our employees, neighbors and communities.”

The Canadian oil major first proposed the project in August 2021 and has since inked an agreement with U.S.-based industrial company Air Products and Chemicals to secure a supply of low-carbon hydrogen.

Air Products is also building a $1.6 billion facility near Edmonton, which will produce blue hydrogen, using natural gas and carbon capture and storage (CCS). It will supply hydrogen to Imperial’s Strathcona refinery via pipeline.

The Imperial facility’s renewable diesel will primarily be produced from “locally sourced” vegetable crops, primarily canola, soy and sunflowers, the company said. Renewable diesel can be blended with regular diesel and behaves identically when combusted, allowing it to be used in engines designed to run on conventional fuel.

Imperial estimates the project will reduce annual greenhouse gas emissions by three million tonnes, equivalent to taking approximately 650,000 cars off the road.

The company’s plans come amid the Canadian government’s new regulations, called Clean Fuel Standard (CFS), aimed at pushing energy suppliers to reduce carbon emissions.

CFS, which imposes an incremental cap on the carbon intensity of gasoline and diesel, will take effect later this year. The government thinks it will lower emission intensity by around 15% by 2030 compared to 2016 levels.

“We wouldn’t be doing the project if it were not for that regulation,” Imperial’s VP of downstream Wetmore said. He added that a pivot to biofuels could be the industry’s “main pathway” to meeting the new clean fuel targets.

“The reason we’re choosing (renewable diesel), and many of our competitors and partners are choosing it, is because it’s ready now and it’s a very low capital way for a customer to reduce their carbon emissions from burning fossil fuel diesel today.”