Statement of reasons—Initiation of investigations: Renewable Diesel (RD 2025 IN)

Definition^{Footnote 4}

[16] For the purpose of these investigations, subject goods are defined as:

Additional product information^{Footnote 5}

[17] For greater certainty, if subject goods are imported blended with other substances, only the renewable diesel component is considered subject goods and any other substances are not. In the case of a rail car being imported that contains 99% renewable diesel and 1% fossil diesel (often referred to as “R99” renewable diesel), only the 99% renewable diesel constitutes subject goods and the accompanying 1% fossil diesel is not.

[18] The reference to “other substances” in the product definition includes (but is not limited to) fossil diesel, biodiesel and fuel additives that enhance the combustion process.

[19] The term “other substances” as used in the product definition is unlikely to include greases, lubricate oil, engine oil, synthetic oil, mineral oil, gear oil, hydraulic oil, brake oil, pump oil, transmission oil, brake oil, petroleum oil or wash oil as these products are heavier and more viscous than renewable diesel and are unlikely to be able to be blended with renewable diesel in a way that the blend would maintain the required properties.

Product process^{Footnote 6}

[20] The subject goods are a synthetic diesel manufactured from organic sources such as vegetable oils (canola, sunflower, and soy) and animal fats. It can theoretically be produced by several different technology pathways. Currently, commercial production facilities are using the hydro treating pathway, with primary feedstock’s being canola oil, soybean oil, vegetable oil, used cooking oil and tallow. The process involves reacting the feedstock (lipids) with hydrogen under elevated temperatures and pressures in the presence of a catalyst. To ensure quality feedstock, including in relation to phosphorus content, some plants include pre-treatment units to lower the contaminants and prolong catalyst life.

Classification of imports

[21] Beginning January 1, 2022, under the revised customs tariff schedule, subject goods are normally classified under the following tariff classification numbers:

1. 2710.19.99.23
2. 2710.19.99.93
3. 2710.19.99.99

[22] These tariff classification numbers may also include non-subject goods, and subject goods may also fall under additional tariff classification numbers.

Period of investigation

[23] The complainant submitted that an appropriate period of investigation (POI) for the CBSA to investigate the alleged dumping and subsidizing of subject imports is from January 1, 2024 to December 31, 2024.

[24] The CBSA agrees that this is an appropriate period as it covers a twelve-month period that ends within three months of the date of initiation of the investigations. The CBSA has, therefore, selected a POI of January 1, 2024 to December 31, 2024 for the purposes of these investigations.

Like goods and single class of goods^{Footnote 7}

[25] Subsection 2(1) of SIMA defines “like goods” in relation to any other goods as “…(a) goods that are identical in all respects to the other goods, or (b) in the absence of any [such] goods…, goods the uses and other characteristics of which closely resemble those of the other goods”. In considering the issue of like goods, the CITT typically looks at a number of factors, including the physical characteristics of the goods, their market characteristics and whether the domestic goods fulfill the same customer needs as the subject goods.

[26] With respect to the definition of like goods, the complainant stated that renewable diesel produced by the Canadian industry is like goods to the subject goods. Domestically produced renewable diesel has similar characteristics in terms of function, composition, physical appearance, is sold through the same distribution channels, is treated as a commodity, is manufactured in similar facilities using similar production processes and is interchangeable with subject goods. Consequently, the subject goods compete directly with domestic like goods.

[27] For the purposes of this analysis, like goods consist of domestically produced renewable diesel described in the product definition.

[28] After considering questions of use, physical characteristics and all other relevant factors, the CBSA is of the opinion that subject goods and like goods constitute only one class of goods.

Domestic producers

[29] The domestic industry is comprised of two producers, the complainant, and Braya. The complaint stated that Braya’s production is all exported to the U.S.^{Footnote 8}, however, Braya did not provide any information to the complainant.

Estimates of domestic production^{Footnote 9}

[30] The complaint included the annual production of like goods for the complainant from November 1, 2023 through November 30, 2024. As the complainant claims they are the only domestic producer who sells goods in Canada, the complainant stated they account for 100% of the production of renewable diesel in Canada for purposes of SIMA subsection 31(2).

Standing

[31] Pursuant to subsection 31(2) of SIMA, the following conditions must be met in order for an investigation to be initiated:

1. The complaint is supported by domestic producers whose production represents more than 50% of the total production of like goods by those domestic producers who express either support for or opposition to the complaint and
2. The production of the domestic producers who support the complaint represents 25% or more of the total production of like goods by the domestic industry

[32] On January 20, 2025, the CBSA sent a Standing RFI to Braya in order to confirm its production for the Canadian market and its production for export, but Braya did not provide a response to the RFI.

[33] The CBSA consulted other departments of the Canadian government and obtained information about Braya’s domestic production. Based on the information provided in the complaint, as well as the information gathered by the CBSA, the CBSA is of the opinion that Braya’s production is not deemed to be part of domestic production for purposes of subsection 31(2), as it is all for export, and is therefore excluded from consideration of domestic production for the purposes of standing.

[34] As information available indicates that Tidewater represents all domestic production, the CBSA is satisfied that the standing requirements of subsection 31(2) of SIMA have been met.

The Canadian market

[35] The complainant, using information from Statistics Canada, provided estimates of renewable diesel importations from the U.S. and other countries from January 1, 2022 to September 30, 2024.

[36] The CBSA conducted its own independent review of imports of renewable diesel from the CBSA’s Facility Information Retrieval Management (FIRM) and the CBSA Assessment and Revenue Management (CARM) systems using the tariff classification numbers under which the subject goods are imported from the U.S. and all other countries. In addition, the CBSA reviewed its Accelerated Commercial Release Operations Support System (ACROSS) data to correct any errors and remove non-subject imports.

[37] Detailed information regarding the sales from domestic production by the complainant and the volume of imports of subject goods cannot be divulged for confidentiality reasons. The CBSA, however, has prepared the following tables to show the estimated import share of subject goods in Canada as well as the Canadian market as a whole from January 1, 2022 to November 30, 2024.

[38] The CBSA will continue to gather and analyze information on the volume of imports during the POI of January 1, 2024 to December 31, 2024 as part of the preliminary phase of the dumping and subsidy investigations and will refine these estimates.

Normal value

Complainant’s estimates of normal values^{Footnote 10}

Section 15

[43] The complainant stated that domestic renewable diesel pricing data for the U.S. is available from Argus, a well-known reporter in a number of industries, such as biofuels, which includes renewable diesel. However, the domestic pricing data provided for the U.S. was characterized by the complainant as “not reflective of the relevant domestic prices of renewable diesel for the exporters shipping subject goods to Canada.”^{Footnote 11}

[44] The complaint claimed that available pricing information is distorted by the subsidies and regulatory frameworks in the U.S. for renewable diesel.^{Footnote 12} Furthermore, the complaint included evidence that selling prices of renewable diesel in the U.S. are actually below the cost of the input material of feedstock used to produce the subject goods.^{Footnote 13} Lastly, the complaint insisted that there are no selling prices that meet the profitability requirements of section 15 because the U.S. prices for renewable diesel are significantly below the cost of the goods.^{Footnote 14}

[45] The complainant argued that the available domestic data would be unreliable and unrepresentative and therefore not satisfy the requirements specified in section 16(2)(b) for the estimation of normal values pursuant to section 15 of SIMA.^{Footnote 15}

Paragraph 19(b)

[46] The complainant provided estimated normal values using a constructed cost approach pursuant to paragraph 19(b) of SIMA, on the basis of the cost of production of the goods in the U.S., as well as a reasonable amount for administrative, selling and all other costs and a reasonable amount for profits.

[47] For purposes of this estimate, the complainant used Diamond Green Diesel LLC’s (DGD) financial information, as reported by Valero Energy Corporation (Valero) – DGD’s parent company. The complaint stated that DGD is the largest U.S. producer and an important supplier of renewable diesel to Canada. Its production capacity for all facilities, as of January 1, 2024, is 1.2 billion U.S. gallons per year or 4.5 billion litres per year.^{Footnote 16}

[48] Valero publishes quarterly and yearly financial reports including the consolidated financial information of DGD. The complainant stated that Valero’s DGD operations are reported as Valero’s “renewable diesel segment.”^{Footnote 17}

[49] For the purposes of estimating the cost of raw materials, the complainant used Valero’s financial information from the renewable diesel segment and made adjustments by adding the Blender’s Tax Credit to obtain DGD’s “true cost of materials” in producing renewable diesel.^{Footnote 18}

[50] The complainant’s estimated cost of production also includes other production related operating expenses, as well as depreciation and amortization related to renewable diesel production, as reported for the renewable diesel segment in Valero’s financial statements.

[51] The complainant stated that two categories of expenses (general and administrative expenses and non-production related depreciation and amortization expenses) were only reported at Valero’s corporate level. To estimate an amount for general, selling and administrative expenses, including the non-production related depreciation and amortization expenses, the complainant allocated the expenses reported by Valero based on the proportion of renewable diesel revenue to the total corporate revenue.^{Footnote 19}

[52] To estimate a reasonable amount for profits for the subject goods, the complainant used the renewable diesel segment in Valero’s financial statements and calculated the amount for profit on a gallon of renewable diesel, including the benefit of the Blender’s Tax Credit.^{Footnote 20} The amounts for profit based on DGD’s reported quarterly profits are as following:

[53] Based on the methodology described above, the complainant estimated quarterly normal values for subject goods based on paragraph 19(b) of SIMA, for the period of October 1, 2023 to September 30, 2024.

CBSA’s estimates of normal values

Section 15

[54] The domestic pricing information of renewable diesel in the U.S. provided in the complaint has been considered by the CBSA for the purposes of estimating normal values on the basis of section 15 of SIMA. The CBSA agrees with the complainant’s position and rationale for why this available pricing information is not suitable for the purposes of estimating normal values pursuant to section 15 of SIMA.

[55] The CBSA agrees that the U.S. regulatory incentives and various subsidies, which are easily available to American renewable diesel producers or sellers, but don’t apply to exports to Canada, have a material impact on the domestic price of renewable diesel as the information available suggests that they permit the producers to sell domestically below the total cost of production, as shown in the price comparison analysis provided by the complainant.

[56] Furthermore, a comparison between the domestic selling price and total cost of renewable diesel from DGD was examined by the CBSA and the CBSA agrees that the domestic selling prices may have been less than the cost of production.

[57] In the absence of comparable and appropriate pricing information in the U.S., the CBSA is unable to estimate normal values following the methodology described in section 15 of SIMA.

Paragraph 19(b)

[58] For the purposes of initiation, the CBSA estimated normal values using a constructed cost approach based on the methodology in paragraph 19(b) of SIMA, calculated based on the aggregate of an estimate of the cost of production of the subject goods, an estimate for a reasonable amount for administrative, selling and other costs and an estimate for a reasonable amount for profits. Based on the information available, the CBSA found the section 19 normal value estimates provided in the complaint to be reasonable and representative.

[59] The CBSA does acknowledge the limitation that the complainant estimated the section 19 normal values based on the financial information from a single U.S. renewable diesel producer. The CBSA reviewed the available information in the complaint and conducted its own research into other possible sources of raw material, labour, other expenses and profit, but couldn’t find other public financial information for the purposes of estimating section 19 normal values.

[60] However, given DGD’s size and the economies of scale, DGD likely has a lower cost advantage and therefore the CBSA finds that using DGD’s information is likely a conservative approach to estimate section 19 normal values and to assess whether renewable diesel imports are being dumped into Canada.

[61] The CBSA accepted that all subject goods appear substitutable and effectively the same and therefore there is only one model for renewable diesel. The CBSA also finds that the normal value calculated for each quarter may reasonably represent the subject goods shipped to Canada during that period.

[62] The CBSA found costs of production and the estimated amount for administrative, selling and other costs used by the complainant to be reasonable.

[63] The CBSA adjusted how an amount for profit for each quarter was calculated, and calculated an amount for profit based on a percentage of total cost at DGD. The amounts for profit were estimated as the following:

[64] At the time of analyzing the complaint, Valero had not yet published its Q4 2024 financials, therefore no specific information about DGD’s Q4 2024 costs and profit is available to estimate October and November 2024 normal values. The normal value for the period of October and November 2024 was therefore estimated by adjusting the Q3 2024 normal values to reflect the change in average feedstock cost from Q3 2024 to October and November 2024.

[65] Based on the information available at this time, the CBSA finds the complainant’s proposed constructed cost methodology to be the best information available. As such, the only adjustment discussed above was made to the complainant’s profit estimates of section 19 normal values.

Export price

Complainant’s estimates of export prices^{Footnote 21}

[66] The export price of goods sold to an importer in Canada is generally determined in accordance with section 24 of SIMA as being an amount equal to the lesser of the exporter’s sale price for the goods and the price at which the importer has purchased or agreed to purchase the goods adjusted by deducting all costs, charges, expenses, and duties and taxes resulting from the exportation of the goods.

[67] The complainant estimated export prices based on customs data available from Statistics Canada for the period of October 1, 2023 to September 30, 2024, under the tariff classification numbers 2710.19.99.23 and 2710.19.99.93. The complainant calculated quarterly weighted average prices on the basis of the total declared value for duty during a quarter and the total declared quantity during the same quarter, to determine weighted average export prices during each quarter of the period.^{Footnote 22}

CBSA’s estimates of export prices

[68] The CBSA used the refined import data, as noted in the CBSA’s estimates of imports section, to estimate export prices for each quarter of the period reviewed. As no information is available to make adjustments to the export prices for either section 25 export prices or to remove included freight in the value for duty, the CBSA is satisfied with the conservative approach adopted by the complainant that no adjustments are to be made for the purposes of initiation.

Estimated margin of dumping

CBSA’s estimate

[69] For purposes of the initiation of the investigation, the CBSA estimated a margin of dumping by comparing the estimated normal values with the estimated export prices for the period reviewed (December 1, 2023 to November 30, 2024). The CBSA used normal values estimated based on the methodology of paragraph 19(b) of SIMA.

[70] The CBSA estimates that subject goods from the U.S. were dumped by a margin of dumping of 6.9%, expressed as a percentage of export price.

Subsidy programs in the U.S.^{Footnote 23}

[77] In alleging that actionable subsidies were applicable to the subject goods imported from the U.S., the complainant mainly relied on documents provided by the U.S. federal and state governments and publicly available financial statements from DGD.

[78] The complainant listed a number of alleged subsidy programs or categories, with references to the provisions in SIMA, under which the subsidy is alleged to constitute a financial contribution and under which it would be considered to be specific and, therefore, actionable. The complainant also claimed that each program is either used by or is available for use by producers and exporters of renewable diesel in the U.S. The documents that formed the basis for these allegations were appended to the complaint.

[79] The complainant’s principal evidence with respect to the subsidy programs availability and/or use by renewable diesel producers/exporters in the U.S. consists of references to the U.S. federal tax code and tax codes of Montana, Texas, North Dakota, Illinois, Virginia and Kentucky as well as financial statements from DGD. The CBSA reviewed the relevant public documents.

[80] As a result, based on the information available, the CBSA identified 17 potentially actionable subsidy programs that may have benefited U.S. producers/exporters of renewable diesel. These programs have been grouped into the following four categories:

1. Relief from duties and taxes
2. Preferential tax programs
3. Preferential loans and loan guarantees and
4. Grants and grant equivalents

[81] The CBSA’s analysis revealed that the alleged subsidy programs constitute potential financial contributions by the USGov that may have conferred benefits to producers/exporters of renewable diesel. In addition, the programs were further examined and were considered to be potentially specific either in law or in fact within the meaning of subsections 2(7.2) and 2(7.3) of SIMA.

[82] The description of the identified programs to be investigated are found in the Appendix.

[83] If more information becomes available during the investigation process that indicates that some exporters/producers of subject goods may have benefited from any other programs during the POI that are not included in the Appendix, the CBSA will request complete information from the USGov and exporters/producers of subject goods to pursue the investigation of these programs.

CBSA's conclusion

[84] Sufficient evidence is available to support the allegations that renewable diesel originating in or exported from the U.S. has been subsidized. In investigating these programs, the CBSA has requested information from the USGov, exporters and producers to determine whether exporters/producers of subject goods received benefits under these programs and whether these programs, or any other programs, are actionable subsidies and, therefore, countervailable under SIMA.

Estimated amount of subsidy^{Footnote 24}

[85] The complainant estimated the amount of subsidy by comparing the estimated total export prices for the subject goods with the declared subsidies in DGD’s financial statements from October 1, 2023 to September 30, 2024.

[86] The CBSA estimated the amount of subsidy conferred to exporters of the subject goods from the U.S. by comparing the Blender’s Tax Credit subsidy amount, as declared in DGD’s financial statements, with the average export price from the U.S., from December 1, 2023 to November 30, 2024, using the export price methodology explained in the “Evidence of Dumping” section.

[87] The CBSA’s analysis of the information indicates that subject goods imported into Canada during the period of December 1, 2023 to November 30, 2024 were subsidized and that the estimated amount of subsidy is 21.0% of the export price.

Increase of subject imports and lost market share

[90] The complainant states that the volume of subject imports has increased dramatically over the past two years, with subject imports quadrupling during this period. Specifically, subject imports increased from 502 million litres in 2022 to 1.2 billion litres in 2023, more than doubling in just one year.^{Footnote 26} These subject imports represent nearly the entirety of total imports during 2022, 2023 and 2024.^{Footnote 27}

[91] With respect to loss of market share, the complainant states that its market share has decreased despite ramping up production in 2024. Specifically, the complainant’s renewable diesel production, which began in Q4 2023 at 14.8 million litres per quarter, increased to 42.5 million litres in Q2 2024 and maintained a similar level at 40 million litres in Q3 2024. However, even with full production capacity achieved in Q2 2024, the complainant’s market share by volume decreased from 6.8% in Q1 2024 to 5.8% in Q2 2024 before showing a slight recovery to 6.3% in Q3 2024.^{Footnote 28} This recovery still represents a net decline compared to Q1 2024. The complainant also notes that while the renewable diesel industry is expected to grow due to federal and provincial government regulations, the increase in subject imports has captured much of this potential market expansion.^{Footnote 29}

[92] Based on the CBSA’s estimate of imports, the total volume of imports from the U.S. increased by 143% from 2022 to Q3 2024. A comparison of quarterly data for 2024 indicates that, despite a substantial increase of approximately 30% in the complainant’s production upon reaching full capacity in Q2 2024, its market share, by volume, declined from Q1 2024 to Q2 2024 and showed only a marginal recovery in Q3 2024. Although there was a slight increase in Q3 2024, the complainant’s market share remained below its Q1 2024 level, falling from 10.3% to 10.2% overall.

[93] The CBSA recognizes that the available data is limited, as the complainant only began producing at full capacity in Q2 2024. However, the decline in the complainant’s market share during this period, despite significantly increased production levels, reflects the significant increase of U.S. imports, which increased by 39% from Q1 2024 to Q2 2024. The surge of U.S. imports captured a significant portion of the expanding market, further liming the complainant’s ability to maintain its competitive position.

[94] Data for October and November 2024 indicates a temporary increase in the complainant’s market share, however, the broader trend suggests that the company has struggled to maintain its position against increasing pressure from the low-priced imports.

[95] Based on the CBSA’s estimates and analysis of import volumes, the CBSA finds that the injury factors of increased volume of subject goods and lost market are sufficiently supported and linked to the allegedly dumped and subsidized goods.

Price undercutting and lost sales

[96] The complainant states that the allegedly dumped and subsidized goods have captured market share at the expense of the domestic industry by undercutting the prices of the domestically produced like goods. Furthermore, the complainant states that subject imports are not only priced below the complainant’s offerings but are also continuing to decline in price over time.

[97] To accurately compare the prices of subject goods with like goods, the complainant provided detailed information outlining adjustments made to the prices of like goods to account for the values of associated compliance credits from federal and provincial governments. These compliance credits, including CFR credits under Canada’s Clean Fuel and Regulations and LCFS credits under British Columbia’s Low Carbon Fuel Standard, are integral components of the renewable diesel market. Adjustments to the prices of like goods are necessary to reflect the value of these credits, as the subject imports include the value of these credits.^{Footnote 30}

[98] The evidence of price undercutting provided by the complainant compares the average unit import value of the subject goods, as calculated based on Statistics Canada data, against the complainant’s quarterly weighted average unit price. This price includes both the physical diesel value and the credit value for the period Q4 2023 to Q3 2024.^{Footnote 31}

[99] The result of this comparison demonstrates significant and increasing price undercutting from the subject country during this period.

[100] In addition to the evidence discussed above, the complaint provided account-specific examples of price undercutting by subject goods well below that of the complainant’s selling prices. The complainant highlighted eight instances where their selling prices were undercut by pricing on subject imports, resulting in either lost sales, price reductions, pricing pressure from their customers or sales to its parent company at discounted prices.

[101] Based on the CBSA’s analysis of the information contained in the complaint, the CBSA finds the claim of price undercutting to be supported and sufficiently linked to the allegedly dumped and subsidized goods.

Price depression

[102] The complainant states that the price undercutting discussed above has caused price depression, particularly in a price-driven market where renewable diesel functions as a commodity. To maintain sales volumes, the complainant had to lower prices, resulting in reduced margin and diminished revenue.^{Footnote 32}

[103] As noted above in the Price undercutting and lost sales section, the complainant provided its “all in” pricing data for a proper comparison, which includes both the physical diesel value and the credit value, from Q4 2023 to Q3 2024. This data shows that during this period, the complainant’s physical diesel value dropped, while the credit value experienced a sharper decline.^{Footnote 33}

[104] The credit value and the physical diesel value are closely connected, as compliance credits are a key component of the overall market for renewable diesel. While these are separate markets, they are directly related because credit revenues provide a critical source of revenue for renewable diesel producers. Renewable diesel producers rely on these credit revenues to offset production costs and maintain profitability. During this period, the complainant states that the LCFS credit market collapsed, due to the surge of subject imports.^{Footnote 34} With the increased availability of lower-priced subject imports, demand for domestic credits fell, further driving down credit values. As a result, the complainant was either unable to sell its credits at all or could only do so at significantly lower prices than it had previously secured, eliminating a key revenue stream and severely impacting profitability. Given that credit revenues directly affect the complainant’s overall financial viability, the decline in the credit market must be considered a key factor in this injury analysis. The complainant also emphasized that price undercutting by subject imports not only caused loss of existing sales but also resulted in prospective customers using subject imports’ prices to demand lower prices.

[105] To further support the allegation of price depression, the complainant provided account-specific evidence of instances where they were forced to reduce prices in response to pricing pressure by their customers in light of lower available prices on imports of subject goods.^{Footnote 35}

[106] Based on the information contained in the complaint, as well as the analysis above, the CBSA finds the claim of price depression to be well supported and sufficiently linked to the allegedly dumped and subsidized goods.

Reduced profitability

[107] The complaint alleges that the injurious impact of the dumped and subsidized goods is demonstrated by the financial results of the complainant. Specifically, the complainant states that the growing volume of subject imports at low prices saturated the market in early 2024 and the injurious effect had fully manifested by Q3 2024. To support this allegation, the complainant provided their quarterly financial results for Q3 2023 through Q3 2024 as well as October and November 2024.^{Footnote 36}

[108] The CBSA has reviewed the financial information contained in the complaint and finds that the information demonstrates a loss of profitability, thereby supporting the complainant’s allegations of impacted financial results and reduced profitability. The CBSA acknowledges that the period of available data is limited, as the complainant only began producing the like goods in Q4 2023, but has taken this into account in its analysis. The CBSA finds that the information in the complaint has sufficiently linked the allegedly dumped and subsidized goods to the complainant’s impacted financial results.

Negative impact on cash flow, return on investments, and ability to raise capital

[109] The complaint includes details of negative effects to cash flow. As of June 30, 2024, the complainant reported negative working capital of $189.2 million, total cash and cash equivalent of $2 million, and cash flow from operating activities of $73 million for the first six months of the year.^{Footnote 37} This insufficient cash flow left the complainant unable to cover its short-term obligations. The complainant attributes this to the inability to secure sales of associated credits beginning Q2 2024, a result of market saturation caused by subject imports. To address the cash shortfall, the complainant sold assets to its parent company, Tidewater Midstream, at significantly reduced prices, sacrificing long-term viability and incurring losses below the assets’ carrying values.^{Footnote 38}

[110] The complainant also states that $380 million has been invested in constructing its facility since Q3 2021. Since production began in Q4 2023, the complainant has experienced a lack of return on this investment.^{Footnote 39}

[111] With respect to the ability to raise capital, the complainant highlights the sharp decline in its publicly traded share price following the release of its Q2 2024 financial statements. These statements disclosed the inability to sell associated credits, which the complainant states, as a result of oversaturation of the market caused by subject imports. As a result, financial analysts downgraded the complainant’s shares, which have since remained at low levels, making it more difficult to raise funds and significantly increasing borrowing costs.^{Footnote 40}

[112] The available evidence supports the complainant’s claim of a lack of return on investments, an actual negative effect on cash flow, and a potential negative effect on the ability to raise capital. As such, the CBSA finds that the injury factors above are sufficiently supported and reasonably linked to the alleged dumped and subsidized goods.

CBSA's conclusion: Injury

[113] The CBSA has reviewed the injury factors discussed above. Based on the evidence provided in the complaint, and supplementary data available to the CBSA through its own research, its FIRM, CARM and ACROSS databases and customs documentation, the CBSA is satisfied that there is sufficient evidence that the allegedly dumped and subsidized subject goods from the U.S. have caused injury to the domestic industry. The injury factors allegedly suffered by the domestic industry include increased volume of subject good imports, lost market share, lost sales, price undercutting, price depression, reduced profitability, and negative effects on cash flow, return on investments and the ability to raise capital.

Increase in subject goods imports^{Footnote 41}

[115] The complainant has provided an estimation of the importation of subject goods for the years 2022 through 2024, along with forecasted future imports for 2025 and 2026. The data indicates that imports of subject goods increased from 502 million litres in 2022 to 1.2 billion litres in 2023, and rose further to 2.2 billion litres in 2024. This represents a cumulative increase of over 330% increase in volumes from 2022 to 2024 and over 80% increase since the complainant’s production capacity became fully operational. Moreover, the complainant projects that imports of subject goods will continue to grow, reaching approximately 3 billion litres in 2025 and 3.9 billion litres in 2026, based on a simple linear projection. The complainant attributes this growth to factors such as “excess capacity in the U.S. and attractiveness of the Canadian market”, which are further discussed below.

[116] The CBSA finds this allegation reasonable and well supported. The trend of increased subject imports could lead to further increases at prices that substantially undercut domestic producer’s pricing, which will threaten to cause injury to the Canadian domestic industry.

Excess capacity in the U.S. and the attractiveness of the Canadian market^{Footnote 42}

[117] The complainant provided evidence that U.S. producers have significant excess production capacity, which could enable them to capture a larger share of the Canadian renewable diesel market. For example, the complainant provided a list of North American renewable diesel refineries and their production capacity, showing a combined total of 13,200 million litres.^{Footnote 43} The complainant states that even the production capacity of a single U.S. producer is sufficient to overwhelm the Canadian market multiple times over, with capacity exceeding the complainant’s by approximately 25 times. Furthermore, the collective production capacity of U.S. producers is estimated to be 76 times greater than that of the complainant.

[118] The complainant also states that the U.S. renewable diesel market is not sufficiently large enough to absorb their production capacity, making Canada a critical export market. The complainant emphasizes that U.S. production capacity continues to expand, with plans to increase capacity by 52%, despite of the existing excess production capacity.

[119] The complainant further states that the Canadian market is particularly attractive to U.S. producers, due to its geographical proximity and the reliance on rail transportation for renewable diesel imports. Additionally, the complainant notes a significant increase in Canada’s share of the U.S. renewable diesel exports market, which rose from 37% of total exports in 2023 to 50% in 2024, further underscoring the increasing attractiveness of the Canadian market.

[120] The CBSA finds that the information suggests the existence of excess production capacity of renewable diesel in the U.S. The CBSA also finds that U.S. producers of renewable diesel will attempt to increase exports to attractive markets like Canada and thereby threaten to cause injury to the Canadian domestic industry.

Domestic price depression^{Footnote 44}

[121] The complainant states that there is a downward trend in the pricing of subject goods imports, which suggests the likelihood of further price reductions in the near future. Specifically, as detailed in the section on price undercutting and lost sales, import prices decreased 14.5% from Q1 2024 to Q3 2024, dropping from $1.65 to $1.41. These prices are already significantly undercutting the complainant’s pricing. Historical prices for subject goods were also notably higher, at $2.78 in 2022 and $2.16 in 2023. The complainant believes that prices for subject goods imports will decline further to below $1 by Q3 2025 based on a linear projection. The complainant asserts that falling prices in a commodity market will create severe challenges by eroding already negative profit margins.

[122] In light of the above and evidence on increased volume of subject goods, price undercutting, lost sales, and price depression previously discussed in the Injury Section, the CBSA finds the continued presence of subject goods at these prices is likely to cause negative price effects in the future and threaten to cause injury to the Canadian domestic industry.

Magnitude of the margin of dumping and amount of subsidy^{Footnote 45}

[123] The complainant states that the margin of dumping and amount of subsidy are significant and threaten to cause injury to the Canadian domestic industry.

[124] The complainant estimated a margin of dumping of 14.6% and an amount of subsidy of 23% or higher, both expressed as percentages of the export prices. This brings to the combined amount of dumping and subsidies of 37.6% or higher.

[125] Based on the CBSA’s estimates with respect to the margin of dumping and amount of subsidy, the CBSA finds that there is a reasonable indication that the subject goods have been dumped and subsidized, and that the magnitude of this alleged dumping and subsidizing is such that it poses a threat of material injury to the Canadian domestic industry.

CBSA's conclusion: threat of injury

[126] The complaint contains evidence that discloses a reasonable indication that there is a threat of injury to the renewable diesel industry in Canada. The information provided in the complaint indicates that imports of allegedly dumped and subsidized subject goods from the U.S. are posing a threat of injury to the Canadian domestic industry. Given the presence of the risk factors discussed above, the CBSA believes that the allegation of threat of injury is reasonably supported.