Good morning. Thank you very much.
It's a privilege to be here today on behalf of the Canadian Renewable Fuels Association and our membership.
Just by way of a quick background, our domestic biofuels industry is now generating $3.5 billion yearly in economic activity. We've created over 14,000 quality Canadian jobs to date. We return over $3.7 billion in investments back to the government every year. We've had significant growth since 2006.
Notably, 26 renewable fuel plants are operating across Canada. They make more than just biofuel. We make clean technology. We're making new products, and we're expanding our renewable fuels supply.
CRFA represents the full spectrum of Canada's domestic biofuels industry. Our members are biofuel producers, petroleum distributors, retailers, and farmers. Over our 30-year history, we've seen many challenges and we've risen to them. Declines like this and these low prices that we're seeing in this environment certainly are not uncharted territory. Of course, this is not to minimize the impact that lower oil prices have on our industry or our membership, but it is not uncharted territory. We've been here before.
After all, renewable fuels and petroleum industries are very closely linked and tied. Earlier in this hour, we heard from CAPP and from CFA. I want you to know that those two groups really encompass our customers. They are our members as well—you heard from Suncor. We work together, we play direct roles in one another's successes, and by that token, what affects one impacts the other.
With the committee's questions in mind, I will give you an overview of what we're seeing in our industry as a result of lower prices.
By way of context, we have federal mandates. There is a 5% requirement for ethanol in the gasoline pool and 2% for biodiesel or renewable diesel in the distillate pool. It really is important to note that those mandates and that stable policy is helping us offset a lot of the disturbances that a low price environment can create.
While we are a domestic industry here, a lot of our business actually operates on a north-south trade axis. American ethanol imports have been slashed. Their exports to Canada are significantly lower than last year's projections. With those U.S. exports drying up, the product does back up into the American market. It has caused depreciation in the U.S. market.
It's reducing the amount of overblending in the Canadian market compared with what we have seen in previous years. It's significant because with overblending and over-compliance largely due to the price advantage of ethanol, Canada overblends and exceeds the national mandate requirement by about 130% a year. This is going to dry up now because that price advantage for ethanol is shrinking.
On average, the wholesale price of ethanol has been roughly 20¢ cheaper than gasoline. Falling gasoline prices weaken that price advantage and essentially remove a lot of the financial incentives for higher blends and for overblending that we've seen in the past.
The resulting glut of product in the U.S. also shrinks the market for Canadian biofuels, so it reduces demand and it puts downward pressure on profit margins. At the same time, we see input costs that are a bit higher, purchases that are down, investors who see their portfolios shrinking, and access to capital tightening. In one way or another, we all feel the effects.
Even more concerning than price fluctuations in the short term is policy instability in the medium and long term, and that's true in any market. The long-term need for Canada to diversify its fuel mix really does remain strong. That's kind of the point here for us and our members today and that is in the face of anything, including declining oil prices.
The good news, and there is good news, is that Canada benefits from stable national mandates that have helped build resiliency. However, if we are to continue to grow and progress, government policies need to keep pace by: specifically, renewing and expanding renewable diesel mandates, which is important, moving from 2% to 5%; and supporting innovation and developing broader market access for producers. That's going to echo a lot of the comments that you heard in the first hour.
Thank you very much for the invitation. I look forward to your questions.