Alternative fuels are low-carbon substitutes for conventional fossil fuels, essential for the hardest-to-electrify parts of Canada’s economy: aviation, heavy freight, marine shipping, and high-temperature industrial heat. They span bio-based liquids (biodiesel, renewable diesel), renewable gases (renewable natural gas), and synthetic drop-in fuels that require little or no change to existing engines and infrastructure. With transportation responsible for roughly 22% of Canada’s GHG emissions, and batteries still unable to meet the energy-density and range demands of long-haul and heavy-duty use, these fuels are a near-term pathway to cut emissions where electrification can’t yet reach.
The challenge is one of scale, cost, and feedstock. Domestic production has historically lagged demand, sustainable feedstocks are limited and increasingly contested across fuel types, and most advanced and synthetic fuels still cost more than the fossil fuels they’d replace. Canada has real advantages, abundant biomass, low-carbon electricity, and strong innovation capacity, but capturing them means prioritizing these fuels for the sectors that need them most, scaling production, and building the policy, feedstock, and infrastructure base needed to compete with international incentives.
Biofuel output has historically trailed demand with gaps filled by imports.
Limited sustainable feedstocks, with multiple alternative fuels competing for the same inputs.
Sustainable aviation fuel cost 2-7 times more than conventional jet fuel.
Ethanol and virgin-crop biodiesel raise sustainability and land-use-change concerns
Reliance on imported sustainable aviation fuel and, historically, renewable diesel.
Facilities are exposed to shifting incentives.
Reconciling near-term deployment with scaling advanced, residue-based biofuels as feedstock and technology constraints tighten.
Assessing higher-cost synthetic e-fuels and their market fit.
Coordinating the fuel transition with the wind-down of fossil-fuels and evolving global markets.
Preventing competition of alternative fuels with electrification in sectors where electricity can meet needs.
Renewable content in gasoline and diesel by province.
Domestic output and utilization.
Alternative fuel lifecycle carbon intensity reductions.
Abundant biomass with waste valorization options and low-carbon electricity are competitive advantages.
Shifting from raw material exporter to refined product producer captures value in Canada.
Federal incentives to refit refineries or build new biorefineries can catalyze early adoption.
Scores are grounded in the sources cited throughout each sector assessment, then reviewed by experts and industry stakeholders to confirm how each pathway elements criteria are ranked.
economic viability score
Economic Viability description
