Canada's Ethanol Policy Gap: Why the Nation is Losing Out to U.S. Subsidised Production Prime Minister Mark Carney highlighted Canada's readiness to grow new alliances, but domestic ethanol policy still favors U.S. producers. This article outlines the trade imbalance, subsidy shortcomings, and a suggested credit multiplier to level the playing field while keeping costs low for consumers. Prime Minister Mark Carney spent last week in Brussels speaking to the European Parliament, announcing that Canada is prepared to forge new partnerships deliberately, methodically and swiftly. Canada Seeks Faster European PartnershipsHe noted that Europe is already accelerating the rebuilding of its defence industrial base and that Canada aims to match that speed. Carney argued that Canada's ability to move quickly in opening new markets should be mirrored by a government that can also act rapidly at home to remove regulations that run counter to the ambitions he has just presented abroad. One issue that exemplifies the need for faster domestic reform is the hydrogen fuel ethanol sector.The Canadian federal clean‑fuel policy has successfully built a fast‑growing ethanol market, yet the country has largely handed that market growth to heavily subsidised U.S. producers. Import data confirm the trend: U.S. ethanol exports to Canada have more than doubled in five years, increasing from 1.2 billion litres to 2.9 billion litres - a 135 percent rise.Today, Canada is approaching a full billion gallons of American ethanol imports each year, a figure that has made the United States, especially Iowa, its largest export customer. Iowa's corn industry thrives on record ethanol exports that allow more Iowa corn to reach premium overseas markets. For Canada, the question is why policy does not ensure that Ontario corn, Canadian workers, and Canadian ethanol capture a larger share of the demand created by the clean‑fuel mandate.Ontario Ethanol Industry Faces U.S. CompetitionOntario's ethanol industry already supports one-third of the grain bushels processed in Canada, dominates national ethanol production, and underpins six plants and nearly a billion dollars of rural infrastructure. Those Canadian facilities now face competition from U.S. ethanol producers who can qualify for a production tax credit of up to 36 cents per litre under the 45 Z program. The import imbalance is not just a border issue.Subsidised U.S. ethanol enters Canada tariff‑free, competing under the Clean Fuel Regulations on the same terms as Canadian ethanol. The American producers benefit from U.S. subsidies and then receive Canadian clean‑fuel credits. Five years ago, Canadian and American ethanol competed more evenly; today imports dominate. This imbalance matters not only to existing producers but also shapes where the next wave of low‑carbon fuel investment will be built.Clean Fuel Credit Multiplier NeededThe policy solution is straightforward: offer a credit multiplier of at least 1.4× for Canadian‑made ethanol under the Clean Fuel Regulations to offset the competitive disadvantage created by U.S. subsidies. This change would not require any new government spending or additional costs at the pump - ethanol already costs roughly 7.4 cents per litre less than gasoline. Another inconsistency lies in Canada's counter‑tariffs.While intended to help Canadian industries compete against U.S. products, American fuel ethanol remains excluded, creating an uneven playing field compared to other contentious trade issues such as autos, steel, and forestry. Ethanol presents an opportunity that has not been fully leveraged. Ontario supplies the corn, hosts the plants, employs the local workforce, and provides the necessary infrastructure.National Policy Can Retain InvestmentCanada has created the market but lacks a national policy to determine whether the next litre - and the investment that supports it - is produced domestically or shipped from across the border. As the prime minister urges investors in Toronto to place their bets on Canada, Ottawa has an opportunity to demonstrate the same commitment by aligning its policies to keep production, jobs, and capital within the country.Building Canada is not merely about attracting global investment; it is about ensuring that our own policies do not send Canadian opportunities, employment, and capital out of the country. In short, creating a market is only half the equation - the other half is designing rules that make the local investment happen.The essay was authored by an internationally recognised biofuels expert and President of Biofuels Consulting Canada Inc., who brings nearly 20 years of experience as a renewable fuels consultant.