Multibillion-dollar renewable diesel facility, canola crushing plant projects in Regina put on hold

A pair of projects meant to produce 15,000 barrels of renewable diesel per day at a facility near the Co-op Refinery Complex in Regina is being put on hold because of political and regulatory uncertainty.

In a news release Friday, Federated Co-operatives Limited (FCL) said it would pause its proposed renewable diesel facility and canola crushing projects, located at its proposed Integrated Agriculture Complex.

The company said it was halting the projects "due to regulatory and political uncertainty, potential shifts in low-carbon public policy and escalating costs."

"We do look at what's happening south of the border and in other markets as to what impacts they have in the markets we're playing in," Heather Ryan, FCL's CEO, said in an interview.

"Our market is really Western Canada but … things like the Inflation Reduction Act that occurred south of the border, what that did to pricing and markets all have a part to play."

Ryan said the decision did not have a direct correlation with which political party is in power and said there were several different factors leading to FCL's decision.

An FCL spokesperson said the original cost of the $2-billion project has more than doubled.

Ryan did not count out the potential for the projects to return, but that would depend on how the future plays out.

Canola-powered diesel still possible: AGT Foods CEO

The $360-million canola crushing plant was proposed as part of a joint partnership between FCL and AGT Foods. It was meant to provide the plant-based diesel facility, fully owned by FCL, with about 50 per cent of the canola stock required for the facility.

In an interview, AGT Foods CEO Murad Al-Katib pointed to rising costs, political changes from the United States and potential changes to the Canadian political leadership as to why the canola crushing project was put on hold.

Al-Katib is optimistic that, while these projects have been paused, Saskatchewan canola will be a renewable fuel one day.

"I believe that zero-carbon fuels are achievable using Canadian canola. To me, it's a matter of when this project goes ahead, not if it will go ahead," he said.

"I'm still optimistic that projects like this will end up in our province."

Project part of clean energy plan

The projects were announced three years ago and were a part of FCL's plan to reduce greenhouse gas emissions.

Ryan said there are still other environmentally friendly aspects of their clean energy plan, like carbon capture projects at the refinery complex and Belle Plaine ethanol complex, but said the agriculture complex projects were not feasible.

Neither project had begun construction, Ryan said.

"This would have been a huge investment for our organization and for Co-op and so we did need to make sure it was viable on an ongoing basis," she said.

Decision a 'disappointment,' union says

Unifor, one of the unions representing FCL employees, said in an email, "It is a disappointment that expanding FCL's clean energy operations is no longer a priority. Saskatchewan families stand to gain from the jobs created in the energy sector."

The union also said that in this uncertain political landscape, including U.S. president-elect Donald Trump's tariff threats to Canada, Canadian companies like FCL need to invest in Canadian jobs.

When the agriculture complex was announced in 2022, Saskatchewan Premier Scott Moe called it one of the largest investments in the province. The provincial government said the plant would create more than 2,500 construction jobs and about 150 permanent operating jobs. 

At the time, FCL said it could create up to 300 permanent jobs.

The facility containing the two projects was estimated to have $4.5 billion of direct and indirect economic benefits, the province said at the time. 

It was expected to be finished construction in 2027 and, once built, the plant was expected to produce 450,000 tonnes of oil.