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A planned Imperial Oil renewable diesel facility to be built at its Strathcona refinery near Edmonton is expected to cost $720-million.DARRYL DYCK/The Canadian Press

Imperial Oil Ltd. IMO-T committed to building the country’s largest renewable diesel refinery on Thursday, investing $720-million in a facility that will turn Alberta crops into fuel that primarily helps British Columbia hit its emission reduction targets.

Imperial’s board formally approved construction of a facility that will produce a billion litres of diesel annually at its Strathcona refinery near Edmonton using locally sourced vegetable oils – from soy, canola or sunflowers – and hydrogen.

Calgary-based Imperial said it will earmark a significant portion of the fuel for B.C. gas stations to support the province’s plan to lower greenhouse gas (GHG) emissions. Imperial also plans to fill up its own fleet of vehicles on Strathcona diesel, using a formula that produces fuel suited to harsh winters. To a lesser extent, the Imperial project will also help Alberta achieve its goal of an 11-per-cent reduction in GHG emissions by 2030.

“Imperial supports Canada’s vision for a lower-emission future,” said Brad Corson, Imperial’s chief executive officer, in a press release. “We are making strategic investments to reduce greenhouse gas emissions from our own operations and to help customers in vital sectors of the economy reduce their emissions.”

The Strathcona plant facility is expected to cost $720-million, up from an estimated $500-million when the project was first announced less than two years ago. A spokesperson for Imperial said the increased budget reflects inflation in construction costs and expansion in the scope of the project, which now includes a larger rail link. The project represents a significant portion of Imperial’s $1.7-billion in planned capital spending this year.

The Strathcona plant is expected to start shipping diesel in 2026. Imperial said construction will provide 600 jobs over the next two years, and create hundreds more jobs at suppliers. The project still requires regulatory approval, which the company said it expected to receive “in the near term.”

Imperial forecasts diesel from the new facility will reduce GHG emissions from diesel-powered vehicles by about 3 million metric tonnes annually, the equivalent of taking approximately 650,000 cars off the road each year. The hydrogen used to make diesel will come from Alberta-produced natural gas, supplied by Pennsylvania-based Air Products & Chemicals, Inc.

The Strathcona plant is the first renewable diesel facility in parent Exxon Mobil Corp.’s XOM-N global operations. When the project was first announced in 2021, Exxon Mobil executives said it was a test bed for technology that could be used around the world.

“Canada’s clean fuel regulation could be a model for other countries,” said Joe Blommaert, former president of Exxon Mobil’s low carbon solutions division. “Technology-neutral, lifecycle carbon-intensity based fuels policies like the one proposed in Canada can quickly bring projects like Strathcona to scale and rapidly reduce emissions at a low cost to society.”

The Strathcona facility will produce approximately 20,000 barrels of diesel each day, or half of the planned 40,000 barrels of renewable fuel that Exxon Mobil forecasts it will make each day within the next two years.

By 2030, Exxon Mobil’s global target is producing 200,000 barrels per day of low-emission fuels. The company already has contracts to sell this fuel in jurisdictions such as California, which have set targets to lower GHG emissions.