[octothorp]

For right or wrong, there's clearly a demand right now for biofuels. The US is a net consumer of biodiesel sources, importing them from as far away as Indonesia. Not only does Canada have an existing infrastructure and proximity to make it a better source of biodiesel than Indonesia, Canadian production would have less of an environmental imprint and would actually work better in a north-american and european market, with canola-based biodiesel working at cooler temperatures than Indonesian palm-based oil.
In Europe, it's end consumers who are driving demand for biodiesel, with diesel engines far more popular than anywhere else in the world. Germany consumes about 2 billion litres of biodiesel annually; that's a significant market, and it's only going to increase. With North American car manufacturers being relatively resistant to diesel, it's unlikely that our market will ever reach the same dimensions as Germany, but reaching a point where it's a self-sustaining industry really isn't that much of a stretch.

Edit: Just a further note on demand. The EU has a binding mandate that biofuels will constitute 10% of all fuels sold by 2020. If they stick to those targets, that's an absolutely massive demand, and greatly exceeds current european production... Probably exceeds current global production, too. As well, the EU is considering recommendations to ban palm-oil as a biodiesel source, because of the clear-cutting impacts of palm crops in third-world countries. That would make rapeseed the most important bio diesel source globally. If the EU stick to those targets, it becomes very realistic to have a Canadian canola-based biodiesel industry that is self-sufficient off of exports to europe. There's currently a looming trade war between the US and Europe over biodiesel, and the outcome of that will have huge implications for whether this industry is viable in Canada or not.