Western Canada might be the birthplace of canola, but North Dakota is getting the jump in processing the oilseed into an environmentally friendly fuel with two projects.
Archer Daniels Midland says its plant will produce 190 million litres and North Dakota Biodiesel Inc. will produce 120 million litres. Together, they would take the production of about one million acres, equal almost to the entire U.S. canola crop that is grown mostly in North Dakota.
These projects alone dwarf the embryonic biodiesel industry in Canada and they are just two of many biodiesel plants planned or under construction in the United States, most of them using soy oil as a feedstock. The contrasting experiences can be traced to different national energy situations.
While Canada is a net exporter of oil, the United States is heavily dependent on supplies from unstable regions like the Middle East. It is desperate to increase domestic energy resources.
Canada’s interest in biofuels is driven more by environmental considerations.
Biodiesel has many attributes.
Whereas ethanol yields only a little more energy than it takes to make it, studies show that biodiesel yields 3.4 times the energy needed to produce it.
Adding biodiesel improves the lubricity of regular diesel, a major benefit as the U.S. moves to ultra low sulfur diesel fuel that is clean burning but hard on engines.
Farmers also benefit. The American Soybean Association estimates that for every 100 million gallons of soy-based biodiesel demand, soybean prices would rise by 10 cents US per bushel.
All this convinced the U.S. government to provide an excise tax credit that makes biodiesel competitive with regular diesel, plus other incentives. Many states also have biodiesel incentives.
The president of North Dakota Biodiesel said the project was shopped around in Canada, but never attracted the enthusiasm and chequebook of governments. But North Dakota offered a host of subsidies.
Ottawa and the provinces must now decide whether they, too, will support this new industry and reap its benefits.
Ottawa removed the four-cents-per-litre excise tax on biodiesel and provides modest support for research and demonstration, but has not backed the fuel as it has ethanol. Federal support kick started 1.4 billion litres a year of ethanol production. Provincial incentives also focus mainly on ethanol.
Governments must be cautious in directly supporting businesses.
But that dictum must be tempered by the need to encourage new industries and technologies that promise to benefit the environment and economy.
Biodiesel clearly meets that standard and Canadian governments would be wise to extend to biodiesel all the incentives they now provide to ethanol.