THE FEDERAL government has introduced three welcome programs designed to encourage farmer ownership in the biofuel industry.
Without such assistance, big companies building large plants near urban centres would dominate this developing sector. Farmers’ involvement would be limited to supplying grain.
The new programs give farmers a chance to structure a portion of the industry to produce rural economic development, jobs and locally retained profits.
The $200 million EcoAgriculture Biofuels Capital Initiative provides up to $25 million in a repayable contribution for projects with farmer investment. Biofuels Opportunities for Producers Initiative provides money to producer groups to create feasibility studies and business plans. The Agricultural Bioproducts Innovation Program provides $145 million over five years to increase Canada’s biofuel and bioproducts research and development capacity.
These are part of a $2 billion federal commitment to biofuel over seven years. The government will require an average of five percent renewable fuel content in gasoline by 2010, and two percent renewable content in diesel fuel and heating oil by 2012.
This is a lot of government help for one industry. The arguments for support of biofuel are usually based on often over hyped environmental benefits.
A Library of Parliament paper calculates that a 10 percent grain based ethanol blend in all vehicle fuel in Canada would reduce the country’s greenhouse gas production by only one percent.
Grain-based ethanol is not a panacea. However, it is a stepping stone to a second generation of more efficient biofuels like biobutenol and ethanol from cellulose.
Further, we are myopic if we see only the environmental implications of biofuel policy and miss the potential for industrial, technological and rural development resulting from properly targeted government spending. These investments will create the first parts of an infrastructure, much of it in rural areas, upon which to build a biobased economy where plants and bacteria provide raw material for products and fuel now produced by the petrochemical industry.
Companies and governments globally are investing billions of dollars in biobased research, attracted by the earth friendly nature of the products and the need to find an alternative to dwindling supplies of petroleum.
Canada must invest wisely to stay in this race or cede the economic and environmental benefits to others with the vision to develop the technology.
Luckily, the burden of this government investment will be offset by the likelihood that its agricultural support payments will drop as the new bioeconomy’s demand for grain increases its price, leading to higher farm incomes.
Ottawa’s recent investment in biofuel is a good use of taxpayers’ money.
Bruce Dyck, Terry Fries, Barb Glen, D’Arce McMillan and Ken Zacharias collaborate in the writing of Western Producer editorials.