The Manitoba government is squeezing some grease into the slowly grinding gears that are holding back progress toward a biodiesel industry.
The promise of money and tax breaks to spur biodiesel plant development may be enough to get the industry moving, farmers think.
“We have a better chance of getting some money now (from banks and local investors),” said Bifrost, Man., farmer Paul Bobbee, who wants to set up a major production facility in his community. He already operates a small pilot plant that has produced 20,000 litres of biodiesel.
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“This is really going to help anyone who is going for financial backing.”
Bobbee said the combination of government money and political backing for the industry will reassure banks and investors that the industry is legitimate.
The Manitoba government will no longer collect the 11.5 cents per litre fuel tax on 100 percent pure biodiesel. That will equal about a 5.5 cents per litre price advantage for biodiesel compared to regular diesel that has provincial sales tax, the government said.
The province and federal government are also putting up $1.5 million to help cover the costs of groups that put together biodiesel project proposals.
The Manitoba government will encourage the use of biodiesel in its large motor vehicle fleet, research feedstocks including the offal banned from rendering and study the effects of long haul trucking using biodiesel.
Ian Wishart, vice-president of Keystone Agricultural Producers, was pleased by the announcement and with the focus on biodiesel as a fuel source. Ethanol holds potential, but biodiesel looks like a better bet.
“I think it’s something that can be implemented quicker than huge ethanol plants,” said Wishart. “I think it is more doable than ethanol.”
Ethanol plants must be large to make the fuel at a profitable price. But biodiesel plants can be much smaller, experts say. Ethanol production will increase the general demand for feed grains, which helps farmers, Wishart said, but biodiesel plants can become an important part of many more communities.
Bobbee said commercial-sized, one-million-litre biodiesel plants can be built for about $1 million each, but the price per litre falls by half for plants that are four to six times larger. He expects most Manitoba projects to have a capacity of about four million litres per year.
A plant that size would consume about 500,000 bushels of canola per year, said Bobbee.
In announcing the new funding and tax break, agriculture minister Rosann Wowchuk said the cost will be covered by keeping fuel production spending in Manitoba.
The province imports about 850 million litres of diesel fuel per year, and “all of it is imported from our neighbouring provinces just to the west of us. At current pump prices, $800 million a year leaves our province every year to help the economic growth in other provinces.”
But even though biodiesel plants cost less than ethanol facilities, and the government is offering incentives to build them, one farmer thought the hurdles still seem high for producer groups like his.
“The investment is not huge compared to the cost of farming and the amount of money we have tied up in our farms, but disposable income is always a problem,” said the farmer, who would not give his name.
Wishart had similar sentiments.
“I think this is good, because (the government) thinks some of these projects could happen in two or three years, but a lot of projects tend to be five years in the future,” said Wishart.
“The problem for producers is getting there. A lot of guys aren’t sure how to put in a crop next spring.”
