Ottawa’s alternative fuel policy has been heavily weighted in favour of ethanol, say biodiesel boosters.
Western Canada’s largest biodiesel distributor wants to see more equity in how federal money is doled out, starting with the establishment of a program to mimic the recently completed $118 million ethanol expansion program, which provided funding to 11 projects.
In a Nov. 8 policy submission sent to a variety of federal cabinet ministers, Canadian Bioenergy Corp. proposed a five-year, $100 million biodiesel expansion program that would run from 2006 to 2010.
“If it was a good enough idea for ethanol, let’s make it work for biodiesel,” said Ian Thomson, chief executive officer of Canadian Bioenergy Corp.
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The suggestion is part of a package of proposed incentives designed to help Canada make up some of the ground it has lost to Europe and the United States.
“Until there is a clear direction from the federal government, I think the serious players in biodiesel, who could really make an impact on getting substantial quantities into the system, are going to sit and wait or they’ll go elsewhere,” Thomson said.
Canada will produce an estimated six million litres of biodiesel in 2005, a drop in the bucket compared to Europe’s 3.7 billion litres.
In the U.S., an income tax credit for fuel suppliers that blend biodiesel has caused a flurry of activity, including the announcement of two facilities in North Dakota, one to be built by Archer Daniels Midland and the other by North Dakota Biodiesel Inc.
The two plants will require production from nearly one million acres of canola, some of which they hope to buy from Canada.
Thomson can’t stomach the prospect of potential processing revenue being shipped out of the country.
“It’s nuts; it’s nuts,” he said.
Thomson insists that Canada is missing out on value-added opportunities because, despite a stated goal of producing 500 million litres of biodiesel a year by 2010, there is little in the way of federal incentives for the industry, other than a program that has removed the four cent excise tax on the biodiesel portion of blended diesel.
“We don’t see the government stepping up to the plate and taking an interest in renewable fuels policy the same way that other jurisdictions are,” Thomson said.
In addition to the infrastructure expansion program, Canadian Bioenergy is calling on Ottawa to establish a blender’s tax credit similar to what is offered in the U.S., at a cost of about $539 million, and to devote capital to education, research and a renewable fuel standard requiring a five percent biodiesel blend at the pumps.
Thomson said it doesn’t have to be new funding. Ottawa has committed billions of dollars to meet its climate change goals, a portion of which could be directed to biodiesel initiatives.
The company believes the proposed policy changes would pave the way meet the government’s 500 million litre goal by 2010, 70 percent of which would occur in Western Canada.
Based on current proposals and the economic climate in various provinces, the company expects 40 million tonnes of production in British Columbia, 50 million in Manitoba, 100 million in Saskatchewan and 160 million in Alberta.
Canadian Bioenergy is in the feasibility study stage of building its own 40-million litre facility either in Alberta or B.C.
Most of the submissions in the company’s policy paper augment proposals recently put forward by the Canadian Renewable Fuels Association but there is one area where the two organizations differ.
The CRFA envisions an industry where 80 percent of the plants are creating biodiesel from rendered animal fat and soybeans, such as the 35 million litre Rothsay plant that opened Nov. 21 in Montreal.
Canadian Bioenergy is convinced 70 percent of the 500 million litres of production in 2010 will come from plants that use canola as the raw material. Thomson said that has been the model employed in Europe, where rapeseed is the primary ingredient.
“We see the numbers very differently from the CRFA,” he said.
“The biodiesel is going to be coming out of the Prairies.”
