Ground has been broken on Canada’s first large scale biodiesel plant and the people doing the digging say there are plenty of good reasons why the shovel went into Alberta soil.
Doug Hooper, chief executive officer of Canadian Bioenergy Corp., which is building the 225 million litre canola-based facility in Fort Saskatchewan, Alta., said it all comes down to proximity to markets and which province wants the business the most.
He estimates 45 percent of Canadian diesel is consumed in Ontario and Quebec and 30 to 35 percent in Alberta and British Columbia.
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Hooper said the Fort Saskatchewan plant will primarily supply Alberta and British Columbia.
But there is also a distinct advantage for biodiesel companies locating adjacent to Alberta’s petroleum industry – they can piggyback on its established fuel distribution network to Eastern Canada.
Saskatchewan and Manitoba have ample canola supplies but plants located there will face considerable challenges getting their product to where diesel fuel is consumed, Hooper said.
Then there is Alberta’s $239 million Nine-Point Bioenergy Plan, which provides biofuel plants with a producer credit of up to 14 cents per litre to a maximum of $20 million per year and $75 million for the life of the project.
“To date they are unparalleled in Western Canada for the metrics on that plan,” Hooper said.
“It’s more than just the cents per litre. Underlying that is a very robust commitment by this government to support the renewables industry.”
JoAnne Buth, president of the Canola Council of Canada, said plant location is based on economics and Alberta has the dollars to rival the kind of tax breaks biodiesel firms are receiving in the United States.
When the province’s producer credit is added to the federal incentive of 20 cents per litre, it becomes much easier to make a business plan work.
“That brings them up to 34 cents per litre, which is comparable to the U.S.,” she said.
Buth said Manitoba and Saskatchewan are not offering a comparable incentive package.
“That’s why everybody is interested in Alberta.”
Two other companies intend to build large-scale biodiesel plants in the province. Dominion Energy Services intends to construct a massive complex that will produce 379 million litres of biodiesel and ethanol per year near Innisfail, Alta. Biostreet Canada said it will build a 175 million litre crushing plant and refinery in Vegreville, Alta.
By contrast, Manitoba’s first biodiesel plant, which is scheduled to open in Winkler this fall, will produce 10 million litres. Saskatchewan’s Milligan Bio-Tech Inc. is working on an expansion of its Foam Lake, Sask., plant that will take the capacity to 15 million litres.
Buth said the focus in Saskatchewan and Manitoba appears to be on encouraging smaller facilities that will service niche or local markets, making additives or supplying area farmers with biodiesel, rather than supplying fuel to large trucking fleets.
Judie Dyck, president of the Saskatchewan Biofuels Development Council, said just because there haven’t been major announcements in her province doesn’t mean nothing is going on.
“There are groups here that are working quietly behind the scenes. We tend to be different than Alberta. We tend to be more cautious.”
If the province adopted a five percent biodiesel mandate, she thinks it would give birth to four or five small plants. And she didn’t rule out the possibility of Saskatchewan one day landing its own mega-plant.
“There is potential for a larger plant but I believe that will take an investor partnership, probably from Europe,” she said.
