Canada’s biofuel industry has had half a billion dollars of available government assistance for more than two years and hasn’t touched a cent of it. But that’s about to change, according to industry officials.
In March 2007, the federal government allocated $500 million from its budget for establishing large-scale next generation biofuel projects.
More than two years later, no money has been doled out by Sustainable Development Technology Canada (SDTC) a foundation created by government to manage two clean energy funds.
By contrast, $376 million of the $550 million fund for supporting clean energy demonstration projects have been spent on 154 projects.
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One lone application has been submitted to SDTC’s NextGen Biofuels Fund. Iogen Corporation made the submission in March 2008. It is still under review by the funding agency.
Gordon Quaiattini, president of the Canadian Renewable Fuels Association, said second generation biofuel technology has progressed slower than expected due in part to the slumping economy. But the industry is about to turn the corner.
“We’re now at the stage of transitioning to commercialization and I fully expect within this year that you will see additional applications and funding commitments flowing.”
The first recipient is likely to be Iogen, which is seeking the maximum 40 percent contribution for what was once touted as a $500 million straw-based ethanol plant. The government contribution is repayable over a 10-year period after project completion.
“We are expecting in June a decision around that particular project,” said Quaiattini.
The reason the application has been in the system so long is that Iogen and its business partner Shell Canada Ltd. changed the location of the plant late last year to Prince Albert, Sask., from Birch Hills, Sask.
On May 29 Iogen, Domtar Corp. and the Saskatchewan government signed a letter of intent to turn the old Domtar pulp mill into an ethanol and green energy project.
DTC president Vicky Sharpe said next generation biofuel technology has been slow to develop but Canadian firms are on the leading edge.
“We’re still excited about the opportunity. We’re all just getting a dose of reality. With technology, there is risk. If there wasn’t risk, you wouldn’t need government partnership,” she said.
SDTC is tracking 100 next generation biofuel companies in Canada and abroad, four of which have expressed a strong interest in applying to the fund in 2009. They are all Canadian firms.
“What’s the holdup to those folks, frankly, is the financing is difficult through almost all stages of the innovation chain at the moment. Banks are pulling in their horns and want full guarantees,” she said.
Sharpe wouldn’t divulge which four firms she expects to apply to the fund but she said they are all Canadian.
Quaiattini knows of a few Canadian projects that have been in discussions with the funding agency.
Lignol Energy Corporation is building a cellulosic ethanol plant with Suncor Energy Products Inc. in British Columbia that will use beetle-killed lodgepole pine trees.
Enerkem recently received a permit to build the world’s first commercial municipal waste-to-biofuel facility in Edmonton in conjunction with Greenfield Ethanol Inc.
Greenfield is also exploring its own cellulose ethanol ventures.
Quaiattini said the initial commercial-scale plants will be so expensive that they need government assistance as well as partners like Shell, Suncor and Greenfield.
“Venture capital money is not patient enough for this kind of technology, so you need companies with deep pockets,” he said.
