A big reason why the United States is producing 68 times more ethanol than Canada is that president George Bush’s government has bought into the alternative fuel while prime minister Paul Martin’s hasn’t, say Canadian ethanol advocates.
“It’s sort of ironic that a Republican oil man from Texas would be a far bigger promoter of biofuels than a Liberal government in Canada,” said Kory Teneycke, executive director of the Canadian Renewable Fuels Association.
“It is sort of counterintuitive, but it is very much the case.”
Motivated by an intense desire to decrease its reliance on Middle East oil, the U.S. government is moving toward establishing a federal mandate for renewable fuels. A strong ethanol lobby in politically influential Midwestern states is prodding the government along that path.
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The U.S. Congress is hashing out a new federal energy bill that, among other things, calls for a renewable fuels mandate as high as 30 billion litres by 2012, which represents twice the capacity the industry is expected to have by the end of this year.
If approved, this new standard will essentially replace what has been a mandate-in-disguise through the Clean Air Act, Teneycke said, which requires the use of oxygenated fuel in certain regions of the country during certain times of the year.
Ethanol and Methyl Tertiary Butyl Ether, or MTBE, are the only two viable oxygenates on the market and many states have banned MTBEs due to water contamination issues.
“It’s a defacto mandate,” Teneycke said.
Canada doesn’t have a real or defacto mandate; instead it has set a target that at least 35 percent of gasoline will contain 10 percent ethanol by 2010.
Teneycke said there is a huge difference between establishing an enforceable mandate and picking a pie-in-the-sky target.
“(A target) is completely meaningless. You may as well not even have that,” he said.
The other key U.S. federal ethanol policy tool is a 17 cents Cdn per litre subsidy offered to oil companies to blend ethanol into gas sold at the pumps.
Canada offers a smaller incentive amounting to a 10 cents per litre exemption on the federal fuel excise tax, but because blenders still get the tax break when buying cheap ethanol from the U.S. or Brazil, it does little to promote domestic ethanol production.
“From our perspective it doesn’t deliver any value,” Teneycke said.
Other ethanol boosters are equally critical of what they see as a lack of direction from Ottawa.
“That is part of the problem, is that there just hasn’t been a national strategy on this thing yet,” said Brad Wildeman, president of Pound-Maker Agventures Ltd., an ethanol plant in Lanigan, Sask.
Without a federal mandate, it is hard for proposed new ventures to secure the necessary financing to build what can be expensive facilities, he said. It is equally difficult to convince reluctant oil companies to start blending ethanol into their fuel, he added.
One area where the Canadian government deserves full credit is its $100 million Ethanol Expansion Program, Teneycke said. It is helping close the gap between the two countries by providing critical start-up money to projects such as Husky Oil’s 130 million litre plant in Lloydminster, Sask.
