As the federal government fast tracks biofuel legislation, one agricultural economist is calling on Ottawa to put the brakes on grain-based ethanol.
Murray Fulton, an economist at the University of Saskatchewan, says there needs to be a complete rethinking of the country’s ethanol policy.
In a Feb. 14 blog he wrote for the Knowledge Impact in Society Initiative, Fulton suggests that Canada adopt a policy direction that differs from the rest of the world, one that promotes cellulose technology and disregards grain-based ethanol.
In an interview about the blog, Fulton said western Canadian biofuel promoters are delusional if they think they can compete with corn-based ethanol.
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“Our feedstock doesn’t match up to the feedstock the U.S. has in any way, shape or form.”
Even after kernel visual distinguishability rules are removed, he added, Canadian cereal breeders won’t be able to come close to approaching U.S. corn yields, and corn is a long way from matching the biomass produced by Brazilian sugarcane.
“If we are thinking that we can have a liquid biofuels industry built on growing wheat or barley, I think we’re dreaming in Technicolor.”
Jason Skinner, a former student of Fulton’s, disagreed.
“Saying it doesn’t make economic sense when it does make economic sense and just ignoring the opportunity doesn’t seem like a very rational approach from my perspective,” said the general manager of North West Terminal Ltd., an inland grain terminal in Unity, Sask., that is building a 25 million litre wheat ethanol facility expected to be operational in September.
Skinner said applying Fulton’s logic means farmers in Western Canada shouldn’t grow wheat or barley for the feed sector either, but that has happened for years.
He said North West wouldn’t be building a wheat ethanol plant if it wasn’t going to generate a profit.
He doesn’t see his facility competing head-to-head with U.S. or Brazilian ethanol, but if it was, it would hold its own, partially because of the plant’s innovative design, which uses screenings from the grain terminal to provide thermal energy for the ethanol plant.
“From a cost perspective, I think our model is very competitive against a corn ethanol plant or a Brazilian sugar ethanol plant.”
Fulton said the only way Canadian ethanol plants will compete with U.S. corn-based ethanol is through government subsidies. Canada is already so far behind other countries in establishing an ethanol industry that it’s not too late to take a different direction.
Fulton said the prairie livestock sector has a huge infrastructure and considerable expertise that shouldn’t be wasted by forcing feedlots to compete with ethanol plants for grain.
He would like to see cellulose ethanol development in the northern Prairies’ forest fringe, where farmers would grow high biomass crops such as hybrid poplars and willows for surrounding biofuel facilities.
Skinner said cellulosic ethanol may well be the future, but that technology is about 10 years away from being economical.
“We need to have a transition and I think grain based ethanol certainly creates a transition plan,” he said.
He also rejected the assertion that ethanol can survive only with subsidies. He said the industry needs government help to get kick-started, just as Alberta’s feedlot industry required.
One of Fulton’s colleagues also took issue with some of his conclusions.
Fellow agricultural economist Richard Gray agreed that wheat and barley will not compete with corn ethanol, but he thinks Fulton is too optimistic about the potential for cellulose ethanol, which seems to be perpetually five years away from commercialization.
Brazilian ethanol plants, which are the most experienced in the world, are situated next to mountains of crushed sugar cane stalks. Despite considerable research, they haven’t been able to figure out how to convert that waste material into fuel.
“So I don’t think we will see commercial cellulosic ethanol plants any time soon in our forest fringe,” Gray said in a written response to his colleague’s blog.
Fulton said that may be the case, but it doesn’t change the fact that Canada’s current copycat ethanol policy is ill advised.
“We shouldn’t do bad policy just because we can’t do anything else. That would be silly in the extreme.”
The answer might be doing nothing on the ethanol front and just growing grain for food and feed. If Canada doesn’t develop an ethanol industry it would have little to no impact on the high grain prices producers have been enjoying, largely as the result of the enormous corn consuming capacity of the U.S. ethanol industry.
“Let them do it. We can reap the benefits,” Fulton said.
