The federal government is planning to announce a major investment in the ethanol fuel industry later this summer, stimulating production and creating markets for Canadian grain.
Natural resources minister Ralph Goodale and agriculture minister Lyle Vanclief told the Canadian Renewable Fuels Association that the industry is a key ingredient in government plans for reducing greenhouse gas emissions and shoring up rural and farm economies.
“Listening to the ministers, they certainly have ratcheted up the rhetoric,” association president Bliss Baker said in a interview.
“They are very positive and it seems like they are ready to take flack from the oil industry.”
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Government officials say as part of Canada’s commitment to reducing gas emissions, Ottawa will announce a package that could include:
- Extension and expansion of a program to guarantee loans for ethanol plant construction or expansion. The loan guarantees serve as insurance in case a future government decides to apply excise taxes to ethanol, making the economics of a plant less favourable.
- Continuation of the federal 10 cents per litre excise tax exemption for ethanol.
- Possible provision for direct government aid to help build new plants.
- A recommitment to the goal of increasing ethanol production capacity to close to one billion litres from 220 million litres that are currently produced. The pledge is to reach the goal by 2005.
Vanclief would say only that details will be announced within months and they should be met by the industry with enthusiasm.
“It could be any or all of the above,” he said, when asked about the possible menu of aid items for the industry.
Both Vanclief and Goodale said producing ethanol from grain or other biodegradable products will be one of the tickets for rural income.
A study for the Saskatchewan Research Council has estimated that Saskatchewan could provide feed stocks for ethanol production of as much as 50 billion litres per year, 50 percent more than Canada’s total gasoline consumption.
Goodale noted on June 13 that Ottawa-based Iogen Corp., which uses enzyme technology to create ethanol from cellulose, has been studying a possible $200 million investment in a Saskatchewan plant.
Vanclief said grain prices would increase if demand for ethanol among the world’s richest countries increased just one percent a year.
“For Canada, that would translate into an increase in farm income of more than $2 billion in the sixth year,” he said.
“It’s a very attainable goal.”
