Ottawa’s support for biofuel industry cools

A pump jack in a canola field near Fairview, Alberta.

Ethanol mandate | Farmers cannot meet the current mandate without imports, so a higher content is not feasible, says Ritz

HALIFAX — The federal government is closing the tap to increased support for the biofuel industry after more than $1 billion in support, says agriculture minister Gerry Ritz.

“I think the investments made early on have built the industry as large as it’s going to get,” he said.

Ritz said the industry lobby for an increase in ethanol content to 10 percent from five percent is not feasible.

“I don’t think so,” he said. “It’s not my department but I don’t see an appetite for it.”

Ritz has been a major supporter of the biofuel industry within government, and he said government investments have helped build an important outlet for grain.

However, the government dream of farmer investment in and ownership of local ethanol plants did not take off.

“We gave it our best shot and I worked hard to make sure farmers were investing in that,” he said. “They didn’t, other than on a very small scale.”

Government support for the industry ranged from setting a mandatory fuel content mandate to providing hundreds of millions of dollars for plant construction.

For the government, the biofuel strategy was always a combination of greenhouse gas reduction initiatives and rural development, offering farmers higher prices for their grain and rural residents jobs in ethanol plants.

Ritz said Canada cannot meet the current mandate of five percent ethanol in gasoline and two percent biofuel content in diesel without imports.

Canadian Renewable Fuels Association president Scott Thurlow said current ethanol consumption is 2.8 billion litres per year, which exceeds the mandate. However, Canadian plants produce almost two billion litres.

“Imports from the United States go specifically to over-compliance with the federal regulation.”

He said the two percent biodiesel mandate created a market for 600 million litres of biodiesel, but just 155 million litres are currently produced.

However, a new plant in Lloyd-minster will increase domestic capacity to 400 million litres, leaving a 200 million litre gap.

Thurlow said in an email statement that the open Canada-U.S. border allows imports from the United States, depending on price and conditions.

“However, as demonstrated by our industry’s steady and continued growth since the renewable fuels regulation was introduced, Canadian producers are striving to meet our mandates through domestic production,” he said.

“Currently, we are meeting the majority of Canada’s renewable fuels requirements domestically and strive to exceed it.”

Ritz signaled that the industry should not expect more government aid to meet that goal.

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