Manitoba recently awarded its first biodiesel production licence, but due to what some consider a botched federal subsidy program, the company that received the licence says it has no immediate plans to produce fuel.
“We’ve kind of been hung out to dry,” said Greenway Biodiesel president Royce Rostecki.
“It could have been the greatest story ever, but right now it’s an awful story and one I’m embarrassed to tell.”
Greenway is owned by Speedway International, which supplies methanol and race gas for the North American car racing industry.
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The company has built a plant in St. Boniface, Man., capable of producing 20 to 40 million litres of biodiesel a year. Rostecki said it would be producing fuel today if it had received the same federal subsidy that other Canadian biodiesel firms have qualified for, some of which are only plans “drawn on the back of a napkin.”
He applied for a subsidy through the $1.5 billion federal ecoEnergy for Biofuels program shortly after it was announced in December 2007. The program provides producers with a diminishing incentive that starts at 20 cents per litre and ends at six cents in the ninth and final year of the program.
Program administrators from Natural Resources Canada had questions about the project, including how much energy Greenway would use to produce biodiesel.
Rostecki felt that was an important question, but one he couldn’t completely answer until all the pumps and motors were installed in the plant. So he waited until that was done and then asked his engineers and contractors to conduct a thorough energy audit.
When he submitted the answer to program administrators in October 2008, he was informed the program was already full.
“Had I known that there was a ticking time bomb here, we could have ball-parked a number,” Rostecki said.
He doesn’t understand how projects in the concept phase were able to provide Natural Resources Canada with an accurate estimate of their energy inputs.
The result is that Greenway Biodiesel has been excluded from the federal incentive program. Manitoba has no provincial subsidy.
Under those circumstances, Rostecki’s company can’t compete with American biofuel, which receives a 35 cents per litre blenders tax credit, or with plants in Alberta and Ontario that have access to similarly lucrative federal and provincial subsidies.
He claims the situation is preventing Manitoba from developing its biodiesel program that would require diesel to contain a percentage of biodiesel.
“They know they can’t put the mandate through because we would just get steamrolled by product coming from Alberta, Ontario and Minnesota.”
He said the province is lobbying Ottawa on Greenway’s behalf to loosen the restrictions under the federal subsidy program.
Dan McInnis, assistant deputy minister of Manitoba Science, Technology, Energy and Mines, met with program administrators last week in an attempt to devise a solution.
He has heard 20 of the 45 applicants to the ecoEnergy program didn’t make the cut, including two of Manitoba’s four projects that are either built or in the works.
In the case of Greenway, it has resulted in the odd circumstance of a company that is ready to go but hesitant to start producing.
“It’s bizarre. There is no doubt about it,” McInnis said.
He said the province is working hard on the file and there has been progress in discussions with federal officials.
However, he denied this is holding up Manitoba’s biodiesel plans. The province still intends to implement a mandate in 2009 and is contemplating a 12 to 14 cents per litre subsidy to follow.onsidering producing biodiesel for the U.S. market starting in May when Minnesota moves to a five percent mandate. Greenway’s fuel would be eligible for the 35 cents per litre blender’s credit in that state.
He said he finds it confounding that a fuel meant to address environmental concerns will be trucked from Manitoba into the United States and possibly from other provinces into Manitoba because of what he considers a flawed subsidy program.
“Had we known that things would have unfolded this way, obviously we would have never done this because we have a significant investment in this plant,” Rostecki said.
“Who would have ever thought three years ago when we started this that it would end up like this?”
