Rural Liberal MPs are urging finance minister John Manley to use his February budget to announce a $400 million investment in ethanol production.
Liberal rural caucus chair Murray Calder told a Parliament Hill news conference Jan. 28 that a federal investment is needed to “kick start” the industry in Canada.
He said a federal investment would lead to production of one billion litres of ethanol by 2008. It would provide a new market for farm products, raise grain prices by increasing demand, create jobs across the country and help Canada meet its Kyoto climate change commitments by 2012.
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“The government believes in ethanol, but it needs to move beyond the nice words,” said Calder as rural MPs from the Maritimes, Quebec and Ontario stood behind him.
In the House of Commons, Manley indicated he will listen to the argument, but made no promises.
“As we prepare for the upcoming budget, the member will know that we have put a lot of our emphasis on alternative energy sources over the last several years,” he said in response to MP Jerry Pickard, whose Chatham, Ont., riding is home to Canada’s largest ethanol plant.
“I will be working very closely with my colleagues in order to ensure that we continue to find alternative energy sources to help us achieve our Kyoto target.”
Many ministers have publicly made a claim for some of the expected surplus dollars in Manley’s first budget. Health and the military are expected to win most of the new spending.
But Calder and the Liberal rural caucus said an investment in ethanol plants would serve many purposes.
It would eliminate 30 million tonnes of potential greenhouse gas emissions between 2008-12 by displacing fossil fuels and contributing to Canada’s Kyoto commitments.
It would attract up to $1.5 billion in investment, according to rural caucus analysis.
And it would create a new market for up to 100 million bushels of grain while making Canada’s air less polluted.
“It would be an important investment that would serve a number of policy goals,” Calder said.
He noted that the government’s Kyoto implementation target calls for a 10 percent ethanol blend in 35 percent of Canadian gasoline by 2010.
Some ministers, including Canadian Wheat Board minister Ralph Goodale, have complained that the target is too modest.
Calder said without an expanded domestic production base, growing demand may require ethanol imports from the United States, where ethanol promotion and investment is much stronger.
Rural Liberals and Canadian Renewable Fuels Association president Bliss Baker dismissed the fears of some doubters that there is not enough surplus Canadian grain to fuel an expanded ethanol industry.
They said different regions could depend on different feed stocks. Grain or corn may be the basic feed stock in Ontario while cull potatoes might be the mainstay in the Maritimes and straw or wood on the Prairies using cellulose technology.
Toronto region rural-urban MP Julian Reed said later he expects favourable budget mention because it makes economic, rural development and environmental sense.
And since there is little chance of new agricultural spending in the budget, the prospect of new markets and higher domestic prices because of expanded ethanol production could be a piece of good news for farmers angry about implementation details for Agriculture Canada’s next generation of farm safety net programs.
