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 July 27, 2006
A Canadian Renewable Fuels Strategy

 Ottawa, Canada (GLOBE-Net) -- The Canadian Renewable Fuels Association has released a biofuels strategy as a guide for policy makers to implement the federal government's commitment to creating a 5 percent Renewable Fuels Standard by 2010.

The paper was developed after an extensive consultation process with those involved in the ethanol and biodiesel industry. Farmers, agri-business, fuel producers and automobile manufacturers participated in developing the strategy.

The result is a "comprehensive examination of the benefits of, barriers to, and policy measures needed for a made-in-Canada biofuels industry," says Kory Teneycke, Executive Director of the Canadian Renewable Fuels Association (CRFA).

The policy suggestions are aimed at increasing domestic ethanol and biodiesel production as well as ensuring a strong Canadian market for biofuels. To accomplish these goals, regulation and fiscal policy must create an environment in which Canadian biofuels producers can be competitive internationally and with traditional sources of energy.

The oil and gas industry is behind the proposal, says Canadian Petroleum Products Institute president Alain Perez. "In general, we've been working very closely on this," said Perez, reports The Regina Leader-Post. "I would say that we fully support maybe 90 to 95 per cent of their report."

"We see some of the petroleum companies are actually becoming producers of these fuels which is a very interesting development," added Teneycke.

Such companies include Suncor Energy, which recently started production at the country's largest ethanol plant, and has signed an agreement to supply biodiesel to the Toronto Transit Commission through December 2007.

Enacting a five percent standard would require more than twelve times the amount of ethanol and biodiesel that the country currently produces. Canada lags behind world leaders in use of biofuels, with ethanol making up just 0.7% of gasoline sold in the country.

Currently, Canada imports much of its ethanol from the United States, where it is produced from corn. Without increased support to match US subsidies, Canadian grain could end up being processed south of the border and imported back to Canada as ethanol, the CRFA warns.

Policies recommended as part of a Canadian Renewable Fuels Strategy include:
  • Tax credits for ethanol and biodiesel production, instead of the existing excise tax exemption
  • Programs to encourage farmer equity investment in renewable fuels production facilities and to support emerging technologies
  • Clear standards for renewable fuels to ensure quality and safety
"Renewable fuels, such as ethanol and biodiesel, will lower greenhouse gas emissions, provide a hedge against rising fuel prices, and create sustainable jobs in rural Canada," adds Teneycke. "We are confident that with continued consultation and input, this Made-in-Canada renewable fuels strategy will fuel change across Canada."

According to the CRFA, implementing the 5 percent standard would reduce greenhouse gas emissions from the transportation sector by 4.2 Megatonnes per year, create stronger demand for agricultural goods and reduce the need for government supports.

As well, initial investments to construct ethanol and biodiesel production facilities would total $1.5 billion and create 14,000 jobs; once the facilities are complete, they would contribute an additional 10,000 direct and indirect jobs and $600 million of annual economic activity, says the CRFA.

Federal and Provincial Ministers agreed earlier this year to develop a renewable fuels strategy to meet the 5 percent goal, indicating a preference for an approached based on tax-incentives and investment in new technologies such as cellulose ethanol.

Consultation is now underway, and will culminate at a meeting following the Council of Energy Ministers meeting this August 28th in Whitehorse, Yukon Territory.

The Canadian Renewable Fuels Association (CRFA) is a non-profit organization comprised of representatives from all levels of the ethanol and biodiesel industry.

Read the Canadian Renewable Fuels Strategy (PDF).