If 2006 was the year the biofuels industry got its wings, 2007 could be the year the fledgling industry really takes off — at least, in Saskatchewan.
Last year, the province was host to not one but two major government announcements that will set the stage for the growth and development of the Canadian renewable fuels industry in the years to come.
The first came in Regina in May, when then-federal Environment Minister Rona Ambrose announced the Conservative government would require a minimum 5% renewable fuels content in gasoline and diesel fuel across Canada by 2010.
The announcement was seen as a necessary first step in the creation of a truly national biofuels industry in Canada.
But the national mandate was also seen as one of a number of policies that would be needed to produce the two billion litres of biofuels annually required to achieve the 5% renewable fuels standard.
While applauding the announcement, the province — led by Deputy Premier Clay Serby — continued to push for a more aggressive 10% RFS by 2010, incentives for production participation in the industry and a separate mandate for biodiesel, which uses canola oil as its primary feedstock.
The second big announcement came in Saskatoon in December, when Ambrose and federal Agriculture Minister Chuck Strahl outlined the feds’ plan to achieve its new, enhanced renewable fuels strategy. Besides mandating 5% ethanol content in gasoline by 2010, Ottawa has announced it will require a minimum 2% biodiesel content in transportation diesel fuel and home-heating fuel by 2012.
The two ministers also have announced $345 million in support for the biofuel industry, including a $200-million capital formation assistance program and $145 million for renewable fuels research and development.
The four-year capital formation assistance program would provide repayable grants to renewable fuels projects based on producer participation. Under the program, a 100-million-litres-a-year ethanol plant costing $100 million could receive up to $20 million in as-sistance from Ottawa, if matched by local investors.
However, Ambrose and Strahl also revealed some strings were attached to the government’s renewable fuels strategy. The biggest was linking the renewable fuels strategy to the passage of the Tories’ Clean Air Act, which has been held up in Parliament for months after being assailed by Opposition parties and environmental groups alike.
Although most industry observers welcome the announcement of increased financial support for biofuels production, many are critical of the linkage of the renewable fuels strategy to the Clean Air Act. Without major changes, the act appears to be dead in the water — and probably no major changes in the legislation will happen before an election.
Others say the Tories’ plan doesn’t go far enough. They suggest the 5% RFS will actually discourage construction of new ethanol plants, and that virtually all of the 1.9-billion-litres-a-year biofuels capacity required to meet the national mandate could be met by Ontario alone, which has roughly two-billion-litres-a-year worth of capacity either built or on the drawing board.
Capital for local construction of new biofuels plants will quickly dry up if the two-billion-litres-a-year mark is achieved within the next year or two, they add.
But, if the feds were to increase the RFS to 10% by 2012, that would be sufficient impetus to build new biofuels plants, they say. And the 10% RFS could be achieved without passage of the contentious Clean Air Act — either through a separate bill that would get support from all parties or through agreement by the majority of the provinces.
That is, unless the Conservative government’s goals for its renewable fuels strategy are political (passage of the Clean Air Act), rather than environmental (reduction of greenhouse gas emissions).
In the former case, all bets are off for 2007 being the year the biofuels industry takes off. It may very well be grounded instead. IE
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