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Canada offers C$1.5B in biofuels incentives
Gary Park For Petroleum News
The Canadian government is offering C$1.5 billion over nine years to producers of renewable alternatives to gasoline and diesel fuel, ignoring the latest warnings that biofuels are transforming agriculture worldwide and resulting in higher food prices.
As it pushes ahead with its “green” agenda, the administration of Prime Minister Stephen Harper announced incentives of C10 cents per liter for ethanol and C20 cents per liter for biodiesel as it pursues a seven-fold increase in renewable fuels to meet its goals of a 5 percent average renewable content in gasoline by 2010 and 2 percent for diesel and heating oil by 2012.
The incentives will be phased out by 2016.
Harper said that with the transportation sector accounting for more than one-quarter of Canada’s greenhouse gas emissions, raising the renewable content will “put a real dent in emissions.”
He said that drawing on leading-edge technology and an abundance of grains, oilseeds and other feedstocks should put Canada in the forefront of global biofuels producers.
That would be “good for the environment and good for (61,000 grain and oilseeds) farmers,” Harper said.
United Nations concerned about biofuels But the announcement coincided with a United Nations Food and Agricultural Organization report that the use of cereals, sugar, oilseeds and vegetable oils to “satisfy the needs of a rapidly increasing biofuels industry” is a special concern for the urban poor and developing countries that have net food imports.
It forecast a dramatic rise in the use of corn, wheat, oilseeds and other crops for biofuels such as ethanol and biodiesel.
Harper is following the lead of the United States which provides generous subsidies to the ethanol industry, whose production is forecast to double over the next decade, pushing corn needs to 110 million metric tons a year, or one-third of the projected crop.
In contrast, Canada will consume 13 percent of its corn crop to meet its ethanol target in 2009.
A spokesman for the Canadian Renewable Fuel Association agreed North American corn prices have risen because of ethanol demand, but argued energy prices have been a greater cause of the recent spike in food prices.
He said biofuels will “increase energy diversity, increase overall supply and therefore keep fuel costs from going higher,” noting that the supply chain accounts for 95 percent of supermarket food costs.
GHG storage expected to become more economical On another climate change front, Natural Resources Minister Gary Lunn said the capture and underground storage of greenhouse gases will become more economical as technology advances.
He told the Calgary Herald that carbon capture is like the evolution of the oil sands, which were not economic in the beginning, but have made significant gains over the years through technological innovation.
“That’s the same analogy we can make today in carbon capture storage. … It’s very, very expensive to sequester a ton of CO2 gases, but it’s important that we get it going,” he said.
Lunn said the federal and Alberta governments must work closely with industry to get the first large-scale projects operating, but he would not be drawn into committing federal money to projects such as pipelines carrying CO2 from the oil sands to aging oilfields for enhanced oil recovery.
A joint task force is scheduled to make recommendations to the two governments later this year.
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