3 Sept 2010, By Matthew Little

Biofuels Mandated For Canadian Gas Tanks
Canadians will be burning home-grown biofuels in their engines as early as this December following an announcement on Wednesday that finalized regulations for renewable fuel content in gasoline.

That announcement requires an average 5 percent renewable fuel content in Canadian gasoline starting December 15 this year.

“Regulating renewable fuel content in gasoline is just one of several steps the Government is taking to reduce greenhouse gas emissions in the transportation sector, which account for about a quarter of greenhouse gas emissions,” said Environment Minister Jim Prentice in a statement.

The government says the 5 percent requirement will lower greenhouse gas emission in Canada by one megatonne a year and ignite demand for about two billion litres of renewable fuels annually.

The move is part of a broader renewable fuels strategy that the government says will dovetail with provincial regulations to cut greenhouse gas emissions by up to four megatonnes in 2012, the effect being the rough equivalent of taking one million vehicles off the road.

The new regulation will also ensure that investors feel secure in financing the new production plants that will supply the renewable fuels.

“Support for renewable fuels is support for farmers, rural communities and our economy,” said Agriculture Minister Gerry Ritz in a statement. “This is a vital step in generating new market opportunities for our farmers and maximizing Canada’s high quality resources to produce food and fuel for the world.”

The other key cornerstone of the strategy is a 2 percent renewable fuel content for diesel fuel and heating oil, which will hinge on a technical feasibility study carried out under a variety of Canadian conditions. The goal is to have the requirement in place sometime next year.

The government says the initiatives are key to Canada meeting its commitments to reduce greenhouse gasses by 17 percent from 2005 levels by 2020.

The government signalled its plan for the new regulations in 2006 and has backstopped the new requirement with an EcoEnergy program to spur production. That program will give up to $1.5 billion over nine years to producers of renewable fuels. Incentives are paid on a per-litre basis that start at $0.10/L for renewable alternatives to gasoline (mainly ethanol), and $0.26/L for biodiesel. The incentives will gradually decline and 21 companies have so far signed up for the program.

The government has also created the ecoAgriculture Biofuels Capital (ecoABC) program to fund farmers who want to develop biofuel facilities. So far, $46 million has been committed to eight projects and another $156 million remains of the $200 million fund that provides repayable contributions for the construction or expansion of transportation biofuel production facilities.

But the move towards biofuels hasn’t been without its detractors. While many hail it as a solution that will cut greenhouse gases and propel agriculture in Canada, others say growing crops for fuel could raise food costs as farmers grow crops for fuel rather than food.

There are also concerns that the inputs needed for biofuels, including fuel for farm vehicles, nitrogen fertilizer—created using fossil fuels—and copious amounts of water, will detract from the overall green benefit.