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Posted on  

August 13, 2003

Ethanol industry welcomes C$100 million from Ottawa

By Roberta Rampton

WINNIPEG, Manitoba, Aug 12 (Reuters) - Ottawa's plan to pump C$100 million ($72.5 million) into new ethanol plants is short of what the industry wanted, but may still help double output of the fuel additive in Canada, officials said Tuesday.

The subsidy, one of several announced Tuesday aimed at helping the government meet Kyoto commitments, is a quarter of what the fledging industry asked for, but the president of the Canadian Renewable Fuels Association said he was still pleased with the sum.

"It's pretty hard to be negative," Bliss Baker said. "It's not going to get us to the government's (production) target ... but we didn't expect it to."

The funding is part of Ottawa's promise to cut greenhouse gas emissions by 6 percent below 1990 levels over the next decade under the Kyoto accord on climate change, which it ratified late last year.

By 2010, the government wants 35 percent of gasoline to contain one-tenth ethanol -- a type of fuel made from grain that, when blended with gasoline, cuts emissions of greenhouse gases like carbon dioxide, which are blamed for global warming.

That represents a lofty target of 1.4 billion litres (370 million U.S. gallons) of ethanol a year, seven times what Canada currently produces from four plants.

A large-scale ethanol plant can carry a price tag of C$100 million, but Baker predicted the new funding could help three to 10 plants get off the ground.

The cash may help build a 100-million-litre (26-million-U.S.-gallon) ethanol plant in Manitoba, being developed by Commercial Alcohols Inc., the country's largest ethanol producer.

The plant, designed to use wheat as a feedstock, would cost up to C$90 million, said Ken Field, the company's chairman.

"We hope to make an announcement in the next couple of months," Field said.

Cellulose-based ethanol firm Iogen Corp. said it hoped to use the federal money to build the world's largest such plant somewhere in western Canada, and was selling governments in Alberta, Saskatchewan and Manitoba on the benefits.

Ottawa also said it will spend C$12 million on pilot plants for biodiesel -- a diesel fuel additive made from oilseeds like soybeans and canola.

Biodiesel is not currently commercially produced in Canada, but a new organization of oilseed producers and crushers hopes the market can one day boost the country's oilseed crush by at least 25 percent.

"It is very encouraging to see that biodiesel is included in the mix," said Bob Broeska, president of the Canadian Oilseed Processors Association.
 

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