Renewable Fuels Generate Economic Benefits: Study

“It validates the

commitment we made to Canadians.”

– GORDON QUAIATTINI, CRFA

Anew study for Canada’s renewable fuels industry has found biofuel production contributes major benefits to the nation’s economy.

Canada receives a $2-billion-net annual economic gain from the production of biofuels, says the study done for the Canadian Renewable Fuels Association.

Biofuel (made from distilled grain and blended with regular fuel for cleaner burning) occasionally draws criticism from some who argue food for people should not be used to make energy for cars.

But the study’s findings validate the industry’s long-standing claims that renewable fuels make sound economic sense, said Gordon Quaiattini, Canadian Renewable Fuels Association president.

“I think it validates, quite frankly, the commitment we made to Canadians a number of years ago when we advocated to federal and provincial governments the benefits that would come from building a viable renewable fuels industry,” Quaiattini said following the study’s release May 26.

The study by Doyletech Corporation, an Ottawa econometric firm, measured the economic impact of operating 28 renewable fuel plants in Canada. It based findings on a total annual production of 2.25 billion litres from 14 ethanol and six biodiesel plants, with eight more facilities currently under construction.

The total annual net economic impact from the renewable fuel plants operating in, and planned for Canada is $2.103 billion. That includes $1.473 billion in benefits to the general economy, $111.8 million to the federal government, $108.8 million to the provinces and $14.1 million to municipalities, according to the study.

It also says biofuel production creates a net 1,038 direct and indirect jobs annually. As well, it creates an annual $540-million benefit in additional possible oil exports by replacing petroleum with biofuel.

CRFA called the study the first of its kind in Canada to measure the economic impacts of renewable fuel plants.

The study refers to the “opportunity costs of alternate feedstock sales,” although it does not actually split out the value of grain sales by farmers to biofuel plants. Quaiattini put the figure at roughly $900 million annually.

He said Canada right now produces 1.5 billion litres of ethanol a year and will go to two billion litres when a five per cent federal content requirement for ethanol in regular gasoline takes effect Sept. 1, 2010.

A two per cent renewable content standard in diesel fuel is expected to come into effect in 2011 or 2012. That will require 500 to 600 million litres of biodiesel annually.

In Manitoba, an incoming two per cent provincial mandate for biodiesel blends will require 20 million litres of biodiesel produced from two to 2.5 million bushels of canola seed, said Roy Arnott, a MAFRI business development specialist in Killarney.

“That’s additional demand coming out of the existing supply,” Arnott said.

Three emerging biodiesel plants at Arborg, Beausejour and Winnipeg are in various stages of operation.

A Husky ethanol plant at Minnedosa produces 130 million litres annually. At a rate of 10 litres from one bushel, that gives an alternate market to 13 million bushels of locally grown grain, said Arnott.

“It’s a relatively defined benefit to have that amount of grain being processed and value being added here in Manitoba.” [email protected]

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