The federal government says it’s not going to spend any more
money on subsidies to build biodiesel plants, but will honour existing
commitments that will cost the treasury $1 billion by the time the program
expires in 2017.
Natural Resources Minister Joe Oliver sent a letter to the
Canadian Renewable Fuels Association recently, denying their request to open
the subsidy taps.
The government stopped taking applications in 2010, so will
have about $500 million left in the funds it promised when he program expires.
It has spent $672 million so far, mainly to subsidize
construction of ethanol distilleries.
The government is disappointed in the industry’s failure to
take up the challenge to build enough biodiesel production capacity to meet the
goal of two per cent biodiesel in diesel fuels.
Some of the plants that have been built are producing
biodiesel that Canadian companies won’t use because of quality concerns, so
that biodiesel is exported and Canadians are importing biodiesel to meet the
two per cent mandate.
It’s likely that the biodiesel that’s exported is processed
from raw materials such as restaurant grease and fat and discards from meat-packing
plants. What the diesel blenders prefer is biodiesel processed from crops such as
soybeans and canola.
The mandate for five per cent ethanol is being met with ease
by existing distilleries. Some of them are shutting down because the corn and
wheat they have been using as raw material have become too expensive, because
there is more than enough ethanol on the North American market and because
blenders have lost the incentives that existed a year ago to go beyond
government-mandated minimums.
A number of planned biodiesel plants are on hold, including
an Archer Daniel Midlands plant at Lloydminster, Alta., that could produce up
to 265 million litres a year and a Great Lakes Biodiesel Inc. plant at St.
Catharines, Ont., that applied for $65 million in federal subsidies.
Scott Thurlow, president of the Canadian Renewable Fuels
Association, says there are enough plans ready to go if and when the federal
government opens the subsidy taps, to meet the goal of 600 million litres of
biodiesel per year.
