In stark contrast to its neighbor to the south, the Canadian ethanol industry didn’t experience the sweet boom years that the U.S. industry did, but it also hasn’t suffered sour effects from a declining economy. In fact, it has likely learned a few lessons from its neighbors to mitigate such effects. Significantly smaller than its U.S. counterpart, the Canadian industry hosts 15 commercial-scale fuel ethanol plants in operation or under construction, ranging from 12.5 million to 225 million liters per year to total nearly 1.8 billion liters (about 476 million gallons). That’s a small fraction of that of the U.S., which has an installed capacity of more than 13 billion gallons. Canadian producers also enjoy fewer incentives and less federal assistance than U.S. producers historically have. Canada’s slow but steady progress, however, seems to be cementing a solid foundation for continued growth.

Canadian ethanol plants are concentrated in Ontario and Saskatchewan, with a scattering in other provinces. Corn is the prevalent feedstock in eastern Canada, most of which is grown domestically with roughly 40 percent imported into eastern Ontario and Quebec, according to a recently completed biofuel economic impact assessment report commissioned by the Canadian Renewable Fuel Association.
Western Canadian plants typically use wheat, of which Canada is a net exporter, ranking sixth in the world among wheat growing countries. In 2008, Canada produced more than 29 million metric tons, and according to the Western Canadian Wheat Growers Association, the seven commercial plants in that region annually require about 1.4 million metric tons of wheat or about 7 percent of the wheat grown in Western Canada.

Aside from corn and wheat, municipal solid waste (MSW) is being targeted as the feedstock for a planned facility in Edmonton, Alberta. Canadian ethanol pioneer Greenfield Ethanol Inc. has teamed up with native cellulosic ethanol developer Enerkem Inc. to build a facility that will gasify 100,000 metric tons of MSW from the city into 40 million liters (10 MMgy) of ethanol.

While new projects such as these continue to build and strengthen the Canadian ethanol industry, the positive economic impact of the biofuel industy is influencing the way government and the public view ethanol and renewable fuels.

Many Angles of Support
It doesn’t seem as though Canada is experiencing the aggressive ethanol smear tactics that the U.S. has, and recent polls show significant public support for ethanol and renewable fuels in general. Marie-Helene Labrie, Vice-President of Government Affairs and Communications for Enerkem, points out that support seems to be increasing with each year, and companies such as Enerkem that are developing both ethanol and next generation fuels are poised to benefit from the increasing public and government support. According to a national poll conducted last year by Praxicus Public Strategies, 69 percent of Canadians support replacing some of the country’s fossil fuels with renewable fuels—specifically ethanol and biodiesel—and 87 percent of Canadians support federal policies that would encourage the development of next generation biofuels. The study also found 74 percent of Canadians support the E5 mandate taking effect this summer, an 8 percent increase from a poll conducted in April 2008.

Canada's renewable fuels standard (RFS) takes effect Sept. 1, mandating E5 blends, though the Canadian Renewable Fuels Association and other groups are pushing for an increase to 10 percent. Until that happens, Canada may have difficulty positioning itself as one of the global leaders in the biofuel industry, according to Labrie. “We will need additional programs and incentives, as well as a higher RFS mandate of 10 percent, in order to build the next phase of development in the biofuels sector and to commercialize next generation technologies,” she says.

Meanwhile, federal financial support continues, the most recent being the ecoENERGY for Biofuels Program launched in April 2008 by Natural Resources Canada, which will provide up to $1.5 billion over nine years to boost Canada’s production of renewable fuels. So far, NRC has signed contribution agreements with 21 projects, earmarking $765 million for the majority that are ethanol. The program provides operating incentives to producers of renewable alternatives to gasoline and diesel, based on production levels and other factors. It seeks to make investment in biofuels more attractive by partially offsetting the risk associated with fluctuating feedstock and fuel prices. Recipients receive production incentives for up to seven consecutive years. This includes existing producers, requests for volume increases from existing agreements and new producers that clearly demonstrated an advanced state of readiness of their project before March 31. Financial incentives are provided for the number of liters of ethanol produced in Canada, based on fixed declining incentive rates established by the program and as agreed upon in each contribution agreement. In 2010, the incentive payments start at 10 cents per liter for ethanol, and decline by one cent each year until 2017.

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