Reports that the federal government wants ethanol consumption to reach two billion litres a year by 2005, and is considering the introduction of new legislation to mandate a certain percentage usage of biofuels in transport, have not been welcomed by the oil sector.

The Canadian Petroleum Products Institute (CPPI) which has members with ethanol interests, such as Petro Canada and Suncor Energy Inc, says the benefits for greenhouse gas emission reductions using ethanol are comparable with conventional diesel. According to CPPI Vice President Jack Belletrutti, studies indicate that over the whole cycle of ethanol production, from growing the crops to refining the fuel, there is only a minor impact in reducing greenhouse gas emissions. The CPPI also says that ethanol is expensive to manufacture and would not be produced without the current subsidies it enjoys. At present, ethanol is exempt from the 10% federal excise tax on petrol and from fuel taxes in several provinces.

Studies commissioned by Agriculture and Agri-Food Canada determined that 10% ethanol blends derived from corn in southern Ontario would reduce greenhouse gases (GHGs) by 230,000 tonnes per year under current conditions. At an annual production rate of 1 billion litres of ethanol by 2010, the total greenhouse gas reductions would be 1.47 million tonnes of carbon dioxide equivalents, annually. This represents about 1% of the total greenhouse gas reduction required to meet Canada’s commitment under the Kyoto Protocol, or 4% of the transportation sector’s share of reductions. Ethanol produced from lignocellulose offers additional opportunities to reduce greenhouse gas emissions.

If ethanol production can be expanded to 1.1 billion litres per year by 2010 in plants processing corn stover, wheat straw and switchgrass, the total GHG reductions will be 2.47 million tonnes, annually, representing 1.3 to 1.8% of Canada’s commitment to the Kyoto Protocol.

For a government intent on stepping up its commitment to the Kyoto Agreement, tackling transport fuel usage could bring wide benefits. In Canada, transport is estimated to be the source of about 30% of Canada’s greenhouse gas emissions, and ethanol offers a relatively quick fix. There is no pressure on consumers to convert cars for the new fuel, and the existing fuel distribution infrastructure can be used to deliver the fuel efficiently.

Canada currently produces about 230 million litres ethanol annually, which is equivalent to 0.1% of the country’s annual oil consumption of 38 billion litres. The new target would give ethanol 5% of the country’s transport mix.

Meeting the target will be a challenge for the ethanol industry, but it will also be a boost, according to the Canadian Renewable Fuels Association. The Association president, Bliss Baker believes Kyoto is the driver for the latest initiative and that it is being driven from the top, from the Prime Minister’s office.

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