Cleaner, renewable energy

Taking steps to increase the production and use of cleaner biofuels such as ethanol and biodiesel is an important part of the Government of Canada's practical and balanced approach to climate change. Increasing our use of these fuels will help to reduce greenhouse gas emissions, while increasing our production of biofuels will open new economic opportunities for farmers who grow the corn, wheat, soya, canola and other feedstocks used to make biofuels.

To make sure the benefits of these cleaner fuels are realized, the Government of Canada has announced that Canada's gasoline supply will require an average of five percent renewable content by 2010. Diesel fuel and heating oil will have an average of two percent renewable content by 2012. These regulations are expected to help Canada reduce its greenhouse gas (GHG) emissions by about four megatonnes per year, the equivalent of taking almost one million vehicles off the road.

In order to comply with the regulations, Canada will need about three billion litres of biofuels a year, substantially more than our current production of about 800 million litres a year.

Boosting the biofuel supply

In order to encourage the expansion of our domestic renewable fuels industry, the Government of Canada is providing up to $1.5 billion in incentives for investment in biofuel production. The incentives will make investment in biofuel production more attractive to the private sector by reducing some of the risk associated with fluctuating fuel prices, as well as fluctuations in the feedstock prices needed to produce biofuels.

The incentive program will run for nine years, from April 2008 to March 2017, during which period individual biofuel plants would be eligible to receive the incentive for a maximum of seven years.

Producers of ethanol and other renewable alternatives to gasoline will be eligible for an incentive of up to ten cents per litre during the first three years of the program, and declining thereafter. An incentive of up to 20 cents per litre in the first three years and declining thereafter will be available to companies that produce biodiesel or other renewable alternatives to diesel fuel.

The amount of the incentive may also go up or down from year to year based on the market conditions industry experiences, with lower incentives when fuel prices are high and feedstock prices are low and vice versa.

Details of the incentives available through the ecoENERGY for Biofuels initiative, including eligibility requirements and other important information for producers, are available at Government of Canada – Alternative Fuel Information Portal.

A comprehensive approach

In addition to the biofuel production incentive, the Government of Canada is taking other steps to ensure Canada can produce enough biofuels to meet our environmental goals and keep our country at the leading edge of biofuel technology.

The Renewable Fuels Strategy includes a $500-million grant to Sustainable Development Technology Canada (SDTC). The NextGen Biofuels Fund managed by SDTC will be invested in large-scale demonstration plants that produce next-generation renewable fuels using non-conventional feestocks such as agricultural residues.

Another program, the ecoAgriculture Biofuels Capital initiative administered by Agriculture and Agri-Food Canada, provides capital funds to new biofuel plants based on the level of farmer ownership.

For additional details on the Government of Canada's biofuel initiatives, visit ecoENERGY for Biofuels