Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 16 - Evidence - December 7, 2010
OTTAWA, Tuesday, December 7, 2010
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 5:14 p.m. to study the current state and future of Canada's energy sector (including alternative energy).
Senator W. David Angus (Chair) in the chair.
[English]
The Chair: Good evening, colleagues and witnesses, and good evening to our viewers on the CPAC network, on the World Wide Web and on our dedicated website for the special study this committee is undertaking.
This is an official meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources. We are continuing our study on the energy sector generally, with a view to identifying a strategic way forward to have a more sustainable, efficient and cleaner system of energy and power production in this country in the future given the exigencies of exploding population growth, climate change and all of the considerations, environmental and economic, that relate thereto.
We are privileged this evening to have gentlemen here representing the Canadian Renewable Fuels Association. We have Mr. Gordon Quaiattini, President; Mr. James Grey, Chair; and Mr. Todd Moser, Secretary. I believe you are familiar with the work we are doing.
My name is David Angus, and I am a senator from Quebec and chair of the committee. Our deputy chair, Senator Grant Mitchell of Alberta, is absent this evening, but he is represented here today. By the way, I apologize that we are late starting because the Senate is in session. Usually we are ready to go to committee by five o'clock, but we are not allowed to sit in committee when the chamber is sitting. We now have a hiatus of an hour and three quarters, so hopefully we will be able to do our work this evening.
I will identify those present around the table this evening. To my immediate right are our researchers from the Library of Parliament, Mr. Mark Leblanc and Ms. Sam Banks. On this side of the table, I think you have met Senator Neufeld from British Columbia.
[Translation]
Senator Boisvenu, from Quebec, is standing in for Senator Lang of the Yukon, who is absent.
[English]
To my left is our able clerk, Ms. Lynn Gordon, and down this side of the table we have Senator Robert Peterson from Saskatchewan. I can assure you there will be others joining us, but it is important that we get going right away.
Mr. Quaiattini has long played a leading role for biofuel clients and was a partner with the Wellington Strategy Group, a boutique Ottawa government relations firm, before assuming his current position as president of the Canadian Renewable Fuels Association in 2008. As president, he is the principal advocate for the renewable fuels industry in Ottawa and the provinces as well as the main national media.
Mr. Quaiattini, welcome to you and your team. I understand you have an opening statement, and following that we will proceed to questions.
Another senator has joined us down this side of the table, Senator Judith Seidman from Quebec. You will have noticed a quick appearance — he will be back in a moment — by Senator Paul Massicotte, also from Quebec.
Gordon Quaiattini, President, Canadian Renewable Fuels Association: We appreciate the opportunity to appear before your committee once again. We were last here in 2008 as this committee was instrumental in its work with the passage of Bill C-33, which brought into effect the 5 per cent requirement for renewable fuels to be blended in the gasoline pool and the 2 per cent mandate for renewable diesel. We are pleased to be before this committee again on the important work you are doing on energy policy in Canada.
I will begin by giving introductions to the gentlemen on either side of me. Jim Grey is the chief executive officer of IGPC Ethanol Inc. This is a unique organization; it is the only farm cooperative that owns an ethanol facility in Canada. It is majority-owned by over 900 farmer investors in the province of Ontario. Mr. Grey also serves as the board chair of the Canadian Renewable Fuels Association. Todd Moser is the vice-president of alternative fuels with Rothsay Biodiesel, which is a subsidy of Maple Leaf Foods. Rothsay Biodiesel has successfully built the first commercial biodiesel plant in Canada in the province of Quebec. Both the ethanol and biodiesel fuels are represented around this table.
The Chair: Sorry for the interruption, but another senator has arrived, as I promised you they would. Senator Dickson is from Halifax, Nova Scotia.
Mr. Quaiattini: We are grateful for the timing of your invitation to have us appear because as an industry we have just completed and tabled with the committee a report card on the Canadian renewable fuels industry. We spent some 18 months putting together this document to articulate the size and scope of the industry that we have built over the last 15 years in Canada, particularly over the last 5 years of the significant build-out of capacity that has taken place, and we also foreshadow a dialogue about what more we would like to be able to do in this space going forward. I know the senators have this document, which we were able to table in both official languages with the committee last week.
Why renewable fuels? Why are we a smart and certain part of Canada's energy, environment and agriculture future? In a phrase we use often, we are helping Canada grow beyond oil. However, let me be very clear in saying that when we talk about growing beyond oil, that does not mean that fossil fuels are about to become extinct in any of our lifetimes, nor does it mean that we are campaigning against the oil and gas sector or any other part of the energy sector that delivers jobs and growth to all of us in Canada. We are not talking about substitution; we are talking about diversity and about the vital roles of fuels we harvest from either the ground or the laboratory and the role that they will continue to play in the future.
Oil of course, as I think honourable senators will appreciate, will remain the dominant fuel for the foreseeable future, but renewable fuels are growing. They are expanding in use, and they represent tremendous long-term growth opportunity here in Canada.
That is true across a broad range of opportunities and, quite frankly, is representative of what is happening around the world. It is true in developing nations and amongst the world's emerging economies where growing ethanol production and biodiesel production have the potential to advance economic well-being and social equity, and it is certainly true right here in Canada.
We have made tremendous strides in both ethanol and biodiesel. Grain-based ethanol plants are up and running. Oilseed and yellow grease-based biodiesel is a reality and is set to become an even greater commercial success as industry looks to construct additional production capacity in Canada.
What I am saying is that in the 21st century Canada is leading and must continue to lead the way in renewable and alternative fuels as well as traditional oil and gas. It is not a matter of choice but rather a matter of simple math. The core issue is one of supply and demand. The price of oil will always fluctuate, but the reality of oil is inescapable. It is a finite resource. Alternatives are needed and necessary. With committed enterprise and wise public policy, Canada can help meet that challenge. By becoming an energy-diverse supplier to the world, we can maintain and indeed build upon our standing of energy success. As the saying goes, there is strength in diversity, and that has been well recognized by successive governments and parliaments and certainly this Senate over the last two decades.
I will not force a history lesson upon you, but I would like to underscore the important partnership that has always existed between government and industry in helping this sector find its feet and compete for space against mammoth and entrenched interests. A handful of policies have been created by government to help our sector gain a foothold in the incredibly competitive transportation fuels industry. Allow me to take a few minutes to survey them.
First and foremost is the renewable fuel standard and the reference I made to Bill C-33 and the work that this committee did in 2008. This measure will require a minimum renewable fuel content of 5 per cent in the gasoline pool, which comes into effect next week on December 15.
To our industry, it offers the guarantee of a defined market. It ensures a place for our product and gives us the momentum to operate our facilities in an economic fashion. We are actually celebrating this month the formal promulgation of those regulations for ethanol.
With respect to the 2 per cent renewable fuel standard for biodiesel, we as an industry are asking for an April 1, 2011, start date with a first compliance period ending December 31, 2012. I want to pause for a moment on this subject because I know committee members have recently heard from others questioning the implementation of the biodiesel renewable fuel standard in the same way that others questioned the ethanol renewable fuel standard before it.
To be clear, questions with respect to cold weather performance and technical feasibility for biodiesel are questions no more. They have been answered definitively and repeatedly. In fact, you will search far and wide to find an industry that has been subjected to greater tests or more scrutiny than biodiesel. From pilot projects to dedicated studies, from inquiries to examinations, we have taken every test and passed with flying colours. Moreover, other industry stakeholders can hardly cry foul with respect to notice since the government began the process of consultation on this important standard in 2006, nearly half a decade ago.
The technical feasibility studies were completed in 2008 with a report tabled in January of 2009, some three years ago. In April of 2010, additional demonstration projects were completed and a summary report was delivered by Natural Resources Canada to Environment Canada just this past summer. What I am trying to say as clearly as I can is that we have hopped through every hoop possible, and we agree with the government that now is the time to move.
It is no small matter. For both ethanol and biodiesel, the renewable fuel standard is the cornerstone upon which our industry is built. To investors it means certainty, and certainty creates interest. To rural Canada it means jobs that will be sustained, plants that will operate and feedstock to be purchased. To drivers it means greener fuels and a future positive impact on costs at the pump. To all of us it means lower greenhouse gases and a cleaner energy future.
The second and important public policy lever has been the ecoENERGY for Biofuels program. As honourable senators know, this program provides vital support to help attract critical capital investment to ensure needed ethanol and biodiesel capacity is built out in Canada.
I cannot say how vital this program has been for generating the benefit we have seen. We are currently working with the government to re-profile its efforts in biodiesel with an eye to moving towards large-scale commercial operation of biodiesel capacity in Canada.
Finally, on Sustainable Development Technology Canada, SDTC, both their SD Tech Fund and their NextGen Biofuels Fund have been critical in helping our industry finance early-stage technologies for next-generation biofuels. In fact, we are close to commercializing many of these projects, and the recapitalization of the SD Tech Fund and keeping the NextGen Biofuels Fund available exclusively for these projects is of overwhelming importance to the success of these cutting-edge, homegrown technologies.
Let me turn from what we do with government to what we are doing for Canada, starting with the economy. Much of this is simply highlights pulled out of the report card we have tabled before you.
More than 1,000 permanent manufacturing jobs have been created by the biofuels industry to support ongoing plant operations each year. This is in addition to the more than 14,000 direct and indirect jobs created during the construction phase of new production facilities to date.
We have seen some $2.3 billion in total capital investment — most if not all of it occurring in rural Canada; approximately $3 billion in economic activity; and just during the construction phase alone, some $1.5 billion in expansion to the tax base locally, provincially and federally. Overall, this adds up to a $2-billion annual contribution to Canada's economy that this industry is making every year.
In addition, when you look at the environmental benefits coming from our industry, with the coming into effect of both a 5 per cent mandate and the commitment to bring the 2 per cent mandate into effect in 2011, combined, those renewable fuel standard regulations alone will cut carbon emissions by 4.2 megatonnes a year. That is the equivalent of removing one million cars from our roads and highways each year. According to a third-party expert report by Cheminfo Services Inc., Canadian-produced ethanol reduces greenhouse gases at a rate of 62 per cent compared to traditional fossil fuels, while biodiesel reduces GHGs by a remarkable 99 per cent.
Our energy balance is resolutely positive, with recent studies from the International Energy Agency suggesting that for every unit of energy used to help produce biofuels, some 2.34 units are positively generated. That is a tremendously efficient and environmentally beneficial ratio.
There are many other benefits as well that the report card details precisely, including the positive impact on farmers and the promise biofuels offer to our forestry sector and the communities that rely upon it for their prosperity.
The message I want to underscore on this front is simple: Our industry has delivered. We have made good on our commitments; we have surpassed what was expected of us, and now it is time to concentrate on what comes next.
At the centre of that effort must be a pronounced focus on advanced biofuels. As an industry, we know that it is our leadership in advancing first-generation biofuels that permits the next generation of advanced biofuels to arise; and because we know the additional scientific, environmental and economic benefits of advanced biofuels, they promise to generate return for years to come.
This is a global race to build the better biofuels mousetrap in the future. Canada is ideally positioned in that race if we can continue and keep up the good work.
We conceive of this work in two tranches — the needs of the near term and the opportunities over the longer term. In the near term, we have to finish the job on biodiesel. Beyond that, we have called for an interdepartmental working group of the federal government on advanced biofuels to help us coordinate and plan carefully our efforts to lead in this emerging arena.
In the longer term, beyond the 5 per cent and 2 per cent mandates, we see expansion. That means an eventual commitment to expand the renewable fuels markets to 10 per cent and 5 per cent and to ensure adequate levels of market access are achieved — a market that will be met increasingly by advanced biofuels. Given our strapped fiscal times, it makes sense to examine alternative program funding models, including revenue-neutral, targeted tax measures that would help incentivize expanded investment in and production of advanced biofuels.
This is a time of transition for our industry, a time to recognize how much we have achieved working with government. We have delivered, as we said we would, and we stand ready to do more on behalf of our industry and the Canadian people who support the cause of greener, cleaner fuels.
As an industry, we appreciate the opportunity to come before this committee and share our story. The Senate in general and this committee in particular are respected for the thoroughness and thoughtfulness of the work you have done on this subject to date.
We welcome the chance to discuss what we have done and what more we can do for Canada and Canadians, building on a healthy partnership with government and both houses of Parliament. I would be happy to respond to any questions you have for us.
The Chair: Two more senators have joined us: Senator Bert Brown, from Alberta; and Senator Janis Johnson, from Manitoba, who is representing Senator Linda Frum of Toronto here this evening.
Colleagues, I want to remind everyone that we have to be back in the chamber at eight o'clock, so please govern yourselves accordingly with your questions. I do not want to cut anyone off, but I would like to have a crisp question and answer period, if we could.
I will ask a couple of questions first. I have looked quickly through your brochure, which is really about your association and what has been done in the biofuels industry. Right off the top, I could not see a list of your members. Is there a list in here of the members of the Canadian Renewable Fuels Association?
Mr. Quaiattini: Yes, if you go to the appendix section of the document, on page 26, you will see all of the ethanol plants that are either in operation or are under development; and on page 29, you will see the same for the biodiesel side of our industry.
The Chair: Excellent. Are you financed by contributions from your members?
Mr. Quaiattini: Not all of these plants are our members, but, yes, that is correct. We represent both ethanol producers and biodiesel producers. We also have a number of agricultural organizations, including the Canola Council of Canada and the Grain Farmers of Ontario. A number of agriculture interests are also represented around our table.
We also have energy companies, like Shell and Suncor, that are also members of the association as they are producers of renewable fuels and also those interested in investing in next-generation technology. The full value chain of technology providers and fuel producers is represented around the table.
The Chair: You went into some detail about how you have worked in partnership with the government — the federal government in particular — in getting to this stage, which you have described as a turning point, and now you must move to the advanced section of your industry.
I notice that you made reference to Sustainable Development Technology Canada and its funds, along with organizations that have received funding from them and have succeeded. Regarding things that need to be done going forward, I was curious when you said it is of overwhelming importance now that SDTC be recapitalized. What do you mean by that? What kind of money are we talking about and what source?
Mr. Quaiattini: SDTC has two funds that currently provide funding not only to the renewable fuel sector but also to other renewable energy stakeholders within Canada. The tech fund is designed to take the opportunity of research and innovation that is primarily done at the research level, at the pilot level, and bring it to a demonstration level.
One of the examples we have in our industry is Iogen Corporation, which is based in Ottawa. It is a next-generation cellulosic ethanol technology company. Iogen has benefited from the tech fund and precursors to that tech fund: It has taken that cellulosic ethanol production technology from basically the lab level to now a demonstration facility based in Ottawa that produces some 5 million litres a year of next-generation cellulosic ethanol. Where that opportunity then transitions into commercializing that next-generation technology is where the SDTC NextGen Biofuels Fund comes into play.
The challenge we have now is that the tech fund is fully subscribed, and there are a number of competing technologies, not just in renewable fuels, but wind, solar, biomass and elsewhere, that would like the opportunity to see their technology brought to demonstration. Last year SDTC sought to have additional funding brought into the tech fund, but it was not successful.
The Chair: How much would you be talking about there?
Mr. Quaiattini: You would have to ask SDTC. I do not have the specific number it was looking for. The original program was in the order of magnitude of about $550 million, and the vast majority of that fund has been committed. The NextGen Biofuels Fund is a $500-million program. That is fully funded currently, and no new money is required there.
The Chair: Thank you. We will go to our list. I have Senator Massicotte, a big shareholder of Iogen, I am sure. If not, he will be.
Senator Massicotte: Thank you for being with us today. In your report, you talk about myths, and you try to eliminate those myths. I am not an expert in your field, but when we read about environmental impact and so on, several things come back all the time. One is to say that the use of corn is efficient for the sake of biofuels, but when you look at the total energy that it takes, including its water component, the world should move away from the use of corn to produce ethanol and should go into sugar canes or the types of thing that grow in Brazil very quickly. Could you give us more information on that? Is that a valid statement, or do you agree with that? Significant experts came to that conclusion.
Mr. Quaiattini: There is no question that there are benefits that come from using sugar cane to produce ethanol. It is an efficient feedstock for that production, but, as you will appreciate, it is climate specific. Sugar cane grows only in certain tropical climates in which that kind of feedstock has the potential for growth. Countries like Canada and the United States would not be able to grow a viable sugar cane crop, so one would look at other alternatives on the grain side. Both corn and wheat have become the dominant first-generation feedstock for the production of renewable fuels.
It is a very efficient feedstock because we use only the starch portion of the grain for the production of ethanol, and it is from within the starch that we extract sugar, and the sugar is fermented in the production of alcohol. The alcohol is then denatured with gasoline to make ethanol. It is a process that has been around for hundreds of years, so the science aspect of producing alcohol is not new. It is the efficiency with which we can extract the sugar out of the grain and return the nutrients and vitamin portion of the grain back as a by-product of ethanol production as a distilled grain. That distilled grain finds its way back into the livestock sector and is a valuable feed that livestock farmers like because it concentrates the nutrients and vitamins into that feed. That becomes a more valuable feedstock than simply using the corn itself, so there is a value that livestock farmers get by having distilled grain.
We are quite efficient at using corn and wheat for producing ethanol, senator. In the North American climate, as elsewhere, it is the most efficient feedstock currently for the production, and we produce more than enough corn and wheat to be able to meet the feed market, again recognizing that the grain we are using is not food-grade grain. The corn we use is yellow, industrial corn. It is a livestock feed corn. We do not interfere with the production of food with ethanol production. There is a healthy competition with respect to livestock use, but it is the dry, distilled grain that is a by-product of ethanol production, in which we think there is value within the livestock industry there.
Government made the important decision to bring forward an ethanol strategy, in part to help grain farmers in Canada who, I think you will appreciate, for quite a number of years simply could not make a living from what they were planting in the ground and harvesting in the fall. In fact, the current federal government, in Prime Minister Harper's first cabinet meeting, was obliged to advance a $1-billion emergency relief payment to Canadian grain farmers in 2006 simply because farmers could not make a living and therefore were requiring those safety net programs to be in place. What was troubling about that decision in 2006 was that it followed successive previous governments' having to do exactly the same thing. In part, the government, both federally and provincially, saw the direct correlation of providing a new market opportunity for Canadian grains in the production of renewable fuels and seeing some of that value-added processing happening here.
Senator Massicotte: It is a subsidy the government wished to make to the livestock industry, or the grain industry.
Mr. Quaiattini: It was. Successive governments over the better part of the last decade were having to advance emergency relief and safety net programs to farmers, and 2008, according to Statistics Canada, was the first time there was a net reduction in safety net programs to farmers by some $1.2 billion. You could see after 2006, 2007 and 2008 that we finally started to see the price of grain starting to go up, so grain farmers in this country could get a decent return.
Senator Massicotte: Could you put a price on that? I am a businessperson. How much does it cost? It is an indirect subsidy in that the government is imposing these things. How much would it cost, comparing a gallon of this stuff versus oil or using some form of measurement, such as the CO2 we save? Can you give me a price comparison between oil and natural gas and nuclear, producing it in energy senses? If there were no subsidy at all, would you exist? If there were no imposition of quotas, would you exist?
Mr. Quaiattini: Certainly the mandate is the most valuable instrument that we have.
Senator Massicotte: If you did not have it, would you exist?
Mr. Quaiattini: It would be challenging because the oil industry has pretty much had a 100-year monopoly on owning the fuel distribution system within Canada.
Senator Massicotte: The answer is no.
Mr. Quaiattini: The answer is no. Without government policy, we would not be here.
Senator Massicotte: If there were a direct subsidy, how much money would you need to compete against natural gas, oil, nuclear and so on?
Mr. Quaiattini: Again, it is a little tough to answer this question, but let me give you the best answer I can. I will try to keep it as short as I can as well.
In this early stage of building out the industry, the price of ethanol is linked to both the price of oil and the cost of our feedstock. Those are the two biggest drivers of the price of ethanol. When corn was $2 a bushel and oil was $40 a barrel, we were price competitive. If the price of corn goes to over $6 a bushel, and oil is where it is today at over $90 a barrel, we are still price competitive.
Senator Massicotte: What would it cost to produce a gallon of ethanol?
James Grey, Chair, Canadian Renewable Fuels Association: That is a difficult question to answer because 75 per cent of our cost of production is corn, and corn is changing daily.
Senator Massicotte: What was it last week, or November 31? Give me a reference point.
Mr. Grey: I could tell you the last hour, maybe.
Senator Massicotte: Last hour, then.
Mr. Grey: It was about $5 a bushel.
Senator Massicotte: I know how much a gallon of gasoline costs. If it was pure ethanol, how much would that gallon cost?
Mr. Grey: To put it in perspective, typically the yield in an ethanol plant is roughly 2.8 gallons of ethanol per bushel of corn.
Senator Massicotte: What is my answer?
Mr. Grey: Again, that is very difficult to answer. If you go through the math, 2.8 gallons per bushel, $5, which is 75 per cent of our cost, will yield just under three gallons of ethanol, so $4.
Senator Massicotte: Is that $4 per gallon or per litre?
Mr. Grey: Per gallon.
[Translation]
Senator Boisvenu: First of all, Mr. Quaiattini, I would like to congratulate you on a very good marketing presentation. You really do sing the praises of the use of biotechnologies in energy production. However, my question will not deal with this issue.
In the early 2000s, I was a regional director for the environment department in Montérégie, which is a significant corn producing area. At the time, there was a debate going on over whether corn should be used to fuel our cars or to feed the planet.
I realize that corn production for industrial purposes and corn production for human or animal consumption are two very different propositions. However, both are grown on the same land. To produce ethanol, you require two raw materials, soil and corn.
Corn production in Canada is growing. Over the next ten years, production will jump from 8 to 15 million tonnes, which is roughly double current output.
Growing corn requires a significant amount of pesticides and chemical fertilizers. Nitrogen, for example, is used at the front-end of corn production. Nevertheless, nitrogen is the source of blue-green algae. There are several ethanol plants planned for Montérégie.
How do you intend to tackle this major environmental issue? Urban sprawl continues to shrink the amount of cultivable land in Montérégie. Montérégie lies to the south of Montreal, on the plains of the Saint Lawrence valley. This is one of the most fertile plains in all of Canada. It is comparable to those in Western Canada. The area loses approximately 15,000 hectares annually to urban sprawl.
What are your plans for tackling the environmental challenge that increased production in Western Canada and in Quebec has created over the past 20 years? How does your industry intend to deal with the issue? I find it difficult to imagine how we are going to deal with the environmental impact of a doubling in corn ethanol production over the next few years.
[English]
Mr. Quaiattini: You asked some very important questions. Let me try to answer the broader question about available agricultural land and then speak specifically to what I know are the opportunities being advanced in the province of Quebec.
Looking at the Canadian context with respect to the amount of agricultural land and more importantly the biomass that we have available, we can certainly expand the production of ethanol and biodiesel far beyond what we are currently doing. Let me give you some perspective.
Right now, we have about 1.9 billion litres of ethanol production capacity built out to date in a mandated market, which I said begins next week, that will require 2 billion litres of ethanol.
On the biodiesel side, we have about 160 million litres of production capacity built out in a mandated market that will require just over 500 million litres, so we have a ways to go with biodiesel to build out the necessary capacity.
On the ethanol side, we are pretty much there. We have a large ethanol plant in Ontario that will come online at the beginning of next year and one additional smaller plant that is now in production, and that will pretty much get us to the 2 billion that we need.
However, from a national perspective and particularly in Western Canada where we have not built out significant production capacity yet, there is considerable agricultural land available. Some 5 million to 7 million acres of arable land sit fallow every year. It is land that is simply not put into production, in part because the demand for that grain is simply not there.
You are quite correct that in the province of Quebec there is little capacity to expand traditional first-generation or corn-based ethanol production. In discussions with the Quebec government, our industry has been very clear that the level of corn ethanol production capacity built out in Quebec would be based on the amount of surplus corn that would be made available, and any further expansion of ethanol capacity in Quebec would be focused on next- generation technology, where we would be using agricultural residue, forestry residue and other biomass as the feedstock.
You are quite correct in your statement that there is little capacity to do more in Quebec. Therefore, our industry has been quite sensitive in the discussions we have been having within the province and with the agricultural partners we have there that the focus of next-generation development will be the direction we will go there.
Certainly in Western Canada, we have a significant amount of capacity to do a lot more production than we are doing now.
The other issue that I think is particularly sensitive, in direct response to your question, is that it is also important to look at where yields are going. Almost all of the considerable expansion of ethanol production that has taken place over the last decade, both in the United States and in Canada, has been met by the amount of corn that we are getting out of the ground through yield growth. About 20 or 25 years ago, we harvested about 70 bushels of corn off one acre of land. Today, the yield is about 150 to 160 bushels an acre. In fact, in Ontario, farmers this year harvested as high as 200 bushels off that same acre.
[Translation]
Senator Boisvenu: There is a direct correlation to the increase in corn production and the rise in the use of fertilizers. Increased corn production, specifically in Quebec, has been made possible by the large-scale use of fertilizers.
I am aware that a great deal of research has been done, corn has been genetically modified and the quality enhanced. However, the increase in corn production shadows the rise in fertilizer use. It is the latter that worries me.
[English]
Mr. Quaiattini: In fact, it is actually the opposite right now. These are North American numbers, and they may vary from region to region. However, if you look at the trend lines currently, over the last 10 to 15 years, for the production of corn, nitrogen fertilizer use is on its way down as the level of corn production has been going up.
You have touched on the reason, in part; it has a lot to do with seed modification and biotechnology advancement. We are producing corn that is pest-resistant and therefore not requiring more pesticides to be used. We are talking about strains of feedstock that have the ability to draw nutrients out of the ground without having to add significantly more fertilizer for that expansion.
None of the corn used for the production of renewable fuels in Canada is irrigated, so we simply rely on the water that falls out of the sky with rain. There is no irrigation taking place. Of particular importance — and Canadian farmers lead in this area — is the mitigation of soil erosion by using no-till practices. We are not turning the land over every time we change crops any longer. We are using very precise technology for planting and for applying fertilizer so that it is not spread out across an entire field; it is precisely placed so that the plant can get the maximum opportunity to extract that nutrient. Canada leads most of the world in mitigating soil erosion. We have some of the best farmers leading in that.
The Quebec government, Quebec farmers and our industry have been particularly engaged. The large ethanol plant in Varennes, Quebec, by GreenField Ethanol has an agreement with the farmers that supply corn to that plant that they have to meet a number of environmental sustainability standards for the production of that corn before it is allowed to be utilized in the production of ethanol at that plant. That was negotiated between the Province of Quebec, GreenField Ethanol and the farmers. Approximately 400 farmers in the region supplied corn, and we think it is actually a best practices sustainability model that is quite progressive for ensuring environmental mitigation in the production of ethanol.
[Translation]
Senator Boisvenu: I would like to conclude by pointing out that, in Quebec, the use of animal-based fertilizers and manure is regulated. However, there are as yet no such standards for chemical fertilizer use. Let me give you an example. You refer to nitrogen as a starter. Producers, whose initial nitrogen starter application is followed by rain, will be permitted to retreat their corn crop.
There are indeed agreements between farmers governing the use of animal-based fertilizers, specifically slurry. However, I would doubt that any such agreement exist in relation to the use of chemical fertilizers.
[English]
The Chair: Things clearly have changed a bit since you were an haut fonctionnaire concerned with the environment, but it is very interesting.
Senator Peterson: Thank you, gentlemen, for your presentation. You mentioned that you want to be an energy supplier to the world. Are you mandated in all provinces now?
Mr. Quaiattini: Senator, I will start west and come east. British Columbia has a 5 per cent ethanol mandate and a 3 per cent biodiesel mandate growing to 5 per cent. That came into effect January 1 of this year.
Alberta has a 5 per cent ethanol mandate and a 2 per cent biodiesel mandate that will come into effect on April 1, 2011.
In Saskatchewan, a 7.5 per cent ethanol mandate has been in place for a number of years. Saskatchewan, as you will appreciate, was one of the first jurisdictions to mandate the use of ethanol. The Wall government has committed to bringing in a biodiesel standard, and we are hopeful that commitment will be fulfilled in 2011.
Manitoba has an 8.5 per cent ethanol mandate, which has been in effect for a number of years, and a biodiesel standard that came into effect in November 2009.
Ontario has a 5 per cent ethanol mandate that came into effect in 2007.
Quebec does not have a mandated requirement but a target of 5 per cent by 2012, in which they have committed to using next-generation biofuels. As I responded to the previous senator, that is the focus the Quebec government has taken.
There are no renewable fuel standards in place in Atlantic Canada, and as the committee knows, the national mandate comes into effect next week for the 5 per cent for ethanol and a commitment in 2011 for a 2 per cent mandate nationally.
Senator Peterson: Just meeting that demand will tax your facilities now, will it not?
Mr. Quaiattini: Yes. The 5 per cent mandate that comes into effect next week will require some 2 billion litres of ethanol to be blended, and we are at 1.9 billion litres of production capacity currently with some additional plants coming online. We will certainly build up enough to meet that mandate on the ethanol side.
On the biodiesel side, we do have a way to go. The absence of having a firm start date in 2011 for that mandate to come into effect has affected capital decisions about building out additional production capacity, so certainly our request of the government is to move swiftly with fulfilling that commitment. We are optimistic that the government will do so at the beginning of the year.
Senator Peterson: Do you have anything imported now?
Mr. Quaiattini: We do have some imported, certainly on the biodiesel side with the mandates in place in British Columbia and some of the pre-compliance that is happening in Alberta and Manitoba. We do have U.S. biodiesel that is making its way into the Canadian market, but equally we also have Canadian-produced biodiesel, which is primarily concentrated in Ontario and Quebec, going into the U.S. market. We have not quite built out enough capacity in Western Canada to meet the mandated requirements, thus they are currently supported by U.S.-imported biodiesel. In Ontario and Quebec, in the absence of mandated markets, the current production is going into the U.S. market right now.
Under NAFTA, the North American Free Trade Agreement, we have a free flow of fuel, and we certainly expect that to continue. We will be competitive in that marketplace.
The Chair: Just for our viewers, when you say ``we'' all the time, you mean the members of your association, the actual Canadian industry?
Mr. Quaiattini: That is correct. We represent only the Canadian industry, senator.
The Chair: When you use the term ``mandate,'' you are saying these are rules that have been legislated in one form or another requiring a percentage or proportion of automotive fuel to be blended with biodiesel or ethanol?
Mr. Quaiattini: That is correct, senator
The Chair: It is either a federal regulation, the new one coming in, or provincial regulations?
Mr. Quaiattini: That is correct.
The Chair: Those mandates are designed, again in the simplest form, to reduce the emissions of CO2 from the burning of the fuel; is that correct?
Mr. Quaiattini: That is certainly one of the public policies that governments, both federal and provincial, have set for the industry. As I said in my comments, on a life-cycle assessment basis, looking at the greenhouse gas footprint of ethanol compared to traditional fossil fuel, there is a 62 per cent benefit that comes from ethanol, and on biodiesel it is a very impressive 99 per cent GHG benefit compared to traditional diesel fuel.
You are correct, senator. One of the public policy drivers that governments wanted to achieve in bringing these mandates forward is to have that cleaner-burning fuel in the transportation sector in order to bring down greenhouse gases. As I suspect this committee is quite sensitive to, fully 25 per cent to 30 per cent of all greenhouse gases emitted come from the transportation sector.
The Chair: We had a number of 28 per cent.
Mr. Quaiattini: That is correct.
Senator Neufeld: I want to deal with two issues, one being cold-weather performance. Having lived pretty well all my life in the North and having worked in the Arctic in construction and having handled as a bulk agent diesel fuel and gasoline for some 13 years, I am familiar with diesel gelling and with seeing, at minus 40 and minus 50 degrees, diesel gel.
I know there have been ongoing tests, and you say you have dealt with it. I know that in B.C. when we put in our standards we wanted to actually reflect that in the North and really get more happening in the South where it is warmer than in the North. Are you telling me now that 2 per cent biodiesel will not gel at minus 40 and minus 50 degrees? Have you discovered that in your tests, and has that been under strict rules or in general purpose?
Mr. Quaiattini: I will give you a little bit of an answer, senator, with respect to the demonstration work we have done in Canada in the climate you were talking about, and I will get Mr. Moser to respond with a little more detail regarding the usage of biodiesel in the fleets.
When the government announced in 2007 its intent to move ahead with biodiesel blending in Canada, the provision placed on the industry was that we needed to demonstrate technical feasibility in all Canadian climates, so we were part of a joint effort that commenced in 2007-08. The Alberta biodiesel demonstration project used a variety of biodiesel blends, both tallow-based and oilseed-based biodiesel, in transport trucks going between Edmonton and Fort McMurray in the spring, in the summer and in the middle of the winter when it was minus 40 degrees Celcius with the unique climate our wonderful country has. That project took place between 2007 and 2008 using a variety of blends and a number of tests, including allowing those trucks to sit over a weekend and not be running and then restarting them up. These tests were to go exactly to the cold weather filtration and gelling issues.
That project was a $4-million joint initiative between the federal government, the Province of Alberta and the Canadian renewable fuels industry. The oil industry partnered with us as well. That report was published in January 2009, and it absolutely demonstrated that biodiesel is technically feasible and can be used in all weather climates.
I will let Mr. Moser speak more specifically on the technical aspects of that work.
Todd Moser, Secretary, Canadian Renewable Fuels Association: The Alberta research demonstration initiative proved that out by putting it in one of the harshest climates in Canada to see if it works. The results of that study were that yes, it does work.
I think you can appreciate the fact that even distillate products require proper care and handling. You will not take a seasonal, light-cycle oil into the Far North; you will invite problems. Prudent care and handling is definitely required. You will not do crazy things like do high-level blends with seasonal distillate products and take it to the Far North. I know our friends in the oil industry are well versed in the issue and at being able to control it.
We have been using biodiesel blends since 2002. Part and parcel of building our demonstration plant was participating in a number of demonstration projects like the Bio Bus, and BioMer in Quebec. We also used it in our fleet in our Rothsay facility in Montreal. We expanded its use, and we are now using 149 tractor-trailer trucks in the Rothsay fleet running on biodiesel blends year-round.
We did our own blending up to the fall of this year. Now FS PARTNERS, a fuel distributor in Ontario, does some of the blending for us in Ontario.
We have not had any issues, although we operate in some pretty harsh climates. If you want to sit down on the top of our tanks down at Sainte-Catherine on the St. Lawrence Seaway, it gets chilly there in January. We have been running that fleet on biodiesel blends since 2002. In fact, we even have B100 trucks that run in April through to October. They are modified vehicles and they are out of warranty, so we do go above and beyond the original equipment manufacturer recommendation blend rates. We can do that because they are out of warranty, but we do not have issues with those trucks either.
We had to prove to ourselves as well as to the producers of this fuel that it would stand the test of time. Running 149 trucks in the Maple Leaf fleet, we will have travelled 19 million kilometres on biodiesel blends. We average about a 10 per cent blend, and I can tell you this product works, because we use it.
Senator Neufeld: I fully understand you do not go out there and use summer diesel blend. I understand that, and I appreciate your response.
I will qualify that a bit. In Fort McMurray and where I live, we might think it is harsh, but the harshest weather is in the Arctic. I do not think we have had any demonstrations, but I would ask: Have there been demonstrations using biodiesel at a 2 per cent mix in that harsh climate of the Arctic?
Mr. Moser: I am not aware of any transport studies, but I do know that biodiesel will find its way into mining applications. I do not know how far north, to be honest, but it is an attractive product, particularly in deep mines, because of its low flashpoint.
We tend to always go to the big Mack truck when we think of biodiesel, but it has other applications — for example, if you have indoor storage tanks for an engine-generator, or for mining applications.
Senator Neufeld: You can use summer diesel in those and probably do, in many cases. Thank you very much for that.
Mr. Quaiattini: You would also be aware that the mandate you brought into effect as minister in British Columbia provides the oil industry the flexibility of where they make the decisions of doing that blending, and the national mandate for 2 per cent will do exactly the same thing. Newfoundland and Labrador, for example, is exempt under the 2 per cent mandate, as are the territories. The flexibility has been built into the regulation to give the oil industry that flexibility of having them meet those mandated requirements on average.
The Chair: Is temperature the main reason for the exemptions?
Mr. Quaiattini: I do not know whether that would be the main reason. Again, we wanted to ensure that the oil companies, who trade and swap fuel among each other, and the business practice in which they operate should have that flexibility built in to make the decisions. Trucks have a warranty for up to as high as B20. There are standards in place — ethanol up to E10. They have the flexibility to concentrate that blending in certain regions to get maximum use. There will be other parts that may not be covered, but we accepted that in the regulatory process.
Senator Neufeld: I am asking these questions in response to the people who were here from the Canadian Petroleum Products Institute, CPPI, just a week ago, telling us that this will not work in northern applications. I am getting the complete opposite from you folks, and they are on the other side, so I will kind of figure out where to cut that down the middle.
I know that one of their biggest issues is different standards across the country. I think we can all understand it would be nice to have one standard — not nice, almost mandatory. There has to be one standard across the country.
There has been a lot of talk, and there were a few questions about it earlier, that when you grow oilseeds to make biodiesel, you are not saving much as far as greenhouse gas emissions go because you have to farm the land; you have to do all those kinds of things, and it is a net neutral.
You are telling me something different, I believe. I would be interested in your expanding on that a bit because that is the story out there. There are many other questions about taking food out of people's mouths, which I understand is not what we are doing, but you can tell me about the difference — how much you are saving and a little bit more explanation.
Mr. Quaiattini: Again, senator, one of the public policy drivers governments were looking for in mandating the use of renewable fuels was that GHG-reduction benefit. We take that issue very seriously as an industry, so much so that we went out and asked a third party to do a life-cycle assessment analysis on the ethanol and biodiesel that we produce in Canada. The term often used is ``well to wheels.'' It is an assessment from literally the planting of the grain and oilseed right through to consumers filling their gas tanks and driving their vehicles — that whole life-cycle assessment evaluation on the full production of the renewable fuel and its use.
For ethanol, that greenhouse gas emission benefit, as compared to traditional fossil fuel, is a 62 per cent reduction benefit. On the biodiesel side, given that the majority of the biodiesel that we produce and use in Canada currently is used restaurant grease and rendered animal fat — I am careful not call it a waste product because sometimes I get in trouble when I use that term because it does have a value — that greenhouse gas emission benefit is as high as 99 per cent.
On the oilseed side, we do have canola biodiesel that is produced in Western Canada in small quantities right now. That greenhouse gas emission benefit number is between 75 per cent and 80 per cent. It is a significant environmental benefit that comes from that use, and it does use life-cycle assessment modelling.
In fact, Natural Resources Canada developed the model that is used. It is called GHGenius. On a global basis, it is considered to be one of the best life-cycle assessment models because it takes in many of the energy inputs and many of the factors in calculating the numbers that I am sharing with the committee now. We are happy to have that scrutiny.
Senator Neufeld: What was the company you hired?
Mr. Quaiattini: As we say in the report, it is a company called Cheminfo Services Inc, which is an engineering and environmental expert company. It uses the GHGenius Natural Resources Canada model.
The Chair: Senator Massicotte says it is page 40 of the report. Thank you for that.
Senator Massicotte: It is complicated. It will not tell you very much, at least for me, but I am surprised at that percentage; it is amazing.
Senator Brown: Gentlemen, I want to know whether you have covered all of the things of transportation across provinces. I know we have the Canadian Wheat Board, and we have some problems getting red diesel out of Saskatchewan into Alberta. These regulations always infuriate farmers. Have you had to deal with any of those yet, or is it because you are upgrading from feedstock to petroleum product of some kind that you are not affected by those organizations?
Mr. Quaiattini: No barriers exist to the industry either in terms of feedstock provision or the flow of ethanol or biodiesel between provincial jurisdictions. Fortunately, we think the rules put in place by those provinces that led the effort to bring in renewable fuel mandates within their jurisdictions have done so in a way that works. We would continue to talk to governments to encourage that those kinds of restrictions not be put in place.
As we say in the document, we are certainly building out the production capacity to meet the Canadian demand that is being created through these mandates, but when you look south of the border, on a comparative basis, the ethanol mandate in the United States will require 36 billion gallons of ethanol to be blended by 2022. To put that into perspective, just that ethanol mandate alone is four times the entire transportation fuel we use in Canada on an annual basis. It is a significantly large demand that the U.S. is moving towards in the use of renewable fuels. On top of that, there is a 1 billion gallon mandate for biodiesel in the U.S. market.
Given the fact that we have significant biomass available to us in Canada, we would like to think that over time, not in the near term but over time, we would build out production capacity here in Canada to where we would actually be exporting the fuel, much like we do in Alberta and Saskatchewan now on the oil side, rather than what is happening. As I explained earlier, we are exporting canola into the U.S. market to be processed into biodiesel, and that biodiesel is coming back into Canada to serve the mandates in British Columbia, the ones about to come into effect in Alberta and already in Manitoba.
We do not see that value-added processing of canola happening in Western Canada yet, but we do see the canola leaving the country and coming back in as a processed product. We would like to see that value-added process happening here. We certainly have the capacity and technology to do it. We are just getting started. We need to do more. Our capacity to create that certainty of market is what is important in bringing the start date in for the biodiesel mandate we have asked for.
Senator Brown: I understand what you are saying between the U.S. and Canada, but we have more problems interprovincially when it comes to trade than we do with the United States. We always have had. For instance, Saskatchewan has had red diesel for many years, and we were not allowed to bring it into Alberta. I could never understand that. It was proven to be better, provide longer life for the engines and everything else, but we could not get our hands on it. Alberta had restrictions against it. I think the Saskatchewan wheat board had problems with moving grain. I wanted to know whether the upgraded product was kept to a certain standard that would get through all of the provincial barriers.
Mr. Quaiattini: Thankfully, we do not have those barriers right now.
Senator Dickson: I have two areas of questions as a senator from Nova Scotia with a special interest in sustainable, renewable sources of energy. You stopped in Quebec. After you covered the province of Quebec, you said nothing about Atlantic Canada. Aside from the technology innovation point of view, have you canvassed the governments in Atlantic Canada? I notice that Nova Scotia is the only province to include a tax credit for biodiesel, as indicated on page 37 of your report. What is the feedback from Atlantic Canada? Do you get down there? Do you do any work there? Would you like to pass on to the committee some positive or negative comments?
Mr. Quaiattini: That is a timely question. In 2005-06, when we were talking to both federal and provincial governments about moving forward with renewable fuel strategies, we were certainly in Atlantic Canada. Unfortunately, we did not get the traction we had expected. We have renewed that effort. I was part of the four- province outreach that we did in June of this year. We identified a number of companies and technologies that have an interest in being in Atlantic Canada, and a number of them were very innovative companies. There is one technology: A company called Atlantec Bioenergy is looking at growing sugar beet as a specialty crop for the production of ethanol. It is in the process of building out a demonstration capacity right now and very much wants to see that opportunity expanded.
There are some feedstock challenges certainly on the ethanol side in Atlantic Canada in the near term. Over the longer term, as we move toward commercialization of cellulosic ethanol, clearly there are forestry residue opportunities in Atlantic Canada. There is capacity to use that biomass in the production of ethanol. On the biodiesel side, maybe Mr. Moser can respond.
Mr. Moser: Our plant is not located in Nova Scotia, but we do get some of our feedstocks from Truro, Nova Scotia.
Senator Dickson: I realize that. That is where I live.
Mr. Moser: Some of the recycled products come out of Truro to our plant in Ville de Sainte-Catherine and are turned into 99 percent GHG reduction biodiesel. Rest assured that Nova Scotia is playing a part in creating a better environment for Canadians.
Senator Dickson: I live close in Truro to where that rendering plant is. They have made certain improvements, but the NIMBY — not in my backyard — principle applies to that plant. I must say that from time to time, when the wind is blowing in the right direction, I do not know whether we suffer because you people are benefiting. Just to make the point to my constituents down in my hometown of Truro, I am one of the ones together with many others who suffer.
My second question is related to multi-feedstock capacity. A group in Nova Scotia particularly, led by Orville Pulsifer of Truro, is looking at grass as a feedstock. Can you comment on that project?
Mr. Quaiattini: I cannot comment on the project specifically, but I can certainly comment on the technology. There is no question about using native grasses like switchgrass, for example, which is predominant in Western Canada. The Iogen technology I referred to earlier, which is a cellulosic ethanol technology, can use native grasses as the feedstock. While the opportunity for first-generation technology in Atlantic Canada has not been as visible as we would like it to be, certainly as we move toward the commercialization of next-generation ethanol and biodiesel, there is no question that Atlantic Canada can benefit from that.
I was encouraged when I met with the Premier of Nova Scotia in Halifax this summer. That government is proceeding with a renewable energy transportation policy review that is just beginning. The premier was certainly quite sensitive to the opportunity of renewable fuels in your province. The Premier of Prince Edward Island has equally expressed interest.
Ideally, from our industry's perspective, an Atlantic Canadian strategy would be helpful in bringing all of the provinces together. I mentioned the workshop we did in June. All four provinces were represented. There was an interest in exploring where those opportunities could be going forward and looking at creating that right competitive environment and the right regulatory environment. In part, the federal regulation will help that.
Irving, as a regional player in Atlantic Canada, will be required under both the 5 per cent mandate and the 2 per cent mandate to have ethanol blending and biodiesel blending happening in the Atlantic regions in which Irving has a presence. Over the longer term, our hope is to be able to see production capacity built out in the regions so that in fact that can be met locally.
Senator Dickson: Were you meeting with Irving? I assume you had meetings with the Irving Group in Saint John, New Brunswick.
Mr. Quaiattini: Irving did participate in that meeting in June. Yes, they were at the meetings.
Senator Dickson: Did you have private meetings with them as well? Generally, what was their response, whether in public or private?
Mr. Quaiattini: The Irvings were represented in the workshop we did in June. Again, they have made clear, public statements that they will be meeting those mandated requirements. I cannot speak on behalf of individual members of mine who may have had their own commercial discussions with Irving about the future. There was an expectation at one point that Irving was interested in building a biodiesel capacity in Atlantic Canada. I am not sure where that is today. Certainly, like Suncor, Shell and Husky, who are in the renewable fuels business, it would be our hope that Irving would look to that opportunity as well.
Senator Dickson: My last question relates to a college and a university in Atlantic Canada, one being the University of New Brunswick and the other, which is located in my hometown of Truro, being the Nova Scotia Agricultural College. Have you been working directly with those post-secondary institutions?
Mr. Quaiattini: As part of this outreach effort that we began in June and continue to pursue, we have had expressions of interest from the university sector along with the provinces to sit down and talk about opportunities.
Senator Dickson: Last but not least, there is a new government in New Brunswick now. Have you talked to Premier Alward?
Mr. Quaiattini: We have not yet spoken to him. Again, as part of this outreach strategy that we will continue to pursue into 2011, it is our intention to reach out to all four Atlantic provinces and look for a way to bring a discussion about opportunity together, no question about that.
Senator Dickson: Thank you.
Senator Massicotte: I think my question was covered by that table. On page 40, when you say 99 per cent, it appears to be such an exaggeration that I cannot interpret it, but that point was covered earlier. In other words, I guess I am a doubtful believer.
Mr. Quaiattini: I will ask Mr. Moser to respond to that issue.
Mr. Moser: I will not pretend I am a life-cycle analysis expert, but much of my awareness of how they do the assessment has to do with where and how the feedstocks are sourced. When you get into recycled feedstocks like spent restaurant greases and rendered fats, you are starting with quite an advantage there because the clock starts at that rendering facility versus seed oils that would go back into the plant.
Senator Massicotte: You also have a page here that summarizes your members by diesel, for instance. I think the average person who reads the information on page 29, for example, would ask, ``Biodiesel represents what savings in CO2?''
If you apply that to the average use of biodiesel, not only to being selective — we could all be selective and reach any conclusion we want — what would be applicable? When I look at page 29, I see feedstock canola, multi-feedstock, yellow grease and oilseed. What would be the percentage?
Mr. Moser: We would go back to the Cheminfo Services report for that.
Mr. Quaiattini: The 99 per cent was in fact the average number, recognizing that the majority of biodiesel production currently in Canada is, as I said, rendered animal fat and used restaurant grease. Again, I am sensitive when I use the term ``waste product,'' but in effect, in its simplest terms, that is what it is.
You are not talking about using a grain or an oilseed; you are actually taking product — if you are in the restaurant business, you have to dispose of that grease; you simply cannot pour it down the drain.
Senator Massicotte: Looking at your members, I see many are using canola and oilseeds.
Mr. Quaiattini: Again, I would caution you. Looking at those plants, those that are operational versus those proposed or under construction, you will see that the vast majority of the plants currently operating biodiesel are the ones using yellow restaurant grease and rendered animal fat as their feedstock.
However, if you look at the average that I shared with the committee earlier, using oilseed or canola, that number again is between 75 per cent and 80 per cent GHG. The range is a healthy 75 per cent to 99 per cent, which is a very positive GHG reduction range.
Senator Massicotte: Do industry experts and other reports agree with that number?
Mr. Quaiattini: Again, there are many reports that look at this. What is unique about this report is that we are talking specifically about Canadian-produced renewable fuels. There are comparative reports for Europe and the United States and other regions of the world that use biodiesel, and those ranges vary depending on the feedstock, the energy input used and the age of the plant.
In Canada, the bulk of this production capacity has been built out over the last five or six years, so we are using state-of-the-art technology. If you compared an ethanol plant built today to an ethanol plant built 25 years ago, you would not achieve those GHG numbers.
With respect to 25-year-old U.S. plants using coal-fired technology to power the plants, those numbers would be nowhere near what we are achieving here. That is the innovation that has happened over the last 25 years in the advancement of the production of that fuel.
Senator Brown: I want to make a comment that you have overlooked. When you grow canola for edible oil, it is a very valuable product at $14 or $15 per bushel. However, if it is frozen, then it becomes sample and is worth but a fraction of that because it is no longer edible; it is a bitter oil and the kernels are green. It does not make any difference to the amount of production you can produce, and for petroleum use, it does not affect that at all. Every time we get a frost in Southern Alberta or Southern Saskatchewan, you will see lots of canola for sale, and they get a better price if it is used for your needs rather than for edible purposes.
Mr. Quaiattini: There is no question about that. The other important issue, particularly in Western Canada, is that there has been a significant expansion of crushing capacity built out in Western Canada in order to meet our significant export opportunities that continue to grow. We export over 80 per cent of all canola we grow and harvest outside of the country. We simply do not do any value-added processing here to the degree we would like to see. In part, that is the promise biodiesel makes.
We have built out all of this crushing capacity but have not built out the biodiesel production capacity yet. In the near term, having a lot of crushing capacity but not a diversified market for it will present a challenge. Therefore, I think farmers are rightfully nervous; we do not want to see a price reduction taking place because we have too much crushing capacity and not enough use for it.
The other issue you will be aware of is that one reason to have a biodiesel market in Canada is in part to go after what can be troubling opportunities on the trade side. China has interrupted its acceptance of canola at different times, requiring the government to intervene. Part of what the canola farmers and industry are looking for in Western Canada is that diversity of market use of canola, so that they are not reliant only upon the trade market, which at times can be interrupted and cause issues.
The Chair: Are there any other questions? Given time constraints, we have done very well. Mr. Quaiattini, I would like to thank you very much, along with your two colleagues, Mr. Grey and Mr. Moser.
This is a complicated area for us, and there is a lot of contradictory material in the media about the products of your association. I am sure we will be coming back to you for further information as we continue down our path, and if you feel at any time you would like to communicate with us directly, through me or the clerk, we would like you to do so.
Mr. Quaiattini: I appreciate that. We are at your disposal while you continue your important work on this study on energy policy. We would be happy to come back at any time.
The Chair: I will now adjourn the session.
(The committee adjourned.)