Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 23 - Evidence - Meeting of October 16, 2012
OTTAWA, Tuesday, October 16, 2012
The Standing Senate Committee on Agriculture and Forestry met this day at 5:06 p.m. to examine and report on research and innovation efforts in the agricultural sector (topics: nanotechnology and the challenges related to applied research in agriculture; and market opportunities for renewable energy and their impact on innovation in agriculture).
Senator Percy Mockler (Chair) in the chair.
[English]
The Chair: I want to take this opportunity to welcome the witnesses. We will have a formal introduction a bit later.
I welcome you to this meeting of the Standing Senate Committee on Agriculture and Forestry. My name is Percy Mockler, a senator from New Brunswick and chair of the committee. At this point, I would like to ask all senators to introduce themselves for the witnesses.
Senator Merchant: Pana Merchant from Saskatchewan.
[Translation]
Senator Robichaud: Fernand Robichaud from Saint-Louis-de-Kent, New Brunswick.
[English]
Senator Mahovlich: Frank Mahovlich, Ontario.
Senator Callbeck: Catherine Callbeck, Prince Edward Island.
Senator Plett: Don Plett from Manitoba.
Senator Buth: JoAnne Buth from Manitoba.
Senator Eaton: Nicole Eaton, Ontario.
Senator Duffy: Mike Duffy, Prince Edward Island.
[Translation]
Senator Maltais: Ghislain Maltais, Quebec.
Senator Rivard: Michel Rivard, Les Laurentides, Quebec.
[English]
Senator Mercer: Terry Mercer from Nova Scotia.
The Chair: Thank you, senators.
[Translation]
As you know, the committee's order of reference specifies that:
The committee has been authorized to examine research and development efforts, particularly with regard to developing new markets domestically and internationally.
[English]
We are also examining enhancing agricultural sustainability. Another mandate, as part of our order of reference, is to improve food diversity and security.
The committee is continuing its study on research and innovation efforts in the agricultural sector.
Today, we will have two panels. In the first panel, we will be focusing on nanotechnology and the challenges related to applied research in agriculture. The focus of our second panel will be market opportunities for renewable energy and their impact on innovation in agriculture.
Honourable senators, I want to take this opportunity to say thank you to the witnesses for accepting our invitation to share with us their opinions, recommendations and visions of the next steps in agriculture.
[Translation]
We welcome Ms. Maria Derosa, associate professor of chemistry at Carleton University.
[English]
Ms. DeRosa, thank you for accepting our invitation.
We also have Suresh Neethirajan, from the BioNano Lab at the University of Guelph.
I now invite the witnesses to make their presentations. I have been informed by the clerk that Mr. Neethirajan will make the first presentation.
Suresh Neethirajan, BioNano Lab, University of Guelph: Good afternoon Mr. Chair and honourable senators. Thank you for the opportunity to appear before the standing committee.
I am Suresh Neethirajan, and I am an assistant professor at the University of Guelph. I am a Canadian who studied at the University of Manitoba and received nanotechnology training at Oxford University in England. Prior to my current position, I worked as a scientist at the National Agriculture and Food Research Organization at Tsukuba in Japan and as a research engineer at the Oak Ridge National Laboratory of the Department of Energy of the United States.
Today is World Food Day, and it is timely to talk about the applications and implications of nanotechnology in Canadian agriculture. The benefits of nanotechnologies in agriculture over conventional technologies are undeniably tremendous.
The BioNano Lab at the University of Guelph is focused on studying the nano-scale aspects of biological systems and thereby creating applications for agricultural systems. The BioNano Lab is working from curiosity-driven research towards application-driven research in producing novel solutions for agricultural and food industries. Novel, smart, micro-nano-enhanced surfaces for prevention and control of biofouling in the food industries, nano-particle-enabled, grain-quality-monitoring sensors and novel microfluidic-based disease diagnostic systems are a few of the research outputs from the BioNano Lab.
I would like to focus on government funding, risk governance and public acceptance of nanotechnology as the three major challenges today related to applied research in agriculture.
While Canada has fewer nanotechnology researchers than larger countries such as the United States and China, we are more efficient in terms of the number of scientific articles published per researcher. The cancellation of funding programs such as Research Tools and Instruments Grants Program and the major resources support by NSERC at the federal level and the Ontario Research Fund - Research Excellence Program at the provincial level are serious blows, as it will significantly stall the research program progress in the nanotechnology domain and impede the capacity to innovate. This is the time to move forward by providing opportunities to encourage the researchers to maintain the momentum.
Research takes a long time, and to move from an idea to an innovation to a product requires sustained funding. Uncertainty in intellectual property rights and regulation is another challenge. Continued investment in basic and applied research from the government is essential. Some of our industry collaborators are willing to provide in-kind contribution, but no cash contribution, toward supporting our projects. Moreover, big industries, especially in the agriculture and food sector, are not willing to openly collaborate if they see the word ``nano'' in the project proposal, mainly due to possible reputation risks.
We have obtained a U.S. patent for a nano-particle sensor for stored food quality monitoring. The challenge we face is to move this invention into a realizable commercial product. From my perspective, most Canadian industries are predominantly supporting technology push rather than market-pull innovation. In reality, Canadian farmers are just relying on temperature-based thermocouple cable to monitor the grain quality. This is a very poor quality management strategy because a grain kernel is a poor conductor of temperature. Our sensing system uses carbon dioxide, other molecules and related biomarkers to efficiently monitor the quality of the stored grain system, which is built based on nano-particles and nano-materials. Although there is a huge market demand for this nano-particle-based quality monitoring system, the Canadian business environment seems to be more technology driven.
One should be mindful and acknowledge that there are deficiencies in the current nanotechnology-related regulations, and a huge knowledge gap exists in terms of public awareness and information on the impact of nanotechnology on agriculture and food packaging. It would be advisable for the government and for the regulatory body to take a proactive approach to avoid any unpredictable health hazard by creating suitable regulations specific to nano-products.
These guidelines are indeed essential as they will aid in sustaining the growth of the agriculture industry in the long term and will help to avoid any health hazards. They will also change and influence the tangent of nanotechnology research toward safety and toxicology. Industries will be compelled to use clear labelling for ingredients present in the form of nano-particles. Agricultural chemical companies and food manufacturing industries might be obligated to conduct risk assessment before releasing the product into the market. As such, there are no standard protocols for testing the toxicology effects of nano-materials. Further research into human exposure to nano-materials and their toxicology and bio-kinetics will add more challenges to the research domain. Although the government regulations sound like contradictions to the nanotechnology-based innovation, it will rather be a driving force for promoting nanotechnology in the field of agriculture.
There is also no consensus among the nanotechnology researchers regarding the definition of the term ``nano'' and more particularly the size as well. Although 1 to 200 nanometre range is commonly accepted as a nano-particle, 150 nanometres and above may not have as serious implications in terms of health risks. The definitions and the size range between 1 to 100 nanometres put forward by the National Nanotechnology Initiative of the United States are predominantly based on the non-food, non-agriculture materials of nano-science. Absence and a lack of clear formal globally accepted definition about the term ``nano'' and the legally accepted size range for nano would cause a political and technical challenge in terms of implementing the new government regulations.
Along with the voluntary disclosure mandates from the industries, the regulatory agency of the government could possibly put forward a platform or web source to inform the public about the list of products that are commercially available in the Canadian market that are made using nanotechnology. Creating public awareness, and thereby acceptance, is the key for successful nano-based agri-food research products. The new legislation should be explicit with specific provisions for various nano-materials. The regulations could release a list of authorized substances that could be used as components of intelligent, smart and active packaging or in the food contact surfaces for antifouling applications.
A nanotechnology network or a hub specific to agriculture, namely, ``networks of centres of excellence — nanotechnology centre for agri-food innovation,'' should be established in Canada, which might act as a sustainable Canadian infrastructure for accelerating agricultural nanotechnology. The creation of such a nano-hub for research and development will advance partnership between universities, companies and government research labs.
For creating public awareness, the government can possibly create precompetitive nanotechnology education platforms that can provide a foundation for innovation. Public participation in all stages of the research and innovation process is essential for addressing the societal dimensions of nanotechnology adoption. Education and research go hand in hand. I believe the University of Guelph and the University of Waterloo are the only two institutions in the whole country that offer ``nano'' specific programs such as a B.Sc. in nano-science and a B.Sc. in nanotechnology engineering. There is a need to create additional nano-based mainstream programs rather than supplemental ``nano'' discipline degrees. I have a list of recommendations to make.
Thank you.
Maria DeRosa, Associate Professor, Chemistry, Carleton University: Thank you for inviting me again to come to speak to you today, this time on the topic of nanotechnology and agriculture. I think you heard a nice overview about the challenges relating to nanotechnology and some general outlooks. I want to give a spotlight on the case for nanotechnology in one specific application and that is for use in fertilizers. That is where I am most familiar because of my research.
I am a chemistry professor at Carleton University and I do research there. At Carleton, we have a B.Sc. nano- science program as well as Guelph and Waterloo. I teach in nanotechnology and research as well.
My research is in the area of using DNA as a building block for nanotechnology. I will explain what that means in a moment, but first I want to talk to you about ways that nanotechnology might be able to solve some of the problems surrounding the production of food. In particular, I will focus on using nanotechnology for fertilizers or other crop inputs.
In 2009, I prepared a foresight review on the use of nanotechnology in fertilizers for the CFIA's fertilizer safety office and I have also published on this topic in the journal Nature Nanotechnology in 2010.
I am sure you are already aware through your work in this committee of the big challenges that are facing agriculture here in Canada and globally. A major challenge will be to find ways to meet growing demand for food in an economically and environmentally sustainable way. That is a big challenge.
In 2007, the Director-General of the Food and Agriculture Organization of the UN made this statement: ``We cannot feed six billion people today and nine billion in 2050 without the judicious use of chemical fertilizers.'' Note the word ``judicious.'' We need to use fertilizers, but we have to do it in a careful way. If fertilizers are needed for food productivity, then why do we need to worry about them? Why is there a bad reputation for fertilizers?
We know that the benefits of fertilizers can come at a cost. They come at an economic cost to farmers; they have to pay for these things. They also come at an environmental cost. We know this. What is the main issue? The main problem with fertilizers is not their use as a nutrient for crops; that is what they are for. They are to provide nutrients to help crops grow and increase crop outputs; we can use that crop as our food supply.
The problem with fertilizers is that they are inefficient. I will speak mostly about nitrogen fertilizers because that is what we are working with. Fifty to seventy per cent of the nitrogen fertilizer applied to farmland does not actually end up as nitrogen that goes into the crop. Instead, it gets lost to water, air, stuck in the ground, these sorts of things. All that wasted fertilizer is a big economic drain on farmers. About $1 billion a year for Canadian farmers is lost, washed away. It is an environmental problem, too. We cannot deny it. Fertilizer, if it ends up in the water, can lead to dead zones. If it ends up in the air, it is greenhouse gases. It is always a problem.
It is not the fertilizer that is the problem; it is the fact that it is so inefficient. How can we reconcile this problem? We need fertilizers to improve crop yields, but fertilizers are bad when they end up in the wrong place. What do we need to do? We need to get more from less.
This is where nanotechnology might be able to help. Nanotechnology is the epitome of getting more from less. If we can improve the efficiency of fertilizers, we can maximize gains while minimizing negative impacts.
You have already heard what nanotechnology is all about. You heard a nice definition — 1 to 100 nanometres. I will not go through that again. It is important to note that nano-particles and nano-materials are different not just because they are small but because their properties are also very different. A lot of that has to do with surface area, but there are other electronic reasons why these things are different. Different can help, but it can also hurt. We must keep that in mind.
Let us get back to the problem. If our nutrients could access the crop more efficiently, they would not be wasted. It turns out that plant surfaces are covered with micro- and nano-sized pores. Perhaps if the fertilizer and the pores were well matched according to size, maybe the transfer of nutrients would be more efficient.
I found examples in papers and patents where this strategy has worked. There was one example where carbon nano- tubes were added to hydroponic tomato seedlings. They found an increase in crop yield in the tomatoes where there were nano-tubes present. They postulated that had to do with the nano-particles interacting with the seed surface, the nano-pores, allowing more water and nutrients to get into the pores. This could be the same idea I mentioned: a size match allows for greater nutrients to be taken up efficiently.
Making a fertilizer into a nano-particle might not solve all the problems. We need to make fertilizers not just small but also smart. We heard a bit about smart materials a minute ago. This is really important. An ideal fertilizer, pesticide or herbicide would respond to the needs of the crop. How would it do that? Only deliver fertilizer when the crop needs it, for example. It turns out that crops are constantly releasing chemical signals into the soil environment. These things are called exudates. Dr. Carlos Monreal at Agriculture and Agri-Food Canada, who is our collaborator, is working to decode these signals and figure out which of these messages are the crop saying ``I need nutrients.'' With that information he is leading our team of researchers to develop our smart fertilizer that can recognize those specific signals and respond by releasing fertilizers to the environment.
Here is where our research comes in. How can we make a fertilizer recognize these signals? We use a type of bio- nanotechnology called a DNA aptamer. It is just a piece of DNA synthetic we make in the laboratory that can fold up and interact with any target. These targets could be drugs, toxins, viruses, anything. You can image we could find an aptamer that binds to one of these signals and that is what we have done. We have been working on that.
Next, we made these into coatings that formed capsules. We could fill those capsules with a nutrient, and we are working on that. The wall of that capsule contains aptamers that could recognize the specific root signal. When the signal comes into contact with the aptamer inside the capsule wall, the aptamer will recognize it and allow the film to become more porous and then the fertilizer would be released. In this way, the smart fertilizer will be able to understand the needs of the plant and respond, delivering fertilizer when appropriate.
We have been doing test studies and have been able to show that when the aptamer does bind to a correct exudate, we can get five times more permeability of these films. These are in dye release studies. We are now moving to the greenhouse to test these on actual nitrogen fertilizers, and things are going well.
We need to expand our work to work on other crop nutrients like phosphorus, potassium, micronutrients, even pesticides and herbicides. You can imagine a crop, a plant under attack could be releasing signals to the environment in the form of a defence. This could be something we could exploit.
With our work and other examples of nanotechnology in agriculture and fertilizers, there are still many questions that need to be answered. How will these nano-materials interact with the soil? What will be the environmental and health effects? What will be the fate of these nano-particles in our food? We have years of work ahead of us. We will need to confirm our coatings are biocompatible and biodegradable. We will have to investigate new plant signals to tailor our fertilizers to different crops and maximize their efficiency.
I think this is a case for nanotechnology. I can imagine this work and the work of others can lead to a time when farmers would be sprinkling their fertilizers on to the crop or adding a pill of fertilizer, nutrients, pesticides and herbicides at the time of planting, so we would get more from much less.
With that, I thank you and welcome questions.
[Translation]
Senator Maltais: Thank you, Mr. Chair. Nanotechnology is still rather recent. It is not well known yet. It cannot be said that it goes back several years, but it is widespread in Canada. Quebec does 39 per cent of the research, Ontario 31 per cent, Alberta 15 per cent, and British Columbia, 14 per cent.
Were you aware that in Montreal, the Canadian Association of Nanotechnology Industries, which has an agricultural component, is being created? You spoke of Waterloo, and of another university. Sherbrooke University is also involved in agricultural nanotechnology, as well as Thetford Mines College, Montreal University, and McGill University, and they have quite interesting specialists. They are looking at nanotechnology as a whole, and they have an agricultural component.
Ms. Derosa, you spoke a great deal about fertilizer. That is, without a doubt, very important. Fertilizers are the starting point for producing a fruit, a plant, a vegetable, et cetera. However, I did not hear you talk about the benefits of nanotechnology for preservation, food traceability, bacteria detection, and so on. I believe that that is a science which will become highly beneficial for all Canadian consumers. It would seem that it permits instantaneous detection of a good or bad product, without waiting for reports for three years. That is an extraordinary step in the world of science, and it has been made thanks to researchers such as yourself. I would like to hear your comments on this particular topic.
[English]
Ms. DeRosa: I agree completely that nanotechnology is a Canadian-wide, worldwide effort. Canada is a leader in terms of the research going on in our institutions. We can be proud of that.
Your point about going toward food safety applications, such as whether meat is good or not, is very important. We are both doing this research. Many people in Canada are doing this research. I think it speaks to the same sorts of challenges.
However, you are right in that there could be more of a direct impact with consumers. If you say you are working on a nanotechnology that will improve fertilizer efficiency, that may not resonate with most Canadians except maybe farmers, but if you say you will ensure that we do not need to have another food recall for E. coli because the nano- sensor will detect E. coli over a certain level early on, then most Canadians will appreciate that.
I think you are right, but I think these efforts are ongoing and also in parallel with the things we are doing.
[Translation]
Senator Maltais: The researchers and academics I have spoken with have raised important points. I would like to know if your opinions match theirs. It would surprise me if you were to disagree with them, but they are asking for more research and development funds. I have yet to meet a researcher who had too much money. Is this a problem?
[English]
Ms. DeRosa: Yes, I think it is a problem. There is less research money to go around. We understand that as researchers. However, maybe there should be some directed funding for these high-risk but high-benefit applications. This is one issue that we might both agree on. With nanotechnology-type research, some of this stuff does sound like science fiction at first. When I first pitched these ideas with Dr. Monreal, people thought it was unbelievable to do something like that. It is difficult to find funding for these sorts of ideas that really out there, but these are the ones that could be transformative.
The lack of research funding is a problem, but maybe directed, high impact-type funding would be really valuable.
[Translation]
The Chair: Professor Neethirajan has comments to add.
[English]
Mr. Neethirajan: Going back to the facts of this discussion, yes, I am aware of Sherbrooke University. Also, the Chemical Engineering Department at the University of Laval, the Bioresource Engineering Department and a few fellow colleague faculty members at McGill University are my collaborators. We often meet in conferences and talk about various nanotechnology-related projects.
Guelph is basically a hub for food-related research in the whole of Canada. There are about 55 key scientists working in three different, major institutions — Agriculture and Agri-Food Canada, Guelph Food Technology Centre, the University of Guelph food engineering and the Department of Food Science — studying food safety issues and bacteria.
My NSERC discovery grant is based on an investigation of biofilms using micro-fluidic systems. We have also developed novel technology called ``smart surfaces'' that will not allow the bacteria to attach to the surfaces. Using nano- and micro-technology, one can enhance the surfaces using a photolithography process. There is no nano- material actually involved. It is just surface undulation; one can repel the bacteria attachment. These particular surfaces can be deployed in food industries. There is a bigger demand from the food manufacturing industries, especially in Ontario.
[Translation]
Senator Maltais: The other points raised are relevant for manufacturers. Once the research is done, the product must be manufactured. I am told that marketing is a challenge for one simple reason: Canadian regulatory processes are not yet able to certify those products. Manufacturing and marketing represent large business investments. Once they have manufactured the product, they want to sell it, and in order to do so, it must be approved by the government. I am told that this is a real problem. How do you see it? Your research on new fertilizers is great, but if no one manufactures the product, the research is going to stay on the shelf.
As for what you were saying, professor, yes, the University of Guelph is the most renowned in Canada in agrifood. I can assure you that a number of witnesses have appeared before us over the past year, and it was an incredible opportunity to meet them. In addition, these are exceptional researchers who work very hard for the advancement of agriculture in Canada. We must congratulate them and, especially, encourage them.
[English]
Ms. DeRosa: Regarding commercialization and the regulations, I think it is a global challenge to regulate nano- materials. Dr. Neethirajan may not agree with me. It is not a Canadian problem alone. My colleagues, such as those at Environment Canada, are working globally to try and come up with the some of the answers to some of these problems; for example, what is the definition of ``nanotechnology''? How do we name nano-products and regulate them? It is a challenge for Canadians. Obviously, industry would benefit, not necessarily from lax regulations but clear regulations. Industry needs a clear idea of what standards they need to meet, and then they will abide by them. That is the challenge now, but it is not a Canadian problem alone.
Since commerce is now so global, too, one of the things that I found when I was putting together my report for CFIA is that a lot of the products currently available that have nanotechnology in them are not produced here — they are produced elsewhere — but we can bring them into Canada. This is a global issue. Regulating products is a global issue and we need to work together.
[Translation]
Senator Maltais: They are worldwide, but there is no regulation anywhere.
[English]
Senator Mercer: I will not pretend that I understand any of this technology that you have described tonight. I am hoping that as we go through the study, I will come out the other end with a little more knowledge. However, I do understand the problem.
Professor DeRosa, you quoted the United Nations about being unable to feed 6 billion people today and 9 billion people in 2050 without a judicious use of chemical fertilizers. I do not think we can get there without the use of some new technology — nanotechnology or whatever it may be called or described. However, I also see a problem in some parts of the world regarding the use of genetically modified organisms.
As we develop nanotechnology in whatever form it takes, will we run into those same people who will say, ``Well, we do not want any of that''? I hope all of those people are paying attention when people start starving around them, because they have not given some thought to GMOs or nanotechnology.
Is there resistance out there? I did not think it is a movement, but is there some resistance to what you are doing?
Ms. DeRosa: Definitely. I think that the similar groups that were against GMOs also have the same hesitation when it comes to nanotechnology. One thing that nanotechnology researchers and even governments dealing with policy and these things have encountered is that when we talk about nanotechnology, they use GMO as an example of how not to go with your technology in the sense that it is important, at least for the public, to show that you are on top of the technology, aware of the technology, understanding the technology, and regulating the technology before the technology gets too advanced.
There was some lag with GMO — and I am not a GMO expert — with the thought that nanotechnology will follow the same path and the general public will reject it because they feel their government is not on top of it by paying attention and taking it seriously. That is something that nanotechnology researchers and policy-makers are aware of, but that is definitely a concern.
I think my colleague spoke to some of these things when he said we need education along with research. If we are teaching about nanotechnology, people are aware of the research and we are interested in studying the effects and being responsible about the research, maybe the general public will be more accepting of it.
Mr. Neethirajan: Nanotechnology researchers are looking at various case studies and different scenarios that have occurred because of the GMO reasoning.
The European Union put forward regulations on how to use nano-materials in food and agriculture. That was two years ago.
In April 2012, this year, the United States Food and Drug Administration developed regulations and guidelines for food packaging and other related nano-materials. The difference between the European Union and the FDA is that the FDA regulations are predominantly voluntary. My perspective is that the European Union is more conservative in adopting the technology compared North America, both the United States and Canada.
Senator Mercer: It seems to me we need to get ahead of this. We are at the early stages, and we need to avoid what happened to GMOs. When we move from 6 billion to 9 billion, if we can send 3 billion to the countries opposed to GMOs, I think they may amend their ideas.
Ms. DeRosa, you used the words ``high-risk and high-benefit,'' but I think we need to add the other issue of a big problem.
Ms. DeRosa: Yes, that is a good point.
Senator Mercer: It may be a high risk and it may be a big benefit, but we are dealing with a problem that is not going away. We have people starving now in the world, probably more because of bad food distribution than because of production, but if you add 3 billion people to this planet, it will get a little crowded. I was in India earlier this year and it is pretty crowded already, and it will get worse.
One way to help attract the proper money for research is to be successful, of course, and that means how you get from your labs to something that is commercially marketable.
Are there people beyond both of your universities — which are good universities — looking at this from a pan- Canadian point of view? My colleague mentioned what is going on in Quebec. Are we looking at this from a national perspective? Things are going on in each area. Can we bring what is going on at Carleton and Guelph, perhaps, together with the University of Sherbrooke and maybe get somewhere? There is a need for competition between researchers because that is what drives you. You want to get there first. However, is anyone saying, ``Okay, can we bring this together''?
Ms. DeRosa: I think it is happening at a grassroots level. Researchers know to pair up and work with the best researchers to get to their goal, but I do not know if there is anything from the top down. I do not think there is, and maybe there should be.
Mr. Neethirajan: There should be a mechanism or a means that should be set at a national level, predominantly focusing on nanotechnology-oriented commercialization. For example, the patent we have is based on nano-material. It is a conducting polymer which behaves in an entirely different fashion. We can tune and tweak the sensing window based on the need we want. The idea is we can detect the incipient spoilage of the stored food rather than once the food has completely spoiled. The moment it spoils, the sensor will be able to tell you and warn the farmer or the manager of the stored food system.
We filed a chemical engineering patent because there is no such mechanism related to nanotechnology or the particular hub that facilitates the nano-oriented product in our society.
Senator Eaton: This is fascinating. There was a good section on food security in the weekend edition of the Wall Street Journal; I do not know if you both saw it. How can nanotechnology be employed in the future when we have to grow so much more food? They talked about growing food by simply hanging roots in the air and spraying them and the food would grow, so you would not need pesticides or herbicides; you would not need earth. Is nanotechnology involved in any of those things?
Ms. DeRosa: I think it can fit in still. You could imagine nano-sized aerosol droplets of the nutrients you need that would be in that spray. Probably nanotechnology would facilitate some of these ideas on how to grow food in confined spaces with limited resources. I think it is still applicable, definitely.
Senator Eaton: In your research, do you think about futuristic things, or are you working on problems that come up day to day, right now?
Ms. DeRosa: There is a bit of both. The idea of discovery-based research was mentioned as well, where we are just trying to come up with the foundation for some of these things. Of course, we do blue sky thinking about where we will be in 20 years, what the challenges will be and how what we are doing now can apply. It will take that much time for some of these ideas to become reality, if we are not thinking ahead in the sense that this may be a product 10 years from now, so what will the world be like 10 years from now and what will agriculture be like then.
Senator Eaton: Should you not be leading the way in agriculture? Is there not always a lead time? You have to allow for lead time and education.
Mr. Neethirajan: We always say that today's research is tomorrow's reality.
There are two issues here. One is the food safety issue. Instead of producing more food, if we can store the food for a longer time using nanotechnology, enhance shelf life, we can then feed more people. The statistics say that whatever we grow, 50 per cent is being lost during storage in China, India and other developing nations.
Senator Eaton: What is the percentage here?
Mr. Neethirajan: It is 9 per cent in North America. We are a well-developed country, but 9 per cent is still huge. Instead of growing wheat kernels, if we can enhance the storage life of one particular wheat kernel using nanotechnology, making every kernel count, we can solve food safety drastically. Therefore, we would not have to use more chemicals and more materials to produce more food and use more land. Just by focusing on post-harvest storage losses, that problem can be possibly solved.
The second question is how you are doing research, whether you are looking in the near or long term. We always focus on the long term. For example, I am collaborating with a scientist at Canadian Light Source Inc. in Saskatoon. The idea is that we are looking at a hand-held sensor imaging system. We foresee that in another 10 or 15 years a farmer can simply take a particular smartphone-appearing device to the farm and scan the crop. The libraries of the particular device will automatically compare the chromosomal makeup of the crop. Based on the chromosomal aberrations and the energy makeup of those chromosomes, the device will immediately tell the condition of the crop. It is just like taking a picture and the immediate result, based on the imaging analysis program.
Senator Eaton: Eventually, people will put it in their tractors or their smartphones, just as they can use GPS, to tell how many seeds there are per acre. They will have those kinds of nanotechnology apps. It is fascinating. I think you just have to go into schools, educate kids and you will make your case.
Mr. Neethirajan: That brings up another important issue. At the national level, as a nation, as a country, we need to step forward to recommend educational awareness at the high school level. At the high school itself, we need to bring nanotechnology awareness to the students. It is not one particular program; it is truly a multidisciplinary field, a combination of mathematics, physics, chemistry, engineering and all kinds of biological sciences. Once we bring it to the high school level, then we can educate the future generation in a much more intelligent fashion.
Senator Eaton: If you had three priorities — not funding because funding is not of interest to us, sorry — what would they be? In terms of research, what would you want to do?
Ms. DeRosa: I think we have touched on it a little bit. Do you mean in terms of agriculture and nanotechnology?
Senator Eaton: Yes.
Ms. DeRosa: For food safety applications, we need to work on that, definitely.
Senator Eaton: You have specific ones, do you? Would you like to put them on the record and send it to us, specifically something we might consider putting in the report, your specific research recommendations?
Ms. DeRosa: Yes, definitely.
Senator Eaton: How it could help, either with food diversity, traceability or sustainability?
Ms. DeRosa: Okay. Sustainability is part of some of the things we have already spoken about and will really fit in there.
Senator Eaton: Thank you.
The Chair: The clerk will be sending you a copy of the question and then you can send a response.
Senator Merchant: Because food safety is front and centre right now with consumers, are you getting to a point with your technology where the consumer can have an analogous way that when we go into a supermarket to buy things, we would be able to — I want to say ``scan'' because I do not know what other word to use. You want to involve everybody, and we have to take charge of our own health and know what we are doing. How close are we getting to the point where I can go into the supermarket and have some way of knowing whether products are fresh or if there is something in them that I should avoid?
Ms. DeRosa: I think we are getting there. You have many examples, I am sure, with the things you are working on, but we are working on something that would look like a pregnancy test but for norovirus, which is Norwalk, if you have ever heard of it. It is gastroenteritis. You would be able to test it on your meat. When you bring it home, you can test it to see if it is safe. That is the goal.
Mr. Neethirajan: We are using colour-changing packaging material. If you store salad for more than four days, automatically the colour changes from red to orange. You then throw it away. Packaging can be enhanced. There is lots of fascinating research going on at the University of Guelph in that particular aspect.
Senator Callbeck: Ms. DeRosa, you ended your statement by saying, ``I imagine that nanotechnology will lead to a time when farmers will be sprinkling their fertilizer into their crops or planting small nutrient pills.'' How far off are we from that, in your estimation?
Ms. DeRosa: That is a great question, and it is always hard to answer those sorts of questions. We started this five years ago from an idea, and we are now at the point of testing things in a greenhouse. I would imagine with the same level of resources we have now, the same number of people, maybe five years from now we would have something to commercialize. With more resources and more people, it could be faster. That is always a challenge.
Mr. Neethirajan: That brings us back to the point of sustained funding. The process from idea to innovation to product does not happen in a few months or years. We need five to ten years to realize a commercially successful product. The government needs to step in to provide sustained funding in order to increase researchers to innovate and invent novel products.
Ms. DeRosa: One challenge or one thing to think about is a lot of research funding is now moving more toward industrial partnerships, which is a good thing. However, there are some areas where it is difficult to get funding through an industrial partnership. You would be surprised; the idea we are presenting with the smart fertilizer seems like it would automatically lend itself to an industrial partner. We have had success finding industrial partners, but we do have to be careful because if you think about it, companies make money being inefficient, and this is true in all sorts of different sectors.
If we depend on industry to help us further this product, we could run into a situation where they take the technology and help patent and shelf it because they do not want to lose revenues from being inefficient. We need industrial-based research, but we also need complementary research that is funded elsewhere.
Senator Callbeck: We have heard from you tonight about a lot of advantages of using this technology in the food sector. I also read somewhere here that there are a lot of concerns emerging regarding use for consumer safety and so on. I would like for both of you to talk about that a little bit.
Ms. DeRosa: Yes, you are right. Because a lot of this is new — and we have touched on this several times — we do not know all the answers yet, and we will not for some time. We do not know what the environmental and health impacts of some of these things will be. The problem is that some of the technology has gotten ahead of regulations. In terms of nanotechnology, there is antibacterial almost everything now, and it has to do with silver nano-particles. There are antibacterial socks, which do not smell. People may have them in their homes, and they could be based on silver nano-particle technology, but we do not 100 per cent understand what happens when those silver nano-particles are washed off the socks and end up in a lake or are consumed, et cetera.
Definitely the drawback now is our lack of understanding. In the push to innovate, sometimes these questions get overlooked and we can end up having to backtrack. That is a big issue right now.
Mr. Neethirajan: I believe that the public and consumers should be involved in each and every step and stage of the process, right from the idea to developing a fully functional product.
I also believe that consumers will have better adoption rates if it has to do with food safety or nano-material that is not inside of food, if they have a feeling or if they think the food has been modified. There is a difference between food and food packaging and the mechanisms and operating processes surrounding food product development. There are two different sections that consumers perceive.
More awareness and more education toward society is the key in addressing these challenges. Again, that goes back to toxicological effects. There are no global nomenclatures. If I go to an electronics shop to buy a particular electronic component, it would be completely standardized. It has a certain number of pins and the power should be a certain voltage. Globally, there is no nomenclature, standard or protocol. There should be some mechanism. Canada can possibly play a leadership role in this particular aspect as well.
Senator Callbeck: Earlier you said that you think Canada is a leader in nanotechnology.
Ms. DeRosa: Yes, I did.
Senator Callbeck: Back in 2000 when Bill Clinton was the President of the United States, a big initiative was started that has grown by leaps and bounds, in my understanding. Have we in Canada grown percentage-wise about the same, or is the U.S. way ahead of us?
Ms. DeRosa: I think we punch above our weight. You heard a bit about that in terms of our publications and the impact of the work that we are doing. However, I think it is difficult to compare ourselves to the United States. They have a larger injection of funding to go with it and more research-based institutions.
Mr. Neethirajan: If you want realistic statistics, I can quickly give those, but please do not feel bad or sad about it. We rank fourteenth out of 17 countries that are doing nanotechnology research. The study was done on a global level by taking into account the GDP and the research target output.
In terms of the productivity, number of publications, we rank very high. For the past 12 years, from 2000 to 2012, we are still in the D category compared to Finland. Finland moved from D to C in the last year. Denmark is in the B category, so we are in D and ranked fourteenth out of 17 countries globally.
Senator Callbeck: Where is the United States in that?
Mr. Neethirajan: Number one. The United States is followed by Japan, China and Korea.
Senator Buth: In the interests of time, I will ask a question and perhaps you can forward the answers to the clerk.
You have mentioned the regulatory issues and some of the challenges with that in terms of definitions and not having standards for testing. Can you give the top five recommendations in terms of what you believe needs to be done on the regulatory side and forward that to the clerk so we can have a sense of that? Try to make your comments very specific so it is something we can take into consideration in terms of our final report. Thank you.
The Chair: On that point, could you also include the challenges that you have in nanotechnology with intellectual property.
[Translation]
Senator Robichaud: It is amazing to see the discoveries you are making and the research you are doing. You work at the molecular level and I find that fascinating.
In practical terms, Ms. Derosa, you work mostly with fertilizers. Do you have an estimate of how much product would be used per acre, if you were to use nanotechnology, whereby fertilizers are applied near the seed rather than spread across the entire field?
[English]
Ms. DeRosa: I do not have all the numbers here, but I mentioned that for each nutrient it is a bit different. However, for nitrogen we are looking for even a 20 per cent improvement in the efficiency. Right now 50 to 70 per cent of the nitrogen is lost. Even a 20 per cent increase in efficiency would save the farmer millions and improve crop outputs and these sorts of things.
In terms of the amount per acre and these sorts of things, I do not have the numbers, but I can run that all for you and send it.
Senator Robichaud: We are looking to see what we can save, where we can be most effective, and it also has a bearing on the environment and our rivers and the fish and so on.
Ms. DeRosa: Exactly. Nitrogen is a particular problem because it is so inefficient, but phosphorous is very inefficient as well. If we are talking about herbicides and pesticides, for many of those if even 1 per cent of the compound ends up towards its goal it is considered high efficiency. There is a lot of room for improvement and a lot of savings we can make — both economical and environmental.
Senator Robichaud: As long as we can produce that nano-particle efficiently.
Ms. DeRosa: Exactly, and we do not want to cause new problems, so this means we have to do the research and determine the effects. We must ensure we are not solving one problem and causing another.
Senator Robichaud: Sir, you mentioned packaging, and research has been done showing if you use a certain type of packaging it can detect if the food is going bad. Would the packaging in this case touch the food or would it just be a sort of marker? As you said, if nano-particles are not in the food itself, the consumer might accept it more readily if it plays another role.
Mr. Neethirajan: The detection of food spoilage can be done in different ways. For example, if we store an apple and the apple starts to spoil, we do not have to touch it physically to understand that. It can be done by immediate analysis, just by taking a picture and using our visual senses, or by the amount of chemical being released by the particular food product. We call these biomarkers, water volatile metabolites. Based on the volatile changes, even tiny molecular concentration changes can be easily detected by the packaging.
Modified packaging is a huge, broad domain. There are also packaging materials that enhance the shelf life. They are called semi-permeable membranes. They allow only certain gases to diffuse and others cannot be passed. For example, if you want to store a beer, it will not release the carbon dioxide outside.
Different materials behave differently. It could be done by physically touching the surfaces or by a non-contact method of identifying the source of the particular spoilage.
Senator Robichaud: Is that technology in packaging being used extensively in other parts of the world?
Mr. Neethirajan: Based on my understanding, a few companies in the United States are already in the process of using those particular packaging materials. Predominantly, we are still in the research and development stage, probably one step behind deploying that into society.
The Chair: Dr. Neethirajan, you mentioned in closing that you had a list of recommendations. Could you please provide the clerk with that list of recommendations over and above the questions that the senators asked of you?
Mr. Neethirajan: Definitely.
The Chair: Thank you very much.
With that, on behalf of the committee I sincerely thank you both for sharing your opinions, recommendations and vision.
Our second panel, honourable senators, is comprised of Henry VanAnkum, Chair of the Grain Farmers of Ontario; Terry Daynard, Consultant, Grain Farmers of Ontario; Scott Thurlow, President, Canadian Renewable Fuels Association; and, to complete the panel, Malcolm West, Vice President, Finance, and Chief Financial Officer for Greenfield Ethanol.
I am being informed by Mr. Pittman, the clerk of our committee, that Mr. VanAnkum will give his presentation, to be followed by Mr. Thurlow and then Mr. West.
With that, Mr. VanAnkum, please begin your presentation.
Henry VanAnkum, Chair, Grain Farmers of Ontario: Good evening, honourable senators. Thank you, chair and members of the committee, for providing Grain Farmers of Ontario the opportunity to speak to you on one of the most important topics in agriculture: innovation.
My name is Henry VanAnkum. I farm near Almonte, Ontario, just north of Guelph and I am Chairman of the Grain Farmers of Ontario.
Grain Farmers of Ontario represents the 28,000 corn, soybean and wheat farmers from Windsor to Hawkesbury and as far north as Thunder Bay. Our members produce over 9 million tonnes of grain on over 5 million acres. Our production generates 3.3 billion in farm gate receipts, results in $6 billion in economic outputs and over 50,000 Canadian jobs.
In the Canadian context, Ontario is the largest agricultural province with $9.3 billion in sales. In grain production we are the third largest producing province after Alberta and Saskatchewan. I have brought Mr. Terry Daynard with me, who has had a long and successful career in our industry, both as a professor at the University of Guelph and as the head of several agricultural organizations, the most notable being his tenure as the general manager of the Ontario Corn Producers Association for 19 years.
Mr. Daynard completed a literature review and study of our organization a year ago on the effect of biofuels and bioproducts on the environment, crop and food prices and world hunger. Much of the information in the study is relevant to the discussion of innovation in agriculture, most specifically the crop innovations beyond food and how they will affect our ability to feed the world.
There has been much recent discussion about whether ethanol production from corn is reasonable, given the growing need for food worldwide. The world's population is projected to grow, albeit at a declining relative rate, to reach a projected peak of about 9 billion by the year 2050.
With diets in many countries continuing to evolve to include more meat, the demand for food ingredients, especially grains and oil seeds, is projected to grow at a rate of at least 1 per cent per year.
The statistic we are all familiar with is the projection by the Food and Agriculture Organization of the United Nations that the world's food supply and capacity will have to increase by 70 per cent between 2000 and 2050, which equates to an annual increase of 1.1 per cent.
The question is, can we continue to feed the world and supply bioproducts like ethanol, biodiesel and bioplastics on our current land base? In actuality, the rate of growth in global grain production has increased at a rate of approximately 1.5 per cent per year from 1961 to 2008. Therefore, a sustained 1.1 per cent or higher average growth rate is not an insurmountable challenge.
Additionally, numerous studies have shown that ethanol production in North America has had a limited effect on Third World food supply, since the yellow dent corn grown here and used in ethanol is used in limited quantities as a food grain in the developing world.
Some top-rate studies by the Food and Agriculture Organization of the United Nations, the U.S. Department of Agriculture and others have shown that the world, and especially the Third World, is fully capable of supplying the food needs of 9-plus billion people by 2050, both through new lands coming into production and by much higher crop yields. Higher crop yields will result from a lessening of phobias about the use of genetically modified crops and other advanced technologies for the improvement of agricultural crops.
The solution to Third World food supply mostly involves greater agriculture and food production in those countries themselves, not increased shipments of low-priced grains from the Western World. Countries like China, Malawi and Ghana have shown the increased food supply which can result if government treats agriculture as a priority. This will likely mean a static or even reduced demand for grain and oil seed exports from Canada to developing countries in the years ahead, even as crop yields continue to grow.
What will this mean for Canada? We believe it will mean a need for innovation at home to utilize surplus capacity, to avoid another era of depressed crop prices and farm income decline. Our Canadian corn supply has grown faster than the corn usage for ethanol, especially when recognizing that at least 30 per cent of the dry weight of corn used to make ethanol is returned into the livestock feed supply as dried distiller's grains.
The potential for continued growth in crop yields is large. Biofuels represented one avenue for increased opportunities and returns to the farm gate with the benefit to Canadians of environmental improvement and a reduced dependence on fossil energy. The renewable fuels industry in Canada is growing rapidly, and it has been the cooperation between industry, government and farmers that has created this success.
Overall, $2.3 billion has been invested in the construction of renewable fuel production facilities across the country, generating 2 billion litres per year of domestic biofuel production. These facilities purchase more than 200 million bushels annually of Canadian grain for ethanol production alone and have brought $50 million of new revenue to Canada's farmers per year.
As an example of the value of renewable fuel production to farmers, almost $450 million of corn was purchased in Ontario in 2011 to make ethanol. Historically, the ethanol industry has conservatively raised our local corn prices by 10 to 25 cents per bushel, depending on the year and the location of the farm. It is not just farmers who are benefiting from higher grain values; income stability for Canada's grain farmers becomes money spent in our rural communities. It also means a stronger, more sustainable Canadian economy, where 50,000 jobs in the supply chain depend on our production of grain.
It will be a similar story for biodiesel production. The Canadian government's Renewable Fuels Strategy announced in early 2011, which mandates that diesel fuel must contain a minimum of 2 per cent renewable diesel, will mean a demand for 500 million litres per year of renewable diesel across Canada. This will boost local demand and strengthen prices for soybeans and canola.
There are 12 biodiesel plants operating or close to operation in Canada today, and many opportunities for further investment to meet demand. Just recently, Great Lakes Biodiesel, a company based in Welland, Ontario, has announced it will be producing 170 million litres of biodiesel this year, with production beginning this fall. Great Lakes Biodiesel was a beneficiary of the Government of Canada's ecoENERGY program and will be a major buyer of local soybean oil, as they will be the largest biodiesel plant in Canada.
In addition to the benefits to rural communities, there are significant benefits to the environment and to Canadian families from these innovative investments in the renewable fuel industry. Ethanol was initially introduced into gasoline as a safe alternative to lead and other hazardous compounds that were traditionally used for octane enhancement. Adding 10 per cent ethanol to gasoline has a major positive impact on the environment by reducing net greenhouse gas emissions by 62 per cent on a per-litre basis. This is the equivalent of removing 440,000 cars from Canadian roads annually. Canadian ethanol has 1.6 times as much combustible energy as is used in its production, and this ratio is projected to exceed two times by 2015.
The benefits continue. Ethanol reduces the average Canadian family's gasoline purchase cost by about $100 to $150 per year. This is much more than a food price increase of $35 to $50 per year experienced by the average family as a result of higher corn values caused by biofuels.
Beyond biofuel, the U.S. bio-based chemical market is predicted by the USDA to be worth $614 billion in 2025, and the global demand for bioplastics is projected to grow by more than 30 per cent per year. Bioproduct development is an especially appealing market opportunity for Canadian grain and oil seed farmers, given the experience we already have in growing crops for non-food markets and in growing higher-value identity preserved crops for specialty markets.
In Ontario, our farmers' expertise meshes well with the existence of a large manufacturing economy in the province and the desire of both manufacturers and government to reduce dependence on imported hydrocarbons while also striving to improve environmental quality.
As you can see, the bioproducts market is a high-value opportunity for Ontario's grain farmers, and with continued access to new on-farm technology, creating efficiency and increasing yields, we are poised to meet the demand. The best way for the Government of Canada to support our sector is to continue encouraging investment through programs like the ecoENERGY program and to continue public research initiatives that improve farm productivity through weed and disease management and enhanced genetics.
In closing, thank you for the opportunity to speak with you today. We believe the abundance of grain grown by farmers around the world and here in Canada can both protect the environment and feed the world.
W. Scott Thurlow, President, Canadian Renewable Fuels Association: Honourable senators, thank you very much for the opportunity to appear in front of your committee to discuss innovation in agriculture, an important issue that is closely linked to biofuels development in Canada. I am President of the Canadian Renewable Fuels Association. Today I will be sharing my time with one of my board members, Mr. Malcolm West, who is Vice President Finance and Chief Financial Officer of Greenfield Ethanol.
Founded in 1984, the Canadian Renewable Fuels Association works to promote and advance the production and use of renewable fuels for the transportation and fuel sector in Canada. Domestic renewable fuel production helps strengthen our economy, protects the air that we breathe, and plays a key role in developing our secure and diverse energy future. It also speaks directly to the value of continued agricultural innovation in Canada.
CRFA members create a suite of innovative fuels, including but not limited to traditional corn ethanol, biodiesel from spent cooking oils and animal residues, and canola-based biodiesel and cellulosic ethanol, which is feedstock agnostic but can include wood waste, forest biomass and reclaimed municipal solid waste. At the same time, our members are continuing to improve energy efficiency in the production of first-generation ethanol and biodiesel, developing new processes and value-added co-products that will advance Canada's place in the emerging bio-economy.
CRFA supports government initiatives to foster and promote innovation in the Canadian agricultural sector. After all, innovation in agriculture and strengthening our renewable fuels industry go hand in hand.
For example, the incredible increases in yields that we have seen in crops such as corn and canola means that our farmers produce more of the high-quality products we use, leading to more efficient practices and less waste. For farmers, expanded biofuel production in Canada means higher farm incomes, better prices at the farm gate, and a larger, more diverse market for their crops. Renewable fuels remain an important business risk-management tool for farmers. Certainly, my colleagues here today can expand on this point in their further remarks.
The federal government's leadership in introducing the Renewable Fuels Standard, or the RFS, for light-duty vehicles and biodiesel, ensuring that 5 per cent of gasoline and 2 per cent of diesel in Canada comes from a renewable source, has already succeeded in securing a necessary footprint for renewables in Canada's energy mix. However, in terms of fully developing the biofuels industry in Canada, there is more work to be done. I am here to say that provided the right conditions are in place for investment in innovation, there is even more work that can be done. There are ample new opportunities that could come online in the very near future with a touch of strategic government support and direction.
As mentioned, the government's ecoENERGY program has been a tremendous help in creating a vibrant and competitive biofuel production industry here in Canada. That platform is positioned to expand into the next generation of the bioeconomy. We continue to work with Agri-Food Canada and Natural Resources Canada to leverage the funds that are left in the program specifically designed for biodiesel, and we think that small tweaks to the program could result in over $1 billion of additional economic impact to Canada, creating over 1,300 new jobs and returning over $100 million of investment to the federal government in taxes.
To do this, we have made the following suggestions to the government: to reopen the ecoENERGY for Biofuels Program to renewable diesel funds to new project applications; ask existing program projects that are currently not producing or have not substantially completed construction to reapply; and ensuring the transparent, timely and prompt window for new application submission selections and approvals.
In Canada, we are doubly blessed. We have the availability of a wide range of biomass and biochemicals, and we have the technology and innovation to develop that into the next generation of renewable fuels. In the near future, construction will be completed at two new facilities — one we previously heard about in Ontario, and the other one in Alberta — which will process Canadian canola oil into biodiesel. Expanding Canada's biofuel industry creates jobs and environmental benefits that all Canadians can profit from. This is why the government must continue to ensure that the right conditions are in place to drive innovation and attract job-creating investment dollars to Canada, like the ecoENERGY for Biofuels Program and Sustainable Development Technology Canada's NextGen Biofuels Fund.
Encouragingly, these programs have been shown to be highly effective in generating industrial expansion and job creation. However, we suggest that there are steps the government can take to make them more timely, efficient and effective, namely, maintaining the existing eligibility criteria for applicants to the NextGen Biofuels Fund through SDTC. Also, it is important to note that the fund is almost fully committed and ready to be deployed, and so we recommend that current funding parameters should be preserved.
Also, I would ask you to keep in mind that regardless what other stakeholders may say, this funding is not idle. You would never depict an Olympic sprinter at the starting gate, locked in the starting blocks, as being idle. They are ready for the race to begin, and so is this fund. This fund has commitments that they are working through. It is not idle money.
This December our association will hold our ninth annual Renewable Fuel Summit in Ottawa. Our theme this year is one that I believe in greatly and one that applies to all Canadians: Sustainable, Secure & Diverse Energy NOW!
Honourable senators, when thinking about our industry we get excited about what the future holds. Together we can be assured that the future is innovative, the future is green and the future is now.
Malcolm West, Vice President, Finance and Chief Financial Officer, Greenfield Ethanol: Thank you for listening to how we at Greenfield Ethanol are embracing innovation in our business. I am the Chief Financial Officer at Greenfield Ethanol. Greenfield is Canada's largest ethanol producer, producing about 500 million litres of year, which represents about 25 per cent of Canadian production.
I have been in the business for about 20 years, so I have seen it go from the embryonic stage to where it is today. Its incredible growth has in large part been driven by the smart, forward-thinking policy of the federal government with its strategy on renewable fuels which, on one hand, provided the renewable fuel standard for market access and, on the other hand, provided the ecoENERGY for Biofuels initiative to help these plants get financed.
We are at about 2 billion litres of ethanol production in Canada today, which represents about 85 per cent of the demand. We have done a pretty good job of getting nearly self-sufficient in terms of the ethanol required to meet the standard.
It is fair to say that ethanol production in Canada is for the most part traditional grain-based ethanol using dry mill technology. Basically you put a tonne of corn into the front end and at the other end you get a third of a tonne of ethanol, a third of a tonne of CO2 and a third of a tonne of distillers grain. That is the traditional way of doing it.
In my view, we are getting very close to the end of industry growth with first-generation ethanol. At Greenfield we are not seeking to develop any more traditional corn dry milling ethanol plants. Rather, we have an ambitious agenda to leverage our production platforms and our knowhow by incorporating emerging new technologies. These technologies will allow us to produce new value-added products from the corn that we do produce, and it will allow us to open doors to using next-generation feedstocks such as agricultural residues, forestry waste and new energy crops.
We are continuously trying to squeeze as much efficiency as possible out of our four ethanol plants. Today we are getting about 10 per cent more ethanol out of a bushel of corn. That is huge when you consider that corn represents 80 per cent of your production cost. We do that with science; new enzymes and new yeasts, as well as with new operating practices. These improvements in enzyme and use technologies will be one of the keys to unlocking cellulosic ethanol, which can break down the barriers of forestry waste, agricultural waste and special purpose crops such as switchgrass, Miscanthus, sorghums and other crops that can provide not only an opportunity for generating biofuels but also help us renovate and improve soil conditions that have been depleted by conventional agriculture.
No matter how effective these new yeasts and enzymes are, you will get nowhere unless you are able to properly break down and pre-treat the biomass, which is where Greenfield is spending most of its time with its R&D efforts. At Chatham we have a talented team of research scientists and process engineers that have developed a potentially game- changing biomass pre-treatment process. Our process generates pure streams of cellulose and heavy cellulose through a novel twin-screw extruding process. Through hydrolysis, fermentation and distillation, these pure streams of C5 and C6 sugars can be readily processed into ethanol and other green chemicals such as isobutanol, succinic acid, et cetera.
Our work in Chatham is being supported by the SDTC technology fund as well as the Centre for Research and Innovation in the Bio-economy, CRIBE. It is ultimately our vision to incorporate cellulosic ethanol technology into our existing first-generation platforms, and we believe that collocation of new technologies with these platforms will be essential to make the economics work and to make these projects pencil, especially in the early stages.
All things considered, it will be the challenges of biomass collection, storage, handling and treatment that will be the obstacle to the successful commercialization of new technologies rather than the science and the process itself. I think we are pretty close to having the technology processes solved. Corn ethanol, on the other hand, had the ability to piggyback on about 100 years of infrastructure development with commercial grain elevators and delivery and storage systems, but for next-generation biofuels we have to invent that. We have to invest in it and manage the whole supply chain, which is a formidable challenge. In this regard governments can play an important role in introducing programs to support the agricultural and forestry sectors' efforts to develop biomass feedstock supply chains.
For next-generation biofuels on the ethanol side there are two pathways. I have been talking about one, which is the biological pathway with the hydrolysis and fermentation of cellulosic material. We are also involved in the other pathway, which is the thermochemical pathway. We are involved in a joint venture relationship with a company in Quebec called Enerkem Inc. It is a technology company that has developed a cutting-edge thermal technology approach that can convert industrial and municipal sorted inorganic waste into ethanol, creating a landfill diversion opportunity at the same time as turning that into advanced biofuel.
We are on target to commence a $100-million project to be collocated at our plant in Varennes, Quebec. It is a 40- million-litre per year facility supported by the SDTC NextGen Biofuels Fund as well as by the Quebec government. We hope to have that in operation in 2014.
Apart from the work we are doing on advanced biofuels, we are doing a lot of exciting things to create an innovation opportunity out of our existing platform to make new products. I can go into details in the question period, but examples are green hydrogen and green chemicals from extracted corn oils. The opportunity exists.
In closing, I want to give you a sense that we have a wonderful asset that has been built over the last five to seven years in Canada with first-generation ethanol. It represents a vibrant and fertile ground for innovation where we can move our existing business into the bioeconomy.
We can do our part in adding value to agricultural and forestry products, but we will need some help along the way. Ongoing innovation funding will be needed to support private sector investment in these emerging technologies and in that regard the renewable fuel sector looks forward to building on our partnership with the federal government in the years to come.
Senator Buth: Thank you for your presentations. This is very interesting and timely.
You mentioned the number of ethanol plants versus biodiesel. Where are we in terms of biodiesel? Can you give me more details about the ecoENERGY for Biofuels Program? What would need to happen for biodiesel development?
Mr. Thurlow: Our membership represents two plants that are in operation. We have a third plant, which was mentioned in the GFO comments, that will come online soon for 175 million litres in production. A fourth plant will be built in Alberta by Archer Daniel Midlands Company that will have a capacity of 235 million litres. Today, we are significantly below the 600 million litre target for the renewable fuel standard, which would require 2 per cent for renewable diesel in the mandate. We have supported the ecoENERGY for Biofuels Program and believe it to be exceptionally important in terms of advancing the needs of biofuels in this country. We have not seen the development that we saw under the Ethanol Expansion Program and there is a confluence of reasons for that. Ultimately the program was closed, but we would like to see it reopen to ensure that applications can be issued and followed up with to allow the target of 600 million litres set by the government to be built out. The unfortunate reality is that under the current program, only one new biodiesel facility that qualified for funding was actually constructed.
Senator Buth: In terms of dollars available, are these extra dollars?
Mr. Thurlow: No, these funds were committed in previous budgets. We are not asking for any new allocation whatsoever. We are not asking in any way for new money. We are asking for money that was already committed by the Government of Canada to be opened up again so that new applicants and previous applicants could have their submissions welcomed again. However, we would like conditions attached to the program, including a deposit to make sure that people who are awarded this funding will carry through with it and put a shovel in the ground. We have shovel-ready projects from our members that we would like to make applications for. As I alluded to in my remarks, more than 1,300 new jobs could be created as a direct result of these new projects going forward.
Senator Buth: My next question is about the balance between first generation and next generation. I hear Grain Farmers of Ontario saying that this has supported them — increased revenue, better rural stability and benefits to the environment. Mr. West, you are talking about next generation technology. What is the balance going forward in terms of first generation and next generation? When will next generation technology come on? When will it be fairly broad scale commercial?
Mr. West: People have been saying for the last 20 years that it will be 5 years out. Corn ethanol and grain ethanol will not go away. Those platforms will be required to commercialize cellulosic production. Initially, we are looking at modules representing maybe 20 per cent of the overall facility size that would be cellulosic and that might be able to grow over time. There are six small scale commercial projects under way globally in the cellulosic ethanol world. That is the first wave — the first rollout. Our project with NRCan in Quebec will be one of the first in Canada to deploy. That will be 40 million litres against an existing ethanol plant producing about 170 million litres. You get the scale of the relationship in the beginning. Ultimately, I see us aiming for a target of a balanced 50/50. We are running out of conventional feedstocks on the grain side, which is why the U.S. has a balanced renewable fuel standard. Part of what we are trying to do as well is to scale the modules for cellulosic ethanol so that it can absorb the agricultural residues within the same supply orbit as where the corn is grown using the logistics. Ultimately, we should get to a fairly even balance over 15 to 20 years.
Senator Mercer: Mr. Thurlow, I have been here for nine years and you are the first person to come before the committee and say that you do not want more money.
Mr. Thurlow: I am sorry but that is not what I said.
Senator Mercer: That is what they heard.
Mr. VanAnkum, I did not quite catch whether it was 10 cents to 25 cents per bushel or 10 per cent to 25 per cent per bushel in bonuses put on the crop because of ethanol.
Mr. VanAnkum: It is a modest estimate of 10 cents to 25 cents per bushel.
Senator Mercer: What is a bushel selling for today?
Mr. VanAnkum: It sells for about $6.50.
Senator Mercer: It would have been about $6.25. That is a significant amount of money for someone in agriculture. I know you can only speak on behalf of Ontario. Have we reached maximum output in products that can be used for ethanol without jeopardizing the production of other agricultural products for foodstuffs?
Mr. VanAnkum: No, it is not even close. I will direct this question to Mr. Daynard.
Terry Daynard, Consultant, Grain Farmers of Ontario: I am delighted you asked that question because it drives me nuts when I listen to some of the things being said in the public media about this. I will try not to be long-winded. Over the years, I have made quite a few presentations to Senate committees. They are almost always about surplus grain production, depressed income for farmers, and how to help the farmers out in capacity. The net result is that we have spent years and years discouraging agricultural production. We have paid people not to grow crops. The Europeans still have land set-aside programs to not grow crops. We have not put any money into it but despite that, our productivity continues to go up. The United States said this year that they have had the worst drought for corn since 1956 and will harvest only 124 bushels per acre. That number is as high as the U.S. ever grew in its best years up until about 10 years ago; and 1956 was the last bad year and they grew 49 bushels per acre. In the last few years, this has discouraged despite production.
I was in research for quite a while as well. You could get research money to do anything except on production. The last thing any government wanted to do was encourage production because we had too much. This has gone on around the world. I do not know the Canadian numbers, but the U.S. spent 25 per cent of its foreign aid budget in 1980 on agriculture. The last numbers I saw showed 2 per cent. Canadian numbers are hidden better so I cannot get at them as easily. Despite that, productivity continues to go up.
I farm and my principal source of income is farming. Every grain farmer in the world is trying to figure out how to grow more grain, and there may not be a drought next year. I worry that it might be the other way around. What will we do with the excess grain production? Heaven forbid, the biggest worry I have is that we will do what we did for 20 years and ship it at cut-rate prices to the third world and destroy their agriculture — subsidize it and put it down.
The answer is that we have not even touched what we can do in agricultural productivity. The big grains from biotechnology are not even here yet. They are in drought resistance and a whole lot of other things like that. All we have at the moment are some disease resistance and insect resistance. I worry from a Canadian standpoint. I think that we will be back in two years talking to the senators about what to do about depressed grain prices, surplus production and farm income.
Senator Mercer: If we listen to Mr. Thurlow and Mr. West, they have an interest in using the product that you and Mr. VanAnkum are producing. I did not hear anyone say that we have maxed out on the demand for ethanol. The demand for renewable energy continues to go up. I want to take what you have said and talk to Mr. West and Mr. Thurlow. Mr. Daynard is talking about still greater opportunities to grow grain and corn that can be used by your members, Mr. Thurlow. If they can increase production, will you be able to buy the product at a competitive rate?
Mr. Thurlow: There is the rub. The first thing that I would tell this committee, as I alluded to earlier, is that we are still importing a little bit of ethanol in order to meet our renewable fuel standard amount. As Mr. West can explain, a confluence of things affects the price. There is another factor that will have an impact in terms of ethanol availability, and that is what is called ``the blend wall'' in the United States. Right now, there is extra ethanol in the United States because they can only blend up to a maximum of 10 per cent of ethanol into the gasoline.
Senator Mercer: They can only do that, or they choose to only do that?
Mr. West: I think that cars are permitted to run with 10 per cent ethanol in the blend.
Senator Mercer: You used the word ``permitted.''
Mr. West: Yes.
Senator Mercer: If I recall correctly, when we talk about Brazil, they have a higher percentage in their cars. I think the same combustion engines that are in American cars are built into Brazilian cars.
Mr. West: There are some very minor modifications required to a standard North America automobile to allow it to be a flex-fuel vehicle, which can take up to 85 or even 100 per cent ethanol. It is mainly replacing some of the gaskets and some of the lines with different materials. Maybe $100 per vehicle would be the cost to allow that vehicle to be totally flexible in the fuel it uses.
To get back to your question on Canadian demand, the overall Canadian demand for gasoline is probably in the range of a little over 40 billion litres per year. We could easily go to 10 per cent, which is 4 billion — twice the current capacity of the industry — without modifications of any sort. There is plenty of room to grow.
Senator Mercer: We are here today to examine and report on research and innovation efforts in the agricultural sector. We are talking with you about technology that is current and has been around for a while. Yes, there are some refinements that can be made for greater efficiencies in growing, production and use, but let us talk about what is next. Where are we going to go next? That is what we want to get at here. What is the next technology and what are we not using? I have been hearing around this table for years about the use of switchgrass, but I have not yet talked to anybody who has used a lot of switchgrass to produce product. What is the next technology that we should be looking at, and how do we get there?
Mr. West: I will give you a two part answer. Part A of the answer will address the question of switchgrass and why that technology has not taken off. Why did the Iogen technology, which has been around 10 years, take so long to develop and then not develop?
The answer to that goes back to what we are focused on — biomass pre-treatment. All of the technologies, up until the last couple of years, used a lot of mineral acid to break down the biomass, to break down the cellulose. Nature gave trees very strong bindings, which is why they stand up for so long. It is really hard to break that stuff down. In the beginning, the pioneers thought that they could break it down with acid to get the cellulose open for conversion. The problem is what to do with that acid because it poisons your yeast downstream, and you have to get rid of it. They only way to do that is with a huge volume of water, which drives up the capital cost to 10 or 20 times a first generation ethanol plant. It just does not work. That is why the Iogen type of technology did not take off. If you can be smart about the way you treat the biomass and extract all the inhibitors so that you are left with pure sugar streams, then it is easier to apply the new enzymes, the yeast fermentation and distillation.
We have trialed Miscanthus. We are getting 380 litres a tonne of ethanol out of it because of this cleansing approach. It has to be done in a way that is capital smart. I am a finance guy. I look at it through the prism of whether it will work on a commercial scale. Do not tell me that you can make a litre of it for a photo op. Is it going to work in a commercial-scale plant? It has only been in the last couple of years that companies like us and others have figured out this problem of getting the sugars ready for the process.
Part B of your question concerns what else we are doing in innovation. We can do things with our existing corn ethanol plants like extract oil out of the corn. We started doing that this year at our plant in the Chatham. Rather than having just the three products, we now have a fourth. We can take that oil and put it through a refining process to make biodiesel. We can put it into a different path and make ethyl esters or butyl esters or high grade glycerols. There are a lot of corn oil-refining products, a whole suite of them. Just like in a petrochemical refinery, we can branch off into various types of anaerobic digestion-type processes or ``transesterification'' processes, which can create products that sell for maybe 10 times more than the distillers' grains that we are selling as animal feed.
Another of our projects is taking the corn kernels and extracting the bran and the germ using a very mild, ``ozonated,'' modified wet milling process. We are able to take that, lightly toast the material and sell it to Kellogg or Kashi to replace peanuts in snacks. We are creating another product that will be worth more than the ethanol in terms of value by weight and coming up with a sensible, very highly nutritious product for energy bars and snack foods.
We can extract hydrogen out of our backset in our process to make a green hydrogen chemical, which can be used for hydrogen fuel cells. We have a $40 million project in Quebec to install a very large anaerobic digester, which will take 100,000 tonnes of municipal waste from the South Shore municipalities around Montreal. Through anaerobic digestion, we can make a methane gas that will allow us to displace the natural gas we use to make steam at our ethanol plant while at the same time diverting 100,000 tonnes of organic waste that is now going into landfill.
These types of things make economic and good policy sense, but you cannot do it without the platform. The secret is the platform.
Senator Mercer: I want to tie together our previous study on forestry. As we did that study, it was no surprise to me; I come from Nova Scotia where we have just closed down two pulp mills and we only have one major one still in operation. It is devastating to the communities in which they are operating. When we heard about the study on forestry, we heard of some ability to take the cellulose produced through the pulp process and use that not just for energy, but for other by-products that simulate textiles and stuff that looks like plastic and is actually cellulose.
One of the real issues is that you talk about the cost of infrastructure. We have pulp mills not just in my province but in other parts of the country that are sitting there out of production. Someone can come up with the technology to make this work. You talked about how strong the trees are, but they have already broken the trees down. If you can find a way to extract something, that is the type of innovation I hope will come out of this study.
Mr. West: This is exactly why we are partnering with organizations like CRIBE, which has a mandate for finding innovation and commercialization opportunities within the forestry sector. Through their participation in our demonstration project in Chatham, we are building the lignin extraction module that is part of the front end of the system so that we can pull out the lignins at the same time we are pulling out the impurities.
You are right. The whole pulp and paper forestry sector represents another existing platform of infrastructure and manufacturing. We just need to find ways to add value to the traditional products using these overlapping technologies. Whether the cellulose technology for biofuels is fully applicable, parts of it are essential as well for forestry products. We have worked for many years with Frank Dottori from Tembec, who was our head of research up until a couple of years ago. He brought with him a lot of the biases from forestry and we are looking at how we can get a commercial opportunity, whether it is in biofuels, chemicals or nano-crystalline technology for lignins. There are a lot of opportunities we are working on with our collaborators.
Mr. Daynard: You asked a question earlier about what the next technology is. I cannot comment from a forestry standpoint, but I certainly can from an agricultural standpoint. Frankly, we see biofuels as today; what we see tomorrow are bioplastics and all kinds of bioproducts. It is important to realize that there is a lot of stuff going on in Canada at the moment commercially. Woodbridge Foam is a private company that is not that well known, but they are the world's largest manufacturer of automotive foams. The head office is in Mississauga. They have been systematically moving ahead replacing the seats, backs, headliners, everything in a car that is not metal or glass and making that out of soybean oil based polyurethane.
Canadian General-Tower in Cambridge has been there for 150 years. They literally started out making buggies. They manufacture somewhere around 80 to 90 per cent of all vinyl seat covers in the world. That includes leather seats. If you sit in a car with a leather seat, you sit on leather. However, everything else around it is fake leather; it is synthetic. They have been systematically moving ahead and replacing that with vegetable oil, partly because they think it is innovative but part of it is cost reduction.
Magna is this huge research facility at Concord north of Toronto with NRC money and a lot of the research there is going on in bioplastics. GM and Ford spend lots of money on this; Toyota is internationally as well. The auto companies are really in the lead on this, but there is a lot of work going on in it elsewhere.
When grain prices come down — in fact, we think they will come down a long way — we see that as an opportunity. The world market for plastics is $2 trillion a year and we would like to have some of that.
Senator Mahovlich: Will the public ever see the price of gasoline to run your car go back down to 60 cents?
Mr. Thurlow: I cannot comment on that, but I can tell you that the use of ethanol will significantly decrease the price of your gasoline. Right now, ethanol trades significantly lower than the rack price of gasoline. Increasing the use of ethanol will contribute to decreasing the price of gasoline.
Senator Robichaud: As a supplementary to that, when will we see that?
Mr. Daynard: You are seeing it right now. You think $1.30 a litre is expensive, but the calculations that have been done here say that it would probably be another 10 or 15 cents higher if it were not for the ethanol. The Americans have come up with some numbers out of Iowa State University — bearing in mind they put 10 per cent ethanol in the gasoline on average and we put in 5 — and they are coming out with a figure of $1 a gallon as the impact. It is hard to explain to the consumer because it is not that gasoline is cheap; it is that it would be more expensive if it were not for the ethanol in it.
The Chair: This is very interesting. I would like to ask a question or add on to what Senator Mahovlich asked. Without naming companies, why do we have gas stations that say ``no ethanol in our fuel''? Why would they do that?
Mr. Thurlow: I think that is a question for the oil and gas sector, notwithstanding for our sector specifically.
The fuel content is mandated, on a national average, to contain 5 per cent ethanol. They are the obligated parties who have to deliver that to consumers based on their total annual product. I think that is a question that is best left to them.
The Chair: Thank you very much.
[Translation]
Senator Rivard: We know that Canada is about to sign a free trade agreement with the European Union, so with 27 countries, potentially. Have you calculated the value that would represent in terms of our biofuel exports, per year?
[English]
Mr. Thurlow: The first answer to your question is that we have an open fuels market in North America. While we are currently importing a little bit of ethanol so that we can meet our domestic mandate of 200 million litres, there is some Canadian fuel that also crosses the border into the United States.
I was asked about the European Union and our association's views on that specific trade agreement earlier in May. We expressed our support for that. Certainly the European Union has the possibility to be a significant export market for canola as well as other grain-based fuels.
Today our focus is meeting our domestic mandate first and foremost. That is both on the ethanol side and the biodiesel side. There is the potential for expanded exports in the future, but we have to focus on meeting our domestic mandate first.
[Translation]
Senator Rivard: I have one last question for Mr. West on the ÉnerCan pilot project in Quebec.
Do you have any idea about how many jobs will be created, or what the annual revenue will be, if the project goes as we hope?
[English]
Mr. West: The question is referring to the joint venture with NRCan. We believe that direct jobs will be in the area of about 25 more personnel. It is a complicated process to operate; highly skilled process-type operation jobs are associated with the operation of it. I do not have the figures in front of me in terms of the number of construction man- hours and construction jobs, but it is a $100 million capital project.
The sales figure relative to the production would be based on the market value of the ethanol that is being produced, but it would be fair to say that the aggregate sales value would be in the range of about $35 million a year just from the cellulosic ethanol.
[Translation]
Senator Rivard: We have to remember that Varennes is in the Montreal region. If the business is successful, similar businesses could be opened in other regions in Quebec. All municipalities produce municipal waste, so your new technology could be very promising.
[English]
Mr. West: It is often hardest to get the first one built, the first in kind. We do have a broader relationship with the technology provider in terms of some areas of exclusivity for joint development of additional thermochemical ethanol plants. The trick is to be able to organize successfully a proper feedstock supply chain for the municipal waste, which is available to develop with enough advance work in any major metropolitan centre. At the moment we are focusing with NRCan in various locations in Canada and in the United States.
[Translation]
Senator Rivard: One last point: when you say municipal waste, you are of course including household waste, right?
[English]
Mr. West: The nature of the waste used for this thermochemical technology is inorganic waste. It is not the banana peels. The organic waste is what is going in the digester. We are starting our first phase with NRCan on industrial and construction wood waste with a blending in of processed municipal sorted waste as a second phase. Ultimately, yes, anything that it is inorganic — plastic bags, wood, paper, waste paper, anything that is collected curbside — could be processed into the biofuel.
Mr. Thurlow: It is anything that has a resident carbon in it.
Senator Callbeck: I know we are running out of time so I will be brief.
Several of you have mentioned distiller grains. Is there any problem with using it as feed for animals, and would it result in lower cost for the producer?
Mr. Daynard: Its use is feeding to livestock. It is an old term, back to distillers. It is the by-product for making ethanol and it is basically everything that was in the grain other than the starch. It is high in protein and in many other things. I would say that 99 per cent of it is fed to livestock without a problem. In fact, livestock people are pretty tickled to get it. It is a little higher in fibre and there are certain types of animals that do not handle that, but it is a protein supplement, really.
Senator Callbeck: You say certain types of animals cannot handle it, but other than that, there is no real problem?
Mr. Daynard: Yes. The types of animals that can use it the best are ruminant animals like beef cattle, dairy cattle and sheep. You can feed them, and in fact people do feed cattle nothing but that. With chickens, you have to be careful in the amount of fibre that gets in there. I said everything that was in the corn kernel was concentrated; that includes the fibre in there as well.
There are some limits. You can go around 25 or 30 per cent, but there is a bigger demand for that material than there is a supply.
Mr. Thurlow: We import dried distillers grain into Canada right now. There has been some media coverage in the United States of how there is not enough DDG to go around and how some animals prefer it because it has such a high protein content.
Senator Callbeck: What about the cost?
Mr. Daynard: The biggest competition is soybean meal. Soybean and canola meal are the most common forms of protein source for feeding livestock. The price is based on what it has to be to compete with soybean meal or canola meal.
Mr. VanAnkum: That is a relative equivalent.
Senator Duffy: I want to get back at the end to blended ethanol in gasoline and the differences between Canada and the U.S.
Mr. VanAnkum, a few years ago I was surprised to learn how large, first, agriculture is in Ontario, but, second, grain production. Canadians, I think, have an impression that all the grain is in Western Canada and that Ontario is cars and a little bit of agriculture. Can you give us a couple of broad pictures on how truly important agriculture is in the province of Ontario, as it is in my own province of P.E.I.?
Mr. VanAnkum: If you combine the production of food with the processing, that is Ontario's largest sector today. Statistics would show that at this time Ontario is the third largest grain-producing province, behind Alberta and Saskatchewan, with tremendous economic output with over 9 million tonnes of grain from 5 million acres in this province.
Senator Duffy: What you are telling us today is that will only expand as we move out and broaden out uses for our various crops.
Finally, if we have the U.S. with 10 per cent green energy, ethanol in their gasoline, why are we at 5 per cent? In the Maritimes, do we not have an option that is 9 or 10 per cent?
Mr. Thurlow: There are two ways of approaching the answer to your question. When the government embarked on its renewable fuel strategy, it set the target at 5 per cent and 2 per cent. We supported that at the time and we continue to support that. We have not yet met the 5 per cent that is required under the renewable fuel standard. As I said earlier, we need to focus on meeting that goal first.
Senator Duffy: Why have we not met it? I am sorry to interrupt, but time is running out on us. Is it that the industry is not ready? Are the petroleum companies reluctant? If we can run a car on 10 per cent in Detroit, surely we can run that same car on 10 per cent in Windsor.
Mr. West: Where ethanol is blended, it is always blended at 10 per cent. It is not as if they are blending it at 5 per cent.
Senator Duffy: The 5 per cent you are talking about is in the total volume that is used in the country?
Mr. West: That is right.
Senator Duffy: How do we get that volume up?
Mr. West: The best way to get it up is to mandate it. It will not happen without a mandate, but we have to balance in staging the time because we want to have a sensible development plan. There is a lot of capital that goes into developing the ethanol plants. There was a concern not to get too far ahead with the first generation to see where the second generation technology was coming in, because we did not want to lose the opportunity of using the best technology for the second half.
That is a good question, but the inclusion rate on a national average will not happen unless it is done legislatively.
Senator Duffy: Tied to that, then, could I take it that the development of these other products like switchgrass — about which we have had testimony, and many of us are interested in those alternative crops and the market for them — will also be tied to expanding the usage?
Mr. West: That is right. We have to ensure there is enough room to accommodate all the different technologies.
Senator Duffy: Thank you very much. It is very interesting food for thought.
The Chair: Senator Robichaud, before I accept your supplementary question, Mr. Daynard had a comment.
Mr. Daynard: I was involved with the corn producers in trying to get this industry off the table. In fact, for a period of time I was President of the Canadian Renewable Fuels Association when it was a much smaller association.
The drivers were different in Canada. In the U.S., they all wanted something to replace lead as an octane enhancer. That is how ethanol came into gasoline to begin with; ethanol has an octane of about 115 and there is value in that.
They are an oil importer and we are an oil exporter, and that was always a major difference in the driver between the two countries and continues to be.
While I am at it, I would like to say one thing that repeatedly comes up about ethanol. Some of the detractors of ethanol on environmental things like that always use American data and do not use Canadian studies. The reason for that is the American numbers are not nearly as good as ours. They use a lot more energy in producing their crops than we do. They use a lot more nitrogen and irrigation down there. Also, a lot of their ethanol plants are coal-fired and ours are virtually all natural gas. We have greater energy efficiencies and so on with that, so if anyone challenges you on ethanol, just ask them where they got their data. It probably came out of California.
The Chair: Thank you very much.
Senator Robichaud will conclude, please.
Senator Robichaud: The question is that we are at 5 per cent production right now. If we were to move, for example, to 10 per cent, how soon would you be in the position to supply the 10 per cent without having to import ethanol from the United States, because you are importing it now, are you not?
Mr. West: Do you want me to take that?
Mr. Thurlow: Please be my guest.
Mr. West: We are talking about another 2 billion litres of ethanol production, which will come out of a combination of traditional grain ethanol and new technologies. We will not be at a place where we can rely on cellulosic or thermochemical ethanol to contribute anything like 1 billion litres for probably another 10 years. Realistically, these modules will start off relatively small, and grow in size and number.
I think we would be misleading you to say that we could successfully go from 5 per cent to 10 per cent using cellulosic ethanol in a period of five years. This will not happen.
There were programs in place for the stimulation of the first 2 billion litres of ethanol production, which were absolutely essential for financing these plants. Unless the government is prepared to redeploy another round of the ecoENERGY biofuels program to provide similar support, then the base of development will be much slower.
The Chair: Thank you very much. I want to share with the witnesses that this has been one of the longest meetings we have had and there is no doubt it is because what you have shared with us has been very informative and educational.
With that, thank you very much for accepting our invitation.
(The committee adjourned.)