Canola-based biodiesel: Made in Canada Opportunity for a Made in Canada Crop
More than 40 years ago, Canadians seized the opportunity to build a new industry with the development of canola. Today, canola contributes over $11 billion to Canada’s economy. A window of opportunity exists for the development of a domestic biodiesel industry- with the potential to stabilize acreage and improve the net return from growing canola by providing an important third market to the North American food industry and raw seed exports markets. But we need to act now before investments are made outside of Canada in production facilities that will use Canadian canola to supply biodiesel for local and export use.
What is Biodiesel?
Biodiesel is produced from oilseeds like canola by a process called transesterification. Canola seed is crushed and the oil is reacted with an alcohol to produce biodiesel. Two valuable co-products are also produced- a high protein meal for livestock from the crushing operation, and glycerin, which can be used in pharmaceutical, cosmetics and food processing industries from the reaction that produces the biodiesel.
Why Biodiesel?
Biodiesel is a proven, renewable and clean-burning fuel source that is supplying an increasing amount of energy in the EU and US. In fact, biodiesel is the fastest growing alternative fuel in the US. As suppliers of the feedstock and major users of fuel on farm, canola growers are uniquely positioned to benefit from this emerging industry.
Why Canola-based biodiesel?
Canola is the preferred feedstock for biodiesel because of its quality standards and unique characteristics including high oil content (more oil is available per unit seed); low levels of saturated fats (low levels mean improved performance in cold climates) and low iodine values that lead to fewer engine deposits. In fact, the EU is currently importing Canadian canola oil for use in its biodiesel production facilities, and US biodiesel production plants are being built that will source Canadian-grown canola for local as well as possible export use.
Do we have enough canola to support this emerging industry?
By 2015, canola production in Canada is expected to exceed 14 million tonnes-enough to supply growing food use and raw seed export markets, as well as over 1.3 billion litres of canola oil for biodiesel production. These increases in production will come from continued technological advances in higher yielding varieties with improved oil content, and from expanding acreage into non-traditional areas as a result of better-adapted varieties Biodiesel is a proven, renewable and clean-burning fuel source that is supplying an increasing amount of energy in the EU and US. In fact, biodiesel is the fastest growing alternative fuel in the US. As suppliers of the feedstock and major users of fuel on farm, canola growers are uniquely positioned to benefit from this emerging industry.
How will a domestic biodiesel industry help growers?
Every $100 million in additional demand for canola generates $83 million in GDP, $5.2 million in tax revenue and 730 jobs in value-added industries. In addition to the impact on grower income, the co-products of meal and glycerin would provide additional opportunities for value added processing. As biodiesel production facilities tend to locate close to the source of the feedstock, the majority of the investment and resulting benefits would be in western Canada.
What is needed?
The Canadian government has played a central role in supporting emerging industries to ensure opportunities remain in Canada and contribute to our standard of living and quality of life. A sustainable domestic biodiesel industry requires government action to ensure Canadians participate in the value-added processing associated with biodiesel rather than simply supplying the raw products.
For the potential of the industry to be realized we need:
A renewable fuels strategy for transportation fuels including diesel to ensure demand. Given the time lag required to bring oilseed crushing and biodiesel production facilities online, careful consideration should be given to a phased in mandate. For example, an initial mandated 2% biodiesel inclusion level in 2010, rising to a 5% inclusion level by 2015, would provide a strong investment signal
Policy incentives including the accelerated depreciation of capital assets, refundable tax credits for production and production incentives, would support a “Made in Canada" supply, while maintaining a competitive balance across North America.
Mandated quality parameters that address the realities of the Canadian climate and ensure end user acceptance
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