The Binkley Report

The Binkley Report

Ethanol could be key to a green bio-economy for Canada

By Alex Binkley
True North Perspective

11 November 2011 — Ethanol has been blamed for everything from higher food prices to environmental degradation, but as far as North America goes, it has been a positive development that could usher a green bio-economy, says a new report from the Conference Board of Canada.

Based on an extensive review of studies on alternate fuels, the Board says new technologies, wider acceptance of flex-fuel vehicles and supportive government policies could extend the importance of ethanol, adds the report .

Ethanol, and to a lesser extent its cousin bio-diesel, have drawn lots of criticism in recent years because they are made from crops grown on land that could be used to feed people. The petroleum industry has also maligned alternate fuels for having a worse environmental impact than conventional fossil fuels.

The Conference Board, a generally conservative pro-business organization, disagrees based on its study that was funded by the Canadian Renewable Energy Association. “Renewable fuels can help reduce dependency on fossil fuels and improve energy self-sufficiency. They also contribute to reducing greenhouse gas (GHG) emissions when compared with gasoline, and reduce environmental pressures related to producing and transporting fuel to end consumers.”

Ethanol production has set the stage for the development of bio-refineries and a bio-economy, the report notes. “Today’s bio-refinery has transformed the way ethanol is produced, with additional potential gains on the horizon. The cost of government support programs has largely been offset through value-added agricultural crops and job creation programs.”

From all the studies the Board could find, ethanol reduces GGHs by 40 to 62% compared to gasoline. “As cropping practices and yields continue to improve, and as ethanol plants rely more on renewable energy (primarily agricultural wastes), GHG emissions per litre of ethanol will continue to decline. The shift to newer technologies as they become commercially viable will also contribute to reducing GHG emissions intensity.”

The Board says its examination of the facts behind charges bio-fuels are driving up food prices aren’t substantiated. “It is important to distinguish the impact of rising fuel costs on agricultural prices from that of biofuels demand, as rising oil prices have much stronger impacts. Even with rising demand in both Canada and the U. S. over the past decade, the total (corn acreage) area harvested has not increased.

“The major reason for this is the increase in corn yields, which produces a much larger crop from the same acreage,” it continues. “Although ethanol producers cite higher corn prices as benefit to local farmers, bio-fuels demand for corn has not significantly impacted land use in North America.

“A 2006 study by the Organisation for Economic Co-operation and Development (OECD) is one of the few that explicitly measured the impact on the cost of crude oil prices against that of biofuels demand, and it found that oil prices have a much stronger effect,” the report explains. “The studies of agricultural prices dealing with the 2006–08 period that do not separate the impacts of biofuels demand from oil prices must therefore be viewed with caution.”

Bio-refineries could become major players in the economy of the future, it adds. “Many products and chemicals manufactured today from non-renewable resources can be created from renewable feedstocks such as energy crops, biomass, and waste.

“Today, ethanol plants are integrating green power generation and producing biochemical building blocks as co-products, replacing those from petroleum.”

 "Good policy is based on accurate information and careful assessment of the alternatives. The purpose of this report is to assess the evidence and to contribute to policy discussions around ethanol," said Len Coad, Director, Environment, Energy and Transportation. "Our study concludes that ethanol should be part of Canada's energy mix. It is a clean transportation fuel that has a positive energy balance, reduces greenhouse gas emissions, and contributes to energy self-sufficiency."

Ethanol production has reached almost 2 billion litres per year and will continue to grow because a federal renewable fuel standard has been implemented and transportation fuel markets continue to expand in Canada. The industry generates about $1.2 billion a year in economic activity, a figure that should grow steadily in the future as the bio-economy expands.

Government support in Canada is estimated to average approximately $260 million annually from 2006 through 2012. An estimated $925 million in government revenues is generated during the construction phase for ethanol plants, and annual operations bring another $240 million into government coffers. The biofuels industry accounts for more than 14,000 person-years of employment during construction phase and over 1,000 permanent jobs once plants are in operation.

The study was funded by the Canadian Renewable Fuels Association. It wanted a review of criticism of the sector “based on a thorough review of an extensive range of reports and scientific studies about ethanol technologies, costs, environmental impacts, infrastructure, and policy support, with a particular focus on research using peer-reviewed, scientific methods.”