| | Commercial production of transportation biofuels is in its infancy in Alberta. It has some exciting potential benefits for rural economies and the environment, as well as some uncertainties.
Ethanol and biodiesel are the two main types of transportation biofuels. Ethanol is produced from carbohydrates – such as starch from grain or sugar from sugar cane – using a fermentation-distillation process. On the prairies, wheat is the main feedstock. Grain-based ethanol production yields a byproduct called distillers grain, which can be used as a high-protein feed.
Biodiesel is made from vegetable oils, like canola oil, or animal fats. It is produced by mixing the fat or oil with methanol and a catalyst. One byproduct is glycerine, which has a wide range of possible uses such as in cosmetics and pharmaceuticals.
Both biofuels are used as additives: ethanol is blended with gasoline and biodiesel with petroleum diesel. In comparison to the straight petroleum products, the blends provide advantages like reduced tailpipe emissions, lower greenhouse gas emissions and improved engine performance, as well as new market opportunities for the agricultural feedstocks.
“These two products are added to transportation fuels in relatively small percentages,” explains Alan Ford of Alberta Agriculture and Food. “For ethanol, blends up to E10 (10% ethanol) are quite common and require no engine modifications. Blends as low as B2 (2% biodiesel) have some beneficial performance improvements. For blends higher than about B20, you have to be aware of how the engine will operate in cold conditions.” Biodiesel use doesn’t require engine modifications.
Capital costs for ethanol plants are fairly high; for example, a plant with a 150-million-litre annual capacity would cost about $130 million. The only commercial ethanol plant in Alberta is Permolex International’s facility in Red Deer, which also produces flour, gluten and feed. The plant’s current ethanol capacity is about 28 million litres per year. Construction is underway to expand that to about 40 million litres.
At present Alberta has no commercial biodiesel production, although there are two proposed plants. The relatively low cost for small-scale biodiesel production is sparking interest in farm-level and community-based production (see Home-Grown Biodiesel).
Because ethanol and biodiesel can be made from agricultural feedstocks, their production could lead to rural development opportunities. “We’ve got the capacity in terms of feedstock supplies to produce these products. The thing that is missing is the market demand that would pull it into transportation fuel market,” says Ford.
To create that demand, the federal government has proposed enacting a standard that would require Canada’s transportation fuels to have a 5% renewable fuel content. Many jurisdictions, including the United States, already use this type of requirement to encourage biofuel production and use.
If a national standard is put in place, the next challenge would be satisfying that demand, explains Ford. For example, about 5.5 billion litres of gasoline are used annually in Alberta, so a 5% standard would involve about 275 million litres of ethanol just for Alberta. He says, “It’s very difficult to start at relatively small volumes and work with the petroleum retailers that deal in hundreds of millions of litres.”
The federal government already has various policies and programs to encourage biofuel production and use, as have many provinces, including all three Prairie Provinces. Manitoba’s Biofuels Act includes an E10 mandate, as well as measures to encourage community participation in production and use of Manitoba-grown feedstock. Saskatchewan has a standard that currently requires 1% ethanol in gasoline; the standard will rise to 7.5% as soon as there’s enough processing capacity in the province to satisfy it. Saskatchewan also has an incentive program for ethanol that is produced and consumed in Saskatchewan, as well as measures to encourage smaller-scale ethanol production.
Alberta has not set its own standard because it prefers a national approach. However, the Province has announced a bioenergy plan that includes policy initiatives and programs totalling $239 million (see Growing the Biogas Industry).
Another key factor in the growth of transportation biofuel production is the price of petroleum. Ford says, “If oil prices stabilize at $60/barrel or go higher, then I think there will be more and more interest in biodiesel and ethanol because we could produce those products at a price that would substitute for some of the higher cost petroleum product.”
Other factors that could influence biodiesel and ethanol production in Alberta include distance from the major Canadian markets in Ontario and British Columbia, competition with the rapidly growing U.S. biofuel industry, changing feedstock prices, changing byproduct markets and changing biofuel technologies. |
|