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Construction Starts on Canada's First Large Canola Diesel Plant

Posted on: Sunday, 14 October 2007, 15:00 CDT

By James Stevenson, THE CANADIAN PRESS

Construction is set to begin Monday on Canada's first large-scale plant to convert canola oil into organic diesel.

The $90-million facility owned by Canadian Bioenergy Corp. of Vancouver will be built in the heart of Alberta's major refinery and pipeline hub northeast of Edmonton, next door to an oilseed crushing plant.

"We are building a state-of-the-art facility capable of producing a large quantity of clean, sustainable canola-based biodiesel to help meet the Canadian renewable fuel standard and U.S. demand for a superior cold weather, high-quality fuel," said Canadian Bioenergy president Doug Hooper.

The plant fits in well with recent moves by Ottawa to financially encourage development of renewable fuels. But it also steps boldly into the ongoing debate over whether biofuels are better for the environment.

Scheduled to begin production by the middle of 2009, the plant will have an expected future capacity of 225 million litres of biodiesel per year. It will also be a key component to feeding Canada's escalating demand for the fuel as new federal regulations call for two per cent renewable content in all diesel by 2012 - requiring about 800 million litres annually.

Last spring, Prime Minister Stephen Harper committed $1.5 billion over the next seven years to help develop Canada's renewable fuel production capacity.

Hadi Dowlatabadi, a renewable fuels expert at the University of British Columbia and board member with Canadian Bioenergy, predicts Canada's thirst for biodiesel will soon be hard to quench.

Once the benefits become better known, people will want to move from a two per cent biodiesel standard in their buses, trucks and tractors and other work vehicles to more like 20 or 40 per cent, says Dowlatabadi.

Proponents of biodiesel claim the fuel has immediate air-quality benefits, drastically reducing greenhouse gas emissions when added to regular petroleum diesel. Being biodegradable, it also makes fuel spills far less toxic and easier to clean up.

Dowlatabadi says even small amounts of biodiesel clean up the exhaust from older engines, "and diesel as a whole is about 25 per cent more greenhouse gas efficient ... than a gasoline engine."

But not all agree on the environmental benefits.

Last month, Nobel-prize-winning Dutch chemist Paul Crutzen suggested that fuels from fertilizer-intensive crops like canola end up actually damaging the atmosphere more than regular diesel because of the amount of nitrous oxide released.

Another international report released by the Organization for Economic Co-operation and Development in September suggested that the rush to promote biofuels was pushing up global food prices. The report also says government subsidies for biofuels create an incentive for farmers to destroy forests, wetlands and pastures.

For precisely these reasons, Canada's canola industry is lobbying hard to distance itself from other biofuels like ethanol - made from crops such as wheat and corn - and even other biodiesel sources such as animal tallow and other vegetable oils.

Canola - grown primarily on the Prairies - is Canada's dominant vegetable oil and the sheer size of the annual crop makes it easy to supply the biofuel market without distorting food prices, says Tyler Bjornson with the Canola Council of Canada.

About one million tonnes of canola would be needed to meet the two per cent commitment for biodiesel. Last year alone the industry's carry-over - or unsold volumes that stayed in storage bins - was 1.5 million tonnes, says Bjornson.

"Just the carry-over could have met the forward-looking mandate, so we believe we can easily handle meeting the volume requirements the government is talking about."

Currently, about 80 per cent of Canada's annual canola production is exported and prices in recent years have risen dramatically as interest in biofuels continues to grow.

Bjornson also says the size of Canada's canola crop means diverting production toward biodiesel will not send food prices upwards.

"We will absolutely continue to fill all of the demand from the food industry for canola," he said. "Our intent is to use the production that we wouldn't normally have otherwise sold for the fuel business here in Canada."

Source: Canadian Press

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