$200M for Canadian biofuel initiatives

The new plan is defined as the ecoAgriculture Biofuels Capital
Initiative or ecoABC. Canadian agriculture Minister Chuck Strahl
said it is the first program “to give farmers capital assistance to construct or
expand biofuels facilities.”

However, some Saskatchewan industry players questioned whether the initiative
will spur producer participation in the industry, increase the number of
biofuels plants or significantly benefit farmers.

The program will provide repayable contributions or loans of up to CAN$25
million per project to help farmers raise the capital necessary for the
construction or expansion of biofuel production facilities.

Projects using agricultural feedstock, such as wheat or corn, that have
producer investments of at least 5% of the project costs are eligible for
funding. Corporations, including co-operatives, individuals and partnerships,
are eligible to apply for ecoABC funding.

Too big for farmers
It is questionable if producers are willing to come up with $25 million to
build a plant of large commercial size.

It is more likely that producers want to participate in smaller plants that
are linked to feedlots, which can use the dry distillers’ grain byproduct for
cattle feed. But those smaller plants are more costly per unit of ethanol
produced, while larger, more efficient plants are becoming more expensive to
build.

To reduce greenhouse-gas emissions, the Canadian government has mandated that
gasoline contain an average of 5% renewable fuel content by 2010, and diesel
fuel and heating oil an average of 2% by 2012.