Rising in the East

With a number of new developments in the biofuels sector, eastern Canada is making waves with new funding, projects, opportunities and hope. But, with a lack of provincial government support and biofuel initiatives, the renewable fuels industry in the Maritimes is struggling to catch up to the rest of the country. Nevertheless, eastern Canada continues working to establish its presence in the biofuel industry with a variety of resources and opportunities.
By Khalila Sawyer | June 17, 2008
Energy Minister Jack Keir announced in January that 2008 would be the year for developing a larger biofuels industry on Canada's East Coast. Backed by federal support and an upcoming renewable fuels mandate, which was passed through the House of Commons in late May, this may just be the boost eastern Canada has been looking for. The mandate requires that all gasoline sold in Canada contain 5 percent ethanol by 2010 and that all diesel and heating oil contain 2 percent renewable fuels by 2012, according to an Agriculture and Agri-Food Canada press release. The legislation will now be debated in the Canadian Senate. With the promise of new funding for projects in the provinces of New Brunswick, Nova Scotia and Prince Edward Island, increased activity in the biofuels industry supported by increased federal funding may prompt provincial governments to invest in the production of biofuels.

Buzzing with Biofuels
In January, Christian Paradis, secretary of state for agriculture, announced funding from the government of Canada for two projects aimed to help New Brunswick farmers turn a profit in the biofuels and bioproducts markets. To establish New Brunswick as the energy hub of the East Coast, $860,000 was invested in renewable energy projects in the province, and $61,000 was contributed by Agriculture and Agri-Food Canada to the Centre of Excellence in Agriculture and Biotechnological Sciences in Grand Falls, a branch of the New Brunswick community college in Edmunston, to develop environmentally friendly plastics. The bulk of the funding, however, was granted to BIO-D Énergie Inc. to construct a biodiesel facility in Clair, New Brunswick. Using canola and soybeans as feedstocks, the biodiesel producer received nearly $500,000 in the form of a loan from Atlantic Canada Opportunities Agency and $300,000 from Biofuels Opportunities for Producers Initiative. The money was used to purchase new processing equipment and refine its current production technology to meet North American standards.

BIO-D Énergie, formerly known as Ouellet Feeds mill, uses crushed canola and soy as meal for animal feed and for oil, which it has been refining and using in its 50-truck fleet in New Brunswick, Québec and Ontario. The company, in partnership with Belisle Solution Nutrition of Montreal and biofuels producer Biocardel, plans to develop a 10 MMly (2.6 MMgy) facility in the town of Clair, New Brunswick, and anticipates increasing production to 30 MMly (7.9 MMgy) in the next three years. All biodiesel produced will be used for trucks and as heating fuel for furnaces.

Other funding is also available this year for the biofuels industry in the province. Approximately $1.3 million will be contributed to the University of New Brunswick over the next five years by the Atlantic Canada Opportunities Agency for a Hydroprocessing Laboratory and Magnetic Resonance Imaging Centre. The lab will specialize in fuel analysis, catalyst synthesis and characterization, and researchers will develop technologies to produce high-quality, clean diesel fuel and reduce nitrogen oxide emissions from biodiesel. The MRI Centre, in collaboration with Saudi Armco and Green Imaging Technologies, will allow researchers to develop faster, more precise and more economical measurement techniques for petroleum core analysis.

The ACOA grant is part of a federal announcement that will see six research and development projects in New Brunswick receive up to $12.6 million in funding under Round V of the Atlantic Innovation Fund. "Agriculture is an important sector in northwestern New Brunswick and we are pleased to support innovative initiatives like these projects," says Robert Thériault, a director on the New Brunswick Agricultural Council. "These Agriculture and Agri-Food Canada programs are designed to be flexible and responsive and are administered by industry leaders who understand regional needs in New Brunswick."

Pushing for Support
Despite recent contributions from the federal government to a handful of projects, eastern Canada is still challenged by the lack of support from its provincial governments, which has proved to be the biggest hurdle. As the biofuels industry in western and central Canada have seen enormous development the past few years, Maritime producers are working extra hard to garner provincial governmental support for more biofuels facilities.

Eastern Greenway Oils Inc. owns a small-scale pilot 3 MMly (800,000 gallons per year) biodiesel facility in Waterville, New Brunswick. EGO incorporated in 2006 with the aim of developing a feasibility analysis to establish a business model for the production of bio-oil crops in Atlantic Canada. After stiff competition from the U.S. biofuels industry, high taxes and fuel prices, the company decided to branch out and explore the production of biofuels additives, which help eliminate carbon monoxide and heavy particles in diesel, in addition to providing a reliable revenue stream for EGO. Boasting the production of primarily canola-based biodiesel and a number of value-added diesel additives, the company has developed a process to replace sulfur with canola oil, eliminating sulfur dioxide. The company is examining other potential value-added coproducts.

Currently, EGO's pilot facility is in the pre-commercial testing phase and plans to become fully operational when the timing is right. "We're more or less in the process of making design changes," says Ray Carmichael, general manager of EGO. "We don't anticipate a full seven-day run until the fall." The company is also producing biodiesel for internal process heat.

Despite the small steps biofuel producers are taking, more action is still needed to fully develop eastern Canada's biodiesel industry, according to Carmichael. Competing U.S. markets and existing road taxes have also become a noticeable challenge. "The U.S. has federal and state subsidies, which means a liter of biodiesel can be imported and sold in Canada for approximately 85 cents," says Carmichael. "[EGO] can produce the same amount for $1.60 per liter, but obviously no consumer wants to pay more for their fuel." In addition, the Maritime provinces, with the exception of Nova Scotia, are the only provinces subject to what is known as a "road tax"- a 16.9 cents-a-liter fuel tax intended to help improve local roads. Ontario and British Columbia eliminated road taxes for biodiesel a few years ago, making it competitive with regular diesel. "We're just not on a level playing field here," Carmichael says.

Nevertheless, the company's business is still thriving locally as the city of Fredericton recently announced it will be using EGO's 4 Plus Premium Biodiesel in its fleet of 27 transit buses. The city added 15 milliliters of the canola and mustard seed-derived fuel to its buses as a test run aimed at reducing emissions and fuel costs. After preliminary testing, the city noticed a slight improvement in combustion efficiency, performance and mileage, and decreased levels of greenhouse gas emissions. In the future, the city plans to introduce biodiesel into its other diesel vehicles, such as snowplows and trucks.

Heading east, ethanol production is also gaining momentum in the Atlantic provinces. The Renewable Energy Growers Association in conjunction with Atlantec BioEnergy Corp. plan to build a plant in Borden, Prince Edward Island. The proposed 85 MMly (22.4 MMgy) ethanol facility will be located on an existing commercial site where the company will have access to nearly 25 acres of surrounding sugar beet cropland. Atlantec BioEnergy will begin construction in May and anticipates coming on line sometime in 2009. Field trials began last summer where local farmers grew 970 hectares (2,396 acres) of sugar beets. The proposed plant would require at least 2,205 hectares (5,448 acres) for initial production and eventually 7,300 hectares (18,038 acres) when production is increased. In addition to ethanol, the company will also produce thermal and electric energy.

According to Ronald Coles, communications manager for Atlantec BioEnergy, sugar beets are ideal for P.E.I because of the crop's high energy, sugar and water content. Sugar beets are also easily grown on the East Coast and can be produced in rotation with cereal and forage crops.

Recently, REGA and Atlantec BioEnergy joined other organizations to make a pitch for the province to support the building of a local ethanol facility. The companies' biggest challenge has been attempting to produce biofuels when no provincial mandate or incentives currently exist. "That would be our biggest hurdle," Coles says. "We've only been getting indications that the P.E.I. government is releasing a strategy [but] the key is implementing [an actual] ethanol and biodiesel mandate. I think everything would flow easily from there." So far, Atlantec BioEnergy has not received any funding directly outside of private investments.

Other future producers include Roach Ethanol of New Brunswick, which plans to build a 40 MMly to 60 MMly (10.4 MMgy to 15.9 MMgy) ethanol facility using cereal grains including wheat, rye and corn as feedstock. The company recently completed a feasibility study and hopes to move forward in the biofuels industry.

Opportunities Not Lost
These challenges may have delayed the potential for swift growth in the biofuels industry but they have not deterred Atlantic Canada. In fact, the challenges have even helped companies outside of the producer market such as Charlottetown Metal Products Ltd., realize the potential for an even greater market. CMP manufactures stainless steel food processing equipment and systems. Two years ago, CMP Vice President Wendell MacDonald traveled to Alberta on a trade mission to better understand the oil industry and to find good sourcing for the company's stainless steel fabrication system. A meeting with a representative from an ethanol facility that was looking to expand led MacDonald to realize there was an opportunity to market his technology in ethanol applications. "I found that our equipment, used for the food processing industry, was compatible and profitable within our manufacturing capabilities," MacDonald says.

As a result, CMP has focused on the ethanol and biodiesel industry as secondary production lines and has been attending biofuels conferences across Canada ever since. "Our ultimate goal is to identify and bid on every pending ethanol and biodiesel plant in Canada," MacDonald says. "There are several proposed projects in eastern Canada that we hope to have the opportunity to bid on and secure a substantial proportion of that system."

While the biofuels industry is mainly driven by western and even central Canada, MacDonald maintains that Atlantic Canada is doing its part to boost the biofuels industry as well.

And with increased interest and support from the provincial governments, industry progress on the East Coast could help put eastern Canada on the map as a biofuels production area in the future. In the meantime, new developments are creating opportunities for new production facilities and technologies, and are instilling an air of pride within the industry players. "We have been in the food industry for 16 years now and becoming a part of this new and exciting industry will give us the growth we need as a company and will provide a positive outlook for the Maritimes," MacDonald says.

Khalila Sawyer is the Biofuels Canada managing editor. Reach her at ksawyer@bbibiofuels.com or (519) 576-4500. This feature was reprinted from the April/May issue.
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