One Step At A Time

Manitoba has been involved with biofuels since its first ethanol plant was built in 1981. Today, the Canadian province is working to create new strategies to increase the production and use of renewables-and biodiesel is a big part of the plan.
By Kory Wallen | February 01, 2006
To be perfectly honest, the biodiesel industry in Manitoba is almost non-existent.

The largest biodiesel plant in the province, Bifrost Bio-Blends, produces just enough fuel to provide the provincially owned utility Manitoba Hydro with 13,000 gallons (50,000 liters) of biodiesel per year. That's a pittance compared to the production capacity of, say, bordering U.S. state Minnesota, which now cranks out more than 60 MMgy (273 MMly) annually.

On the other hand, it's potential that counts, and Manitoba's got plenty of it. Three-quarters of a million people live in and around Winnipeg alone, and Manitoba currently consumes 224 million gallons (850 million liters) of diesel fuel annually. Biodiesel blends are scarcely available in the province, and consumers have limited opportunities to use it, but at least one group is working diligently to change that.

The province's relatively large fuel market was one of many factors that spurred the formation of the Manitoba Biodiesel Advisory Council in 2004. The council was formed to review the biodiesel production industry and its potential development in Manitoba. The 15-seat council includes members from companies and associations, including the Canadian Canola Growers Association and the Manitoba Trucking Association.

The council's initial purpose was to gather information and create a comprehensive report about biodiesel that would be presented to the Manitoba government. The resulting 53-page report, Biodiesel: Made In Manitoba, released in February, looked at industry awareness, consumer issues relating to biodiesel consumption, potential barriers for producers, various feedstocks and available coproduct markets. The council held a number of industry consultations, visited a U.S. biodiesel plant and looked at the biodiesel industry's short history. "It was a real educational process and knowledge-building process for both the province and the council," says Jeff Kraynyk, energy policy analyst for Manitoba's Department of Energy, Science and Technology.

The report covers almost every angle of biodiesel production and use, uncovering the opportunities and challenges that potentially lie head. It states that fleets, agriculture, mining, government and the forest department will most likely be the first to adopt the use of biodiesel. "One of the advantages we have in Manitoba is that 13 of the largest trucking firms [in Canada] are located in Manitoba," Kraynyk tells Biodiesel Magazine. "We see that as a real significant market for biodiesel." The report also looked at cold weather issues, current infrastructure limitations, fuel quality standards and feedstock accessibility. Canola is one of Manitoba's primary crops, and it just might be the province's most viable and abundant production feedstock. Plus, Manitoba is the second largest producer of hogs in Canada, so animal fats could be a viable feedstock as well, Kraynyk says.

In the report, the council derived a number of recommendations for the Manitoba government on how the province should go about expanding its biodiesel program. From these recommendations, the province released a 10-point action plan as a guideline for industry expansion. The action plan was not only a concrete sign of progress but a strong show of government support for biodiesel. "Biofuels are a real priority for our government," Kraynyk says. "We are very bullish here in Manitoba about biofuels."

The two main drivers moving the Manitoba government to promote biofuels are rural economic development and the environment. The recent 10-point action plan takes into account these factors and includes steps to boost rural economic development and maintain clean air in the province. "Biodiesel provides an opportunity for Manitoba farmers and the rural communities that serve them to capture economic benefits [starting with] the fuel they use to operate their machinery," says Manitoba Agriculture, Food and Rural Initiatives Minister Rosann Wowchuk.

In a written statement, Manitoba Transportation and Government Services Minister Ron Lemieux, expounded on Wowchuk's vision. "We want to work with Manitoba entrepreneurs to develop a new industry that keeps goods and services moving while finding innovative ways to protect our planet," Lemieux says.

Manitoba's biodiesel strategy

Within the 10-point action plan, there are two points that Canadian industries and consumers will benefit from immediately. The two major points are a tax incentive on B100 fuel and a request for proposals (RFP) capital support program. When the Manitoba government announced its 10-point action plan in November, a 11.5-cent tax credit for pure biodiesel also went into effect. "What we have done is eliminate the 11.5-cent-per-liter road tax on biodiesel," Kraynyk says. Unfortunately, this tax incentive is not currently applicable to any level of blended biodiesel." Biodiesel groups, along with Kraynyk, are working closely with legislators to change the limitations on the tax incentive so all biodiesel sold in the province can benefit from the incentive. "The program has moved so quickly that we haven't had time to make that change yet," Kraynyk says. "Our intention is to change [the legislation] so blends-regardless of the level-would be tax exempt in the near future." In Manitoba, if the road tax is exempt, a provincial tax of 7 cents is still applied. Even with the provincial tax, biodiesel has been selling at a rate comparable, or cheaper than, petroleum diesel.

The RFP is a CAN$2 million program aimed at developing testing and blending facilities, creating larger markets and generating awareness on a public and industrial level. "I think the challenge, looking forward, is going to be developing future biodiesel markets," Kraynyk says. "In Manitoba, we are going to be dedicating a lot of time and money into growing these markets and in generating awareness." The Manitoba government will be holding a user seminar in March to discuss the benefits and challenges surrounding biodiesel. "We are inviting potential users, school districts, other municipal divisions, trucking companies and large agricultural users to a one-day seminar where experts will talk about biodiesel," Kraynyk explains.

A $1.5 million majority of the RFP funds will go toward a capital incentives program that will help companies, communities or agricultural co-ops finance biodiesel projects. A maximum of $250,000 or one-third of the total capital cost for projects will be given to anyone that applies for the program. Originally the RFP was going to be rolled out in a request for proposals system or a first-come-first-served system. The system had a redesign and now will be distributed to candidates who apply and meet certain criteria. "The overall capital support that will be offered is not going to change," Kraynyk says. "Just the administration aspects may be handled differently."

Other points in the action plan include:

  • A proposal to work with fleets in Manitoba to develop demand for biodiesel

  • Development of a Biodiesel Preference Policy for use in fleet vehicles tendered by the Department of Transportation and Government Services

  • A long-haul trucking demonstration

  • Coordination of research on feedstocks and coproducts in order to maximize the benefits to rural Manitoba

  • Determining the feasibility of converting "dead stock" and other specified risk materials to biodiesel

  • Establishing a biodiesel board to advise the provincial government on implementation of its action plan and future decisions concerning continued biodiesel growth

  • The coordination of the action plan with Manitoba's Agri-Energy Office

Now, with the action in place, the Biodiesel Advisory Council and Kraynyk feel biodiesel can go a long way in Manitoba. "I believe that Manitoba can be one of the most competitive places to produce biofuels anywhere in North America," Kraynyk says.

Not everyone is so optimistic, though, and the action plan has drawn criticism. "There are some who feel there are too many provincial mandates, which could slow growth," Kraynyk says. "We have been encouraging the federal government to implement federal mandates or harmonize all of the different mandates out there." The Canadian government is currently in its election drive where the leading parties have been supporting a national biofuels program or a renewable fuels standard on their platforms. "It is exciting to see biofuels on politicians' minds," Kraynyk says. "That's going to be important in the future."
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