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Canada Announces C$1.5 Billion Biofuels Incentives Program

Canadian Prime Minister Stephen Harper announced ecoENERGY for Biofuels, which will provide C$1.5 billion (US$1.4 billion, €1.1 billion) in incentives over nine years to producers of renewable alternatives to gasoline and diesel fuel.

Last December, Canada announced a new regulation requiring a 5% average renewable content in gasoline by 2010. At that time, the government also signalled its intention to develop a similar requirement of 2% renewable content for diesel and heating oil by 2012. (Earlier post.)

Close to three billion liters [793 million gallons US] of renewable fuels will be needed annually to meet the requirements of the new regulations. Canadian production in 2006 was only about 400 million litres, so the expansion will represent a significant economic opportunity for the country’s 61,000 grain and oilseeds producers.

The program is not yet finalized and approved—the government is targeting completion for later this year—but among the parameters under consideration are:

  • Applicable to eligible production between April 1, 2008 and March 31, 2017.

  • Available to eligible facilities constructed before March 31, 2011, subject to program volume limits. Incentives for up to seven years per eligible facility.

  • Program volume limits of 2 billion liters of renewable alternatives to gasoline and 500 million liters of renewable alternatives to diesel, potentially increasing over time, subject to funding availability.

  • Incentive rates of up to $0.10 per liter [US$0.36/gallon] for renewable alternatives to gasoline and up to $0.20 per liter [US$0.73/gallon] for renewable alternatives to diesel for the first three years of the program, declining over the following 6 years<./p>

  • Incentive rates also based on average industry profitability, determined on an annual or semi-annual basis.

  • A cap of 30% of program volume limits per eligible recipient.

  • A minimum production volume per eligible facility.

  • Certain thresholds for, and reporting of, plant environmental performance such as greenhouse gas emissions, and the quality of fuels produced.

Earlier this year, the government announced two other major renewable energy incentives programs: ecoENERGY for Renewable Power (C$1.48 billion) and ecoENERGY for Renewable Heat (C$35 million). (Earlier post.)



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