A new controversy/opportunity for Saskatchewan is coming to this province through development of a new federal Clean Fuels Standard.
The current standards mandate a five per cent renewable fuel content (ethanol) in gasoline and two per cent biofuels in diesel and heating oil.
The consultation process is under way with new regulations scheduled for 2021 and implementation in 2022.
Purpose of the new regulations, according to Environment Canada, is to encourage innovation and adoption of clean fuel technology in the oil and gas sector and increased use of low carbon fuels.
In the United States renewable fuels have up to 20 per cent of gasoline content and that has fuelled the corn industry.
The blended gasoline, once highly supported by subsidies, increased the price of other commodities — soybeans, wheat and so on. Prices had to increase to compete for the limited acres. This factor affects grain prices in Canada.
When the current standards were mandated the push was to substitute some high priced gas and diesel with homegrown fuel. The Bush administration in the United States made no bones about this as an opportunity for farm based voters. Canada copied the United States.
Both countries also promoted biofuels as an environmentally-friendly solution.
Canada has never fully realized the biofuel opportunity. Plants in Canada produce 1.8 billion litres a year but we import 1.3 billion litres a year, so we produce a little more than half our needs.
In Saskatchewan, three ethanol plants produce 180 million litres a year - about 12 per cent of national production — and six per cent of our needs.
Husky Grain at Lloydminster has 150 million litres capacity, with 15 million litres from Terra Grain Fuels in Belle Plaine and 15 million at Pound-Maker Feeders near Lanigan. New standards are an opportunity for them and grain producers.
The new Clean Fuel Standards are promoted as part of the package to meet reduced greenhouse gas emission (GHG) goals by 2030. That goal plans cutting emissions to 2005 levels. The new fuel standards are planned to take out seven mega tonnes a year. These standards will amount to 14 per cent of planned cuts.
Politics in Western Canada caused the new clean fuel standards to become a political football even before they have been drafted.
Right-leaning politicians in Alberta and Saskatchewan are labelling this as a second carbon tax instead of seeing and seizing the new mandate as an opportunity for farmers and the ethanol industry.
The new standards will increase the price of fuel and heating a little, with no offsetting tax credit like that from the carbon tax.
Strange, how the blended fuel debate has shifted from replacing high priced oil to trying to solve climate change.
One might expect a negative reaction to new standards from oil producing provinces. Oil will be around for a long time but provincial leaders should recognize oil is a declining industry and get with developing replacement industries alongside oil rather than keep sucking on the oil production soother.
Ron Walter can be reached at ronjoy@sasktel.net
The views and opinions expressed in this article are those of the author, and do not necessarily reflect the position of this publication.
