Canada announcing biofuel subsidies

6 July 2007

Canada’s Prime Minister Stephen Harper announced a subsidy program to boost production of biofuels. Under ecoENERGY for Biofuels, the government will provide up to $1.5 billion in incentives over nine years to producers of renewable fuels including ethanol and biodiesel.

The money will go directly to companies that produce biofuels. The manufacturers can receive up to 20 cents per liter of biodiesel, and up to 10 cents per liter of ethanol.

Last December, Canada’s government 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.

Close to 3 billion liters of renewable fuels will be needed annually to meet the requirements of the new regulations. Canadian production in 2006 was only about 400 million liters, so the expansion will represent an economic opportunity for the country’s 61,000 grain and oilseeds producers.

The transportation sector accounts for more than a quarter of Canada’s greenhouse gas output.

Source: Canada PM