Canada Invests in Biodiesel Research, British Columbia Mandates Blend

By Tina Caparella

A glimpse around the world shows biodiesel activities in various countries continues to escalate, but none more so than in Canada, where research into using the fuel in cold weather and year-round is escalating and mandated blends are put in place.

Canadian Pacific, a rail freight provider, and Natural Resources Canada have partnered on an industry-leading biodiesel fuel pilot project under the National Renewable Diesel Demonstration Initiative. The Government of Canada is investing over $800,000 in this project in an effort to find ways to help reduce Canada’s total greenhouse gas emissions. It is the first time biodiesel will be used in Canadian cold-weather rail service.

Canada’s government has announced its intention to mandate an average five percent renewable fuel content in the nation’s gasoline by 2010, and require an average two percent renewable content in diesel fuel and heating oil by 2011 or earlier, subject to technical feasibility. The National Renewable Diesel Demonstration Initiative provides an opportunity for real-world testing and performance evaluation in advance of these regulatory actions.

“Rail is already the most efficient means to move goods long-haul,” said Fred Green, president and chief executive officer, Canadian Pacific. “This initiative positions Canadian Pacific to make a lasting impact by further reducing our network’s environmental footprint. This partnership with the Government of Canada is an opportunity to test the reliability of biodiesel in cold weather, ensuring we continue to provide safe and efficient operations for customers across North America.”

As part of the five-month test cycle, the train company will operate four General Electric diesel locomotives in captive service between Calgary and Edmonton. General Electric and Calgary-based fuel supplier 4Refuels are cooperating with Canadian Pacific during the testing phase, which began in early November and will run through the end of March 2010.

Canadian Pacific will undertake routine detailed mechanical examinations of the locomotives in the pilot project. The information gathered will be used to determine if a biodiesel mixture of five percent (B5) has any significant adverse effects on a locomotive or its associated systems in cold-climate operation. Impact to reliability, potential changes to the overhaul or maintenance work scope, and reviews of specific components on the locomotives will also be monitored.

In another Canadian research project, the Saskatchewan Research Council will seek how well biodiesel performs year-round in agriculture equipment. Also supported under the National Renewable Diesel Demonstration Initiative, the pilot project will help the research council access biodiesel’s quality retention and performance in farming equipment and bulk storage facilities in all seasons, including the coldest winter months. The Government of Canada is investing $782,000 in the demonstration project that also aims to reduce the country’s total greenhouse gas emissions and assist the government in moving forward with its proposed renewable fuels regulations.

During the year-long project, eight agriculture producers will operate their equipment using low-level (B5) and high-level (10 percent biodiesel, or B10) canola-based biodiesel blends to determine whether they effect engine performance. Five producers will operate year-round on a B5 blend, while three others will use B10 during warmer months and B5 the rest of the year.

As part of the study, the Saskatchewan Research Council will evaluate approximately 50 tractors, combines, swathers, and related farm fuel storage tanks. Biodiesel quality will be closely monitored and evaluated to ensure that the fuel maintains adequate quality throughout the year-round farming cycle. The study is expected to be complete in November 2010.

Canadian Province Mandates Blend, Removes Tax Exemption
In British Columbia, the government has enacted its Renewable and Low Carbon Fuel Requirements regulation, which in December 2008 established a five percent provincial annual average renewal fuel requirement for 2010. A regulation passed in December 2009 amended the 2008 law to include new requirements to reduce the carbon intensity of transportation fuels by 10 percent by 2020, and adjusted the five percent renewable fuel requirement for diesel set for January 1, 2010, to now be phased in with a three percent target for 2010, four percent for 2011, and five percent by 2012. These regulations are made under the Greenhouse Gas Reduction (Renewable and Low Carbon Fuel Requirements) Act, which was passed in May 2008.

In response to concerns raised by the petroleum industry and diesel fuel users, British Columbia’s Ministry of Energy, Mines, and Petroleum Resources stated the phased-in approach for diesel fuel was chosen to provide time to put the necessary supply infrastructure in place and address technical issues regarding the cold weather properties of biodiesel and engine manufacturer warranties. The five percent renewable requirement for gasoline in 2010 remains unchanged.

While the three percent biodiesel mandate is good news for the increased use of the alternative fuel and the reduction in greenhouse gas emissions, British Columbia’s Ministry of Finance announced that also effective January 1, 2010, ethanol and biodiesel will no longer be exempt under the Motor Fuel Tax Act. Previously, both alternative fuels enjoyed a 22-cent per liter tax exemption – a 15-cent motor fuels tax, four-cent carbon tax, and 3.5-cent urban transit tax. The government argues that the three percent market requirement will do far more to stimulate the biodiesel industry than the tax incentives did.

Although major oil companies are now required to blend three percent biodiesel into the distillate pool, the tax exemption repeal means independent distributors and fleets who have invested in infrastructure and have been selling and burning higher biodiesel blends will pay a significant premium to do so. This will severely impact the market for selling blends higher than five percent, according to Grant Saar, West Coast Reduction.

For nearly five years, West Coast Reduction in Vancouver, BC, has been importing 100 percent tallow- and waste vegetable oil-based biodiesel from the United States to use in their fleet and sell to small independent distributors and co-ops. Up until December 31, 2009, the alternative fuel was 10- to 20-cents per liter cheaper than petroleum diesel, thanks to the U.S. biodiesel tax credit and the fuel tax exemption in British Columbia. With both those incentives now missing from the equation, West Coast Reduction is no longer able to sell biodiesel to others because the cost has become prohibitive. However, the renderer will continue to use biodiesel in its fleet.

International Report – February 2010 RENDER | back