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Canadian biofuel makers have fired back after a critical Environment Canada analysis suggested the cost of government support for the ethanol and biodiesel industries far exceeds the environmental benefits.

The Canadian Renewable Fuels Association released a report Wednesday that calculates the industry is providing $2-billion of economic impacts, over and above the costs that taxpayers and motorists will incur to support it.

Over the next 30 years, the economic benefit from 28 biofuel plants either built or in the planning stages would be $24-billion, says the report, done by Ottawa-based consulting firm, Doyletech Corp.

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"The major benefits of renewable fuels plants are not merely the provision of transport fuels, but also they provide vehicles for rural revitalization, increased oil exports from Western Canada, industrial development, and valuable options for rebalancing fuel mix," it concluded.

Environment Canada recently published a cost-benefit analysis finding that Ottawa's ethanol fuel mandate will cost $3.2-billion. The regulation - which takes effect Sept. 1 - requires refiners to sell gasoline with at least 5 per cent ethanol content. A separate Environment Canada report put the price tag for biodiesel regulations - due to come into force next year - at $5.3-billion.

The Environment Canada assessment focused on the benefit of reducing greenhouse gas emissions and did not include indirect economic spinoffs, like additional market opportunities for corn and oilseed farmers, or jobs in the plants themselves.

The federal department also provided an analysis of Ottawa's new fuel efficiency standards for cars and light trucks for 2011 to 2016 model years. And in that case, the benefits of fuel savings for consumers outweighed the additional cost of vehicles.

The renewable fuel industry has enjoyed generous support from provincial and federal governments, including mandates for fuel mixing and a 10 cent per litre subsidy provided to producers by Ottawa. The subsidy declines over the next six years and is due to expire in 2017.

The association defends taxpayers' support on the grounds that the policies are as much about rural economic development as environmental goals.

"You look at greenhouse gas benefits, you look at rural development opportunities that come from these plants being constructed in regions where they're close to the feedstock, you look at the new markets for the farmers' product," said association president Gord Quaiattini.

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"This report validates the policy support and the program support that governments have provided to us."

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About the Author
Global Energy Reporter

Shawn McCarthy is an Ottawa-based, national business correspondent for The Globe and Mail, covering a global energy beat. He writes on various aspects of the international energy industry, from oil and gas production and refining, to the development of new technologies, to the business implications of climate-change regulations. More

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