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Alberta can help world grow beyond oil

In another attempt to provide a positive message for bio-fuels, Gordon Quaiattini, president of the Canadian Renewable Fuels Association, offers some ideas of how Alberta could play a role in helping the world grow beyond oil.

April 14, 2008
By Calgary Herald/Bourque Newswatch


April 13, 2008

With the price of oil hovering around $100 per barrel and the amount we pay at the pumps also on the rise, it is becoming obvious that we simply must grow beyond oil as our only source of transportation fuel. In practical terms, that will mean increasing our production of ethanol, biodiesel and biofuels drawn from cellulose, sugar, corn and other grains in Canada and across the globe.

That suggestion might sound awfully peculiar in Alberta, where oil production is a mainstay of economic growth and prosperity. But upon closer inspection, it becomes obvious that Alberta enjoys a unique opportunity to benefit from both oil and biofuels in the years ahead. Indeed, Alberta can fortify its position as a leading worldwide energy producer by combining its oil and agriculture industries to form a larger, better integrated and more powerful energy sector.

That's not an opportunity that the OPEC-producing countries (whose combined control of much of the world's crude oil contributes mightily to price spikes) can ever hope to match.

Before the day arrives when full advantage is taken of this opportunity however, misconceptions about biofuels such as those profiled in a recent issue of Time magazine and repeated here in a column by Mark Milke ("Stealing corn from the poor," March 28) — must be corrected.

In truth, the "science" behind the Time analysis that was embraced by Milke relies entirely upon a single distorted and unrealistic assumption: that the United States will soon be producing 114 billion lites a year of ethanol from corn. In fact, that is simply not going to happen. Currently, the U.S. produces only 30 billion litres of ethanol each year. In time, that will rise to as much as 57 billion litres.

But, importantly, Time and Milke failed to point out that, by order of federal law as passed by the U.S. Congress, the amount of corn that can be directed toward ethanol production is capped. It will not go higher.

Instead, the new demand for biofuels will be met by biodiesel and new technologies such as cellulosic ethanol.

Once that important fact is understood, the case against biofuels begins to crumble.

Similarly, the link drawn between biofuels and grocery bills is misleading. In the past three years, the price of food has risen roughly seven per cent. By contrast, the price of oil has risen 70 per cent. As was pointed out just this week by American economist Richard Perrin, the rise in food costs can hardly be attributed to the demand for biofuels. The overwhelming pressure on prices has actually come from the higher cost of oil.

As for the argument that biofuels benefit from government support and subsidies, that hardly distinguishes it from oil or other energy producers. As Albertans appreciate better than most, government-sponsored incentives for the oilsands far outstrip those enjoyed by the biofuels industry.

If anything, biofuels are encouraging a diminution in government subsidies by helping to make agriculture a more economical and free market undertaking.

The plain truth is that biofuels represent a huge win and a rare chance for Alberta to extend its leadership in the energy sector over its rivals.

No one should be naive about the near-term outlook. Oil is here to stay as the dominant element in both Canada and the world's energy mix. But economics don't lie. And neither do geological surveys. We're running short of accessible oil sources. Something must supplement the demand for affordable and environmentally benign energy.

Only biofuels and biodiesel can practically meet that test. Our industry is not some farflung hope based on a technology that has only been demonstrated under laboratory conditions. Ethanol and biodiesel are here. They are real. And they are only going to grow more significant.

For that reason, we are indisputably at the dawn of a new industry. The federal government has set an average renewable content of five per cent ethanol and two per cent biodiesel in Canadian gasoline and diesel fuel. This Renewable Fuel Standard (RFS) will guarantee a future market of three billion litres of biofuels in Canada. Similar mandates exist in Ontario, Saskatchewan, Manitoba and, shortly, in British Columbia.

For Alberta, the implications are significant. The province already enjoys a vibrant oil industry. Combining that with an increased focus on biofuels will deliver the province a two-fisted punch capable of knocking out competitor jurisdictions.

The critics are wrong and the skeptics are shortsighted.

Biofuels will the next big boost for Alberta and beginning to grow beyond oil is good for Alberta farmers, Alberta drivers, and a more diversified Alberta economy.