Agriculture Committee on June 6th, 2006

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Mr. Baker, a moment ago I called you Mr. Passmore. I apologize to both of you. My question is for both of you. It may be a little more technical.

Quebec has an energy strategy that favours developing biofuels from agricultural and forest residues. We know that this alternative is being used at our Varennes plant. In the magazine La Terre de Chez Nous, I read that Mr. Roberge, the director of the commercial alcohol plant at Varennes, said that these technologies based on cellulose ethanol could not be used on a large scale for a long time yet. It might be up to seven years and we might even have to wait until 2020 before producing ethanol from wood.

Mr. Baker, do forest and agricultural residues still present future opportunities for the Varennes plant? If such is the case, what is the current state of the technology? Will both technologies be really profitable someday, whether we use wheat, barley or corn, as well as forest residues?

Mr. Passmore, my question is also for you because I read that your company was very hard at work on this matter. You are producing a new type of ethanol that will be made from forest biomass. I think that if you continue doing this, there must be some future in it.

[Bliss Baker]

With respect to Mr. Roberge and our Varennes project, we have a very good R and D program right now, a very active R and D program, looking at those kinds of things. We have an R and D project that we've been working on for a couple of years now in partnership with another Canadian technology company, and we're looking at those kinds of things. I don't want to get you too excited. It's still several years off, but the goal of our company is to be able to have as much flexibility for feedstocks as possible, and that is probably true of the entire industy. At some point down the road, all ethanol producers would like to be able to use a variety of feedstocks to get ethanol at the end of the day. Many companies are looking in the direction we are as well.

[Jeff Passmore]

I guess I could only say that we started off looking at forest residues. The history of the country was first forest residues and then agricultural residues, but it was much easier to collect agricultural residues. The baling equipment and everything is all there, available. Gathering forest residues is a bit of a challenge, but eventually we would expect to be able to not just use agricultural residues but also eventually forest residues.

As to the question of whether or not you can have a grain ethanol plant and then switch it to a cellulose ethanol plant, some of the parts would be complementary. There are tanks and distillation columns that you could use. Obviously we use different yeasts and different enzymes, and there's pre-treatment that is different. You couldn't switch back and forth between starch and cellulose, but you could perhaps convert a plant at some point if it seemed like a sensible business decision.

[The Chair, Conservative, Gerry Ritz]

Mr. Atamanenko, do you have any last questions? You have a minute.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

I have three quick questions.

It's my understanding that vehicles up to 10% ethanol or biodiesel are okay. You don't have to change the motors. Secondly, on energy efficiency, how much fossil fuel, say a litre, would it take to produce one litre of ethanol or biodiesel? Also, on CO₂ emissions, what is the difference between emissions from a litre of biodiesel or ethanol in comparison with gasoline?

[Kory Teneycke]

I'll give you three really quick answers. Yes, on the 10% for ethanol. For biodiesel, it's up to 100% in a diesel engine, although blending standards only exist for up to 5% today--although many people are blending far more than that.

In terms of the energy balance, how much fuel you're using, on a life cycle basis based on Agriculture Canada's most recent analysis, it's 2:1 net energy out of ethanol versus use in the growing of the crop, gas for the tractor, and all of that. That's on the Ag Canada website. You can download the study.

The final one was CO₂ emissions. It depends on what you use. For cellulose ethanol, it's about 90% reduction over gasoline on a life cycle basis; for corn and wheat you're looking in the 40% to 50% range, depending on the particular plant; and for tallow--this is rendered animal fat similar to cellulose--you're looking in the range of 90% reduction. For oilseeds like soy and canola, you're also looking at the 40% to 50% range.

Recycled materials have a smaller GHG footprint than grains and oilseeds, but both are very large percentage reductions over petroleum.

[The Chair, Conservative, Gerry Ritz]

Thank you.

Mr. Easter, you have one last, short question--very short.

[Wayne Easter, Liberal, Malpeque, PE]

Always short, Mr. Chair.

[The Chair, Conservative, Gerry Ritz]

That's why I reminded you.

[Wayne Easter, Liberal, Malpeque, PE]

On the commodities to produce ethanol, Lionel mentioned earlier that there needs to be Canadian Grain Commission changes. How critical is that and how fast does it need to happen?

The other thing is, in the U.S.--I was talking to the vice-chair of their agriculture committee--they are really high on switchgrass. Now, I personally don't know much about switchgrass. If anybody can explain that to me and what potential it has in Canada, I'd like to hear that. There is some resistance to using food for fuel, and I think switchgrass would kill that argument.

[Lionel LaBelle]

Mr. Easter, clearly we think the Canadian Grain Commission plays a real role here. One of the caveats in the province is something called KVD registration. We have been producing milling wheat for 100 years and there's a worry that somehow we would pollute this particular grain source and harm our export capabilities. There's new technology out today where it's no longer a kernel verification, but it's done electronically. So there has been an industrial wheat group added to the Canadian Grain Commission's portfolio.

They seem to be tentative. I think they need some pushing just to get them down the ladder. So I think that'll happen fairly quickly, but we do need some political force on that.

[Jeff Passmore]

Switchgrass is a native prairie grass. It grew back in the days when the buffalo roamed. It's drought resistant, sends its roots down six feet, grows six feet tall, and is really thick and really dense. If you were looking at straw yields of a tonne an acre, you'd be looking at switchgrass yields of anywhere between three tonnes and six tonnes an acre. Because it's drought resistant, farmers like it because, hey, you don't have to worry about irrigation.

We have a plot of 100 acres of switchgrass growing up here in Renfrew County. We decided that we would like to grow some ourselves and run it through our demo plant and test it. Yes, it grows great in Renfrew County too. It doesn't have to just be a prairie grass. It's a wild grass with a very high yield.

[The Chair, Conservative, Gerry Ritz]

You don't want to talk about it too positively, or Wayne will want it under the Canadian Wheat Board.

[Some hon. members]

Oh, oh!

[The Chair, Conservative, Gerry Ritz]

Thank you, gentlemen. It's been a great morning. We've had a tremendous amount of information. Thank you so much for coming.

Mr. Wardrop.

[Ron Wardrop]

Some interest has been expressed in seeing a plant. We're having an open house on June 20 specifically for government representatives. If anybody is interested in coming, I would be more than happy to have you at our Ville Ste. Catherine plant on June 20 at 10:30.

[The Chair, Conservative, Gerry Ritz]

So we have a breakfast by Mr. Teneycke and a tour by Mr. Wardrop. Mark this on your calendar, folks.

Thank you so much, gentlemen.

Ladies and gentlemen of the committee, we have a couple of housekeeping issues to work on at the moment, so please stay in your seats.

The first one won't take any votes or anything like that. Bill C-15 passed by unanimous consent yesterday and has gone to the Senate. There was some consideration or discussion about changing some of the default mechanisms, which were lost in the wash of getting it through the House quickly. It won't come to this committee, but are you folks opposed to my writing a letter to the Senate? Apparently they're going to have a hearing on Thursday morning. Can we point out to them that we'd like some changes to the default?

I've chatted with Mr. Easter. I haven't had a chance to chat with Mr. Bellavance or Mr. Atamanenko.

Right at the moment the default mechanism is very punitive on cash advances: 10% is added to your loan; the interest rate starts the day you take out the loan, not the day you defaulted; you're considered in default even if you still have the grain commodity in the bin but haven't been able to sell it. So there are some punitive sides to this that I would like to see addressed in Bill C-15.

Does anyone have a concern about that letter going to the Senate? I've talked to the minister about it already. All right? We will do that.

Mr. Anderson, do you have a comment on that at all?

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

I'd just comment that I agree with you and Mr. Easter on this; it's something we can do to improve the bill. You've spent time at it, we've spent time, and that's one of the places where we can make some change that might help out.

[The Chair, Conservative, Gerry Ritz]

Is everybody okay with that? Good. We'll keep you apprised of the progress.

Also, we had notice of motion from Mr. Bellavance the other day. The 48 hours, of course, are now up.

Mr. Bellavance, do you care to speak to the motion?

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Thank you, Mr. Chairman.

I will not take up much of your time because we have already heard all the testimony we need on milk protein concentrates. I will not take time to read the motion either, unless you wish me to. The motion is before you, and as you so clearly said, Mr. Chairman, it was submitted in time.

I thank the committee for agreeing to study this issue very quickly. Following the Federal Court decision rendered in January, the door to milk protein imports into Canada is now wide open. You heard—as I did—Canadian and Quebec dairy farmers explain how serious the situation is.

Since 1994, Canada has protected the dairy industry by imposing strict regulations on milk protein imports. We might have lost the case in court, but that does not mean we have no avenues for action, no measures we can take to prevent a serious increase in milk protein imports. Even the witnesses, the minister and the departmental officials who appeared before the committee stated we did have such measures.

I am therefore submitting a motion that is in line with what dairy producers are asking for. I am tabling it now and I would like it to be heard in Parliament. I would like the government to take note of it, because the situation outlined by our witnesses is extremely serious. I would therefore ask the committee to pass this motion so that we can table a report in the House as quickly as possible.

[The Chair, Conservative, Gerry Ritz]

Thank you, André.

Speaking to this issue is Mr. Bezan.

[James Bezan, Conservative, Selkirk—Interlake, MB]

I'd like to table this motion to a future date. I don't disagree with the intent of what Mr. Bellavance is bringing forward, but I think the timing is wrong. Right now we have a situation where the DFC and the processors are meeting—they have a working group. We should wait to see what the outcome is before we move ahead, see what consensus they've come to.

Also, we're in a sensitive time in negotiations with the WTO. I think we need to be working to protect our supply-managed industries. By moving ahead on article 28 all we're doing is taking a sharp stick and poking it at our competitors. We're going to make it very difficult to deal at Geneva. It think we should table this for now and deal with it at a later date and let the processes that are under way right now continue.

[The Chair, Conservative, Gerry Ritz]

We have a motion to table. Do we have discussion on that motion?

Mr. Miller.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

I agree. I would have suggested the same thing.

Mr. Bellavance, I agree 100% with the intention of what you have here, but the timing is not good. I'm a farmer. I was in the supply management business—milking, at one time—as well. My heart is there and I have a lot of producers in my riding. We're doing the wrong thing if we pass this motion right now, André; I really believe that.

[The Chair, Conservative, Gerry Ritz]

Mr. Easter.