Thank you very much, Mr. Chair and members of Parliament, for the opportunity to appear today.
My name is Bliss Baker. I am the chair of the Canadian Renewable Fuels Association. I am joined by my colleague and fellow board member Jeff Passmore, who is also executive vice-president of Iogen, who will have a few things to say when I conclude.
I think, without exception, all of you are familiar with the renewable fuels industry, the ethanol and biodiesel industry. The CRFA represents a wide variety of ethanol and biodiesel producers, potential producers, technology providers, and a host of agricultural commodity groups, all of whom will stand to benefit from an expanded biofuels industry in Canada and from the passage of Bill C-30.
The CRFA has been around since about 1993 and was started by a group of corn farmers in southwestern Ontario. Since that time we have been advocating, pushing, prodding, lobbying, and educating on the benefits and merits of renewable fuels, and we are poised for a significant expansion in biofuels in the coming year or two as a result of the passage of this bill.
I have a few comments. I'll try to keep them brief because I prefer to leave some time for questions, but first let me say that I don't think I'm understating it when I say that the potential for our industry is huge with the proposed renewable fuel standard and the passage of this bill. It means a significant expansion of both biodiesel and ethanol in Canada, and when I say potential, it's because not all the work is done yet with this bill. A significant amount of work needs to be done, and I'll touch on that in a second, but I think there's little debate within most jurisdictions about the environmental benefits, the agricultural benefits, and the rural economic benefits of expanding the biofuels industry in any jurisdiction.
With respect to the environment, there are significant clean air benefits in reduction of CO2, there is significant reduction of particulate matter with the usage of biodiesel, and significant greenhouse gas reductions with the implementation of ethanol and biodiesel into the fuel pool.
Second is economic development. I think many of you who represent rural communities will know that there are dozens of communities across the country right now that are anxious to see biofuels facilities built in their towns, for the simple reason that it will have a huge impact on their local economy. The vast majority of the resources and money are spent in the community, and any town that's gotten an ethanol plant in the U.S. Midwest can attest to the fact that their rural economies have expanded significantly as a result of introducing ethanol and biodiesel plants into their town.
Third, agricultural benefits again are significant. There are three primary benefits. One is the direct impact on grain prices. Our large facility in Chatham, Ontario, has had a huge impact on the local price of corn, and farmers are benefiting from that. Secondly, it's a great hedge for farmers. When grain prices are very low and if they've invested in ethanol or a biodiesel facility, the biodiesel and ethanol plants are making money; and conversely, when grain prices are high, the plants may not be making money but the farm is making money, so it's a great built-in hedge for the agriculture sector.
Finally, from a government perspective, if you are increasing revenue to the agriculture sector through these kinds of value-added propositions, then clearly it means fewer support payments from government to the agricultural sector. Those benefits are undeniable and widely recognized across North America.
The 5% renewable fuels standard that is being promoted by the government right now will create a market for about 2.5 billion litres of ethanol and biodiesel. There are many initiatives that the government could support to reduce greenhouse gases today, but there are very few initiatives that the government can support in the transportation sector that are readily available and immediately available to reduce greenhouse gases, and expanding the biofuels sector is one of them.
The blending of these fuels into the nation's fuel pool will reduce greenhouse gases by over four megatonnes annually, and this will be the equivalent of taking thousands of cars off the road annually. Undoubtedly, today's legislation will achieve this outcome. There is no question about it. The passage of a renewable fuel standard will create a demand for 2.5-plus billion litres of biofuels in the marketplace.
The question for all of us, I suppose, is this. If we are going to achieve those other benefits, the agricultural benefits and the rural economic benefits, then we have to build these plants here in Canada.
Let me just elaborate. We're happy to say that the government has consulted with our industry. They've listened to our proposals. We've put a proposal forward that will ensure that plants are built here in Canada. It's a proposal that puts us on a level playing field with the generous tax treatment and regulatory instruments that we see in the United States, where they're launching a new ethanol plant or biodiesel plant every two weeks. Our proposal will generate over $2 billion in investment in industry infrastructure, generate thousands of direct and indirect jobs, and provide much-needed value to grain and oilseed crops across Canada.
Of course, as anyone knows who's living in the GTA right now, or even in parts of Montreal, where there have been some refinery outages, we know refineries are running at maximum capacity these days. Injecting 2.5 billion litres of fuel into the fuel pool at a time when refineries are running at maximum capacity can only have a good impact on the pricing pressures in the marketplace right now.
In short, let me just summarize what our proposal is. Many of you are familiar with it, because we've met with many of you over the last several months.
In order to achieve some kind of tax parity with U.S. producers, ensure that we build plants here, and make that $2 billion in investments, we have proposed a 10¢ per litre ethanol tax credit program and a 20¢ per litre program for biodiesel. Anything less will put Canadian producers at a serious disadvantage with U.S. producers. We run the risk of simply importing fuel to satisfy the renewable fuel standard, and the investment that we talked about will end up in the U.S. I know all of you understand that.
Again, just to close and pass it over to Jeff, we are very pleased with the level of consultation that we had with the government. We know they certainly heard us, and I believe they now understand very well the economics of production in Canada versus the United States. We await the federal budget to see the next step of the biofuels policy in Canada.