Executive Director, Canadian Renewable Fuels Association
Mr. Chairman, honourable members, thank you for inviting the Canadian Renewable Fuels Association to appear before you today.
The CRFA is a non-profit organization with a mission to promote renewable transportation fuels through consumer awareness and government liaison activities.
Our membership is comprised of representatives from all levels of the ethanol and biodiesel industry, including grain and cellulose ethanol producers, biodiesel producers, fuel technology companies, and agricultural associations.
It should go without saying that we are very supportive of the government's commitment to require 5% average renewable content in gasoline and diesel fuel, such as ethanol and biodiesel, by 2010. We're also encouraged by the warmth with which this commitment has been received by various provincial and territorial governments. We believe that all levels of government--federal and provincial, from one coast to the other--are not only interested in the environmental benefits associated with blending renewable fuels; they are also interested in the economic benefits associated with producing these fuels domestically.
To this end, I'd like to make you aware of a comprehensive policy consultation process we are undertaking with our members to look at what barriers exist to the development of a vibrant renewable fuels industry in Canada, and what economic and regulatory instruments can be used to address these barriers.
Our final report is scheduled to be released on July 24, prior to the first ministers meeting in St. John's. So without prejudicing the outcome of that consultation process, I'd like to say in general that we need to have a stable economic and regulatory environment that is competitive with those found in neighbouring jurisdictions if we want to have these ethanol and biodiesel production facilities required to meet the 5% commitment built here in Canada.
This will be no small feat. Alain and CPPI correctly laid out that the United States and other countries have a big head start over our industry, and moreover, depending on how you do the calculation, the 5% requirement could be as high as three billion litres of renewable fuels. Today our annual production is only about 300 million litres, so you're talking about a tenfold increase.
Thankfully we're not starting from a standstill. A number of ethanol plants in the late stages of construction are going to be coming online to meet the ethanol requirements in Saskatchewan and Ontario, and that will take our industry to about 800 million litres by early 2007. These plants are being built not just by companies that are solely in the renewable fuel industry, but also by Suncor and Husky. They're being built not just in mandated provinces--one of the facilities is in Quebec.
So Canada is not alone in predicting such a huge growth curve for this industry. As impressive and large a number as three billion litres is, it's only a drop in the bucket in the context of the North American market, which is expected to exceed 38 billion litres by 2010. The U.S. industry has over 100 ethanol plants in operation today, with 30 more under construction. The market for ethanol in the United States, at 38 billion litres, will more than double over the next two years.
Similarly, the market for biodiesel is expected to quadruple to about two billion litres over the same period; however, that's obviously a much smaller number and a much smaller market. This provides a potentially huge, growing, and lucrative market for Canadian renewable fuel production, and not just in Canada. There's an opportunity to produce these fuels and sell them in the U.S. market as well. However, if we fail to get that competitive and stable economic and regulatory environment established, it's far more likely that you'll see Canadian grains and oilseeds shipped to U.S. facilities, and the 5% requirement met with imported renewable fuel.
It is our belief and that of our members that the 5% renewable fuel standard can be met with Canadian ethanol and biodiesel by 2010. Furthermore, we believe it can be done in a way that respects our internal and international trade agreements--as CPPI has pointed out, that is not the case in some of the provinces today--gains the support of partners in the petroleum industry as well as the automobile sector, and includes strong participation by primary agricultural producers.
Let me close by saying that there are great social, environmental, and economic benefits for having a vibrant renewable fuels industry in Canada, but to realize them we need to get the policy right. We're working very cooperatively with the government in helping to do that right now. We're pleased with the process and the timelines that are under way. We would be more than happy to come back after our internal consultation process is over at the end of July, to give you more details in terms of exactly what mechanisms we think would be best for achieving those ends.
Thank you very much.