Agriculture Committee on Feb. 26th, 2008

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

You represent the distributors. Many people working in the field of biodiesel and ethanol production have told us how hard it is to ensure that consumers have access to these alternative fuels at the pumps. Does your association genuinely have the will to make that happen? Personally, I manage to fill my car's tank with ethanol, but I have to search around because not all service stations sell ethanol fuel. Does your association have a plan in place to make these alternative fuels available at the pump?

[Gilles Morel]

I cannot speak for every one of our members in every region because they have their respective policy directions. However, I would point out that the CPPI represents two of the three biggest producers and distributors of ethanol fuel in Canada, that is Suncor, which operates a very large ethanol production plant in Ontario, and Husky, which has plants in two provinces and supplies ethanol fuel to most service stations.

We want to stress that quick passage of Bill C-33 is critical because we must be in a position to make the necessary retrofits so that renewable fuels can be blended at service stations, distribution terminals and refineries. That is a relatively easy process in the case of ethanol, since automobile technology allows for up to 10%, and sometimes more, of the content of blended fuel to be ethanol. This objective, while not readily attainable, is feasible thanks to technology, our understanding of the process and science.

Regarding biodiesel fuel, there are a number of technical considerations that must be examined. That explains why we are working in conjunction with the Canadian Renewable Fuels Association, the Canola Council of Canada and associations like Climate Change Centre to establish parameters. As far as the consumer is concerned, we are the last step in the process. We need to ensure that the product sold at the pump meets consumer expectations and needs. A number of technical challenges stand in the way of that goal.

As Mr. Carrignan said earlier, we are scheduled to hear from NRCan and Environment Canada representatives in a few minutes' time to work on developing other scientific programs with a view to determining which components continue to be problematic and need to be addressed as quickly as possible. We have said that we support a reduction of between 2% and 5%, as well as the passage of the bill. I hope that answers your question.

[The Chair, Conservative, James Bezan]

Merci. Time has expired.

Mrs. Skelton, the floor is yours.

[Carol Skelton, Conservative, Saskatoon—Rosetown—Biggar, SK]

Mr. Samson, I understand you're from Ontario. Have you been to Saskatchewan and talked to Saskatchewan agrologists lately?

[Roger Samson]

In fact, I'm invited to speak at the agrologists meeting next month. But--

[Carol Skelton, Conservative, Saskatoon—Rosetown—Biggar, SK]

I want a very short answer. My time is very small.

First of all, my constituents are not losers, sir. I didn't appreciate what you said, and I find it offensive that you did that. As someone who comes from Saskatchewan and has a large rural population, I find some of the statements in your presentation questionable. Most of our Saskatchewan farmers, because of erosion over the years, have gone to no till. Basically they're the best environmentalists in this country.

I see a lot of provinces with huge erosion problems. Unless western Canadian farmers have some rules and regulations changed, they are not going to be growing wheat. They will go to lentils, canola--all the other things that they can grow.

You know, if biofuels and ethanol become a success story, which means that farmers will become more industrial and become input suppliers, would you welcome this? Or are you attached to a cheap food policy and the traditional role of agrologists as food suppliers?

[Roger Samson]

Just to give you a bit of my background, I've worked for--

[Carol Skelton, Conservative, Saskatoon—Rosetown—Biggar, SK]

I understand; I've read your background. I want a very short answer.

[Roger Samson]

I'm just saying that I think farmers are winners for staying in farming, because it has been very difficult. When I made that comment, I was referring to the greenhouse gas offset costs at $375 a tonne. You have to admit, that's a little bit high.

[Carol Skelton, Conservative, Saskatoon—Rosetown—Biggar, SK]

Well, I think, sir, that western Canadian farmers.... You talk about the shortage of wheat, saying it's going to ethanol and all that. There has been drought in Australia. There has been frost in China. Huge things have happened around this world. Saskatchewan grain farmers haven't had good crops for years. I mean, you made some statements there that are false. You're scaring people away from this industry.

I want to go back to congratulate the gentleman about the E85 and everything. In my city of Saskatoon, we have buses that run on E85 fuel. The mayor and the council are very excited about it. I'm really interested in hearing more about the diesel biofuel projects that are going on in Alberta.

Mr. Moser, in your summary you made some very valid points. I would really like you to give us those again, please.

[The Chair, Conservative, James Bezan]

We'll start with Mr. Nantais first and then we'll go to Mr. Moser.

[Mark Nantais]

I have spent some time with the Saskatchewan government. They are very supportive of an appropriate ethanol program.

We have to be very careful in what we say about the feedstocks for grain ethanol as they relate to food prices and things such as that. There are just as many studies showing that it's not the case that it's been responsible for the increase in shortages of food. In some cases.... There's the infamous taco story from Mexico. My understanding is that it is more trade- and tariff-related than anything else.

We're suggesting that when you have an opportunity to reduce greenhouse gas emissions by half relative to gasoline and you have more than 100,000 of our vehicles out there now that can run on it, if we don't take advantage of it, this is a real missed opportunity. We've been talking with the provinces in the prairies about an ethanol highway across Canada, where it makes sense to do so. It's the same with biodiesel. I'm driving a clean diesel vehicle now that can run on biodiesel, and it's great.

So I think there are real opportunities here. But we have to be very careful, because a lot of these feedstocks are feedstocks for livestock. You can create the ethanol from them and can still use the mash, if you will, for food for the livestock. But you can use the waste from it, through a cellulosic process, to create ethanol as well. This is where we have to go eventually: to all the opportunities that are showing themselves now—they're evolving—that relate to cellulosic ethanol.

Again, we have a real opportunity here. When you look at the global demand for vehicles and the energy that will be required to power those vehicles, we have to look to diversifying the fuel mix as well as we can.

Globally speaking, demand right now is 71 million vehicles. It's going up to probably 91 million vehicles in ten years. We have to find some way to power those vehicles in a clean and environmentally responsible way.

[The Chair, Conservative, James Bezan]

Mr. Moser, if you can, answer in about 30 seconds.

[B. Todd Moser]

To sum it up, biofuels are good for Canada and good for Canadians. They help the environment and help the economy. It's just generally a great initiative, and we have the structure in place to make this work.

The biggest challenge faced.... I get calls every week in my office as a pioneer in this industry from consumers who want access to biodiesel. I tell them that if they can take a rail car full of it, then I have lots for them. But practically speaking, they're looking for a blend.

The sad reality in Canada right now is that there is very little infrastructure, which is why quick passage is necessary, as was alluded to by my friends at CPPI. They need to put in the infrastructure to make this happen.

[The Chair, Conservative, James Bezan]

Thank you.

Batting cleanup today again is Mr. Atamanenko.

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

Thank you very much for sharing your expertise, gentlemen.

I think one thing we have to understand is that from the point of view of agriculture, anything that helps farmers is a good thing, and there are aspects of this bill that will make life easier for farmers. However, this is not an agricultural bill; it's an environmental bill.

I just want, first of all, your comments, Mr. Samson, and hopefully we can get some reaction here. You mentioned that according to the research you've done, it won't appreciably reduce greenhouse gas emissions, and that it is evident that there is no solid scientific support that the four million tonnes of carbon dioxide anticipated by this legislation will be achieved.

We've seen recently--I believe this month or last month--that the U.K. has put a moratorium on biofuels. There are a dozen or so U.S. scientists questioning the direction in which the United States is going with its corn-based ethanol program.

I'd like some comment on that. We're saying that biofuels are environmentally friendly and that they reduce greenhouse gases. Yet your research and other research is saying that maybe when you take everything into consideration, this is not quite the case.

I'm going to make one more point, and then I'll open it up for some comments.

Your second point is that it's not a made-in-Canada solution, and that it will primarily support markets for U.S. corn growers, and also that we'll open up more LNG for intense corn ethanol processing.

Yesterday we talked about the idea that this bill could be an insurance for our farmers, that in times of trouble, at least there would be somewhere to go. I think Manitoba is setting aside 10% of their arable land for biofuels production from low-quality wheat, hoping to get farmers involved in this, especially when times are rough.

With the high prices for wheat and canola, it's possible that now farmers may not want to take advantage of the biofuel industry. So the question is, where do we get the feedstock? I'm wondering whether you foresee that we will in fact become importers of cheap feedstock, not only from the U.S. but from the southern hemisphere, where we've seen this to be devastating to forests and to farmers forced off their land.

The question is, can we keep the biofuel industry as a made-in-Canada solution? One of my amendments to this bill is that we keep it made in Canada. Any feedstock for the biofuel industry in Canada has to be Canadian.

I'll stop there and ask for your comments, and others can perhaps comment on what I've said.

[Roger Samson]

It seems to me that the drivers of the bill are greenhouse gas mitigation and rural development. Liquid fuels are not the only way to support farmers. We've worked on this for 17 years, longer than anyone in Canada, to see how to use farmland to mitigate greenhouse gases efficiently and support demand enhancement for the farm sector. We came up with a solution that's eight to ten times more effective than what Bill C-33 is focused on.

I would like you to look at these other options, and look at the budgets you have to spend on biofuels, and perhaps say that we should scale back the two and five to smaller numbers, develop biogas for power, and develop switchgrass pellets for commercial energy. Thermal energy is our biggest energy need in Canada, and it's the lowest-cost solution that we've found in that report.

[B. Todd Moser]

I'd like to respond if I could.

You asked two questions.

Is it an insurance for farmers? I can speak directly for our organization. The premise when we got involved with biofuels was quite a bit different at the time. We were dealing with the risk of BSE and some key markets for our animal by-products getting closed down. That was a major concern, because we exported a lot of that material. We had to because of the supply imbalance in Canada.

Biofuels provide our organization the opportunity for domestic supply, which is a much more stable environment for me and my products than is living at the vagaries of export economics. So yes, I think it is something of an insurance policy for both oilseeds and animal by-products in terms of what biofuels can do in establishing a domestic market.

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

Can we sustain our biofuel industry with domestic feedstock?

[B. Todd Moser]

I believe we can, particularly at the pace we're contemplating on going here, in terms of 5% ethanol, 2% biodiesel. The other programs that are in place.... It's important that we recognize when we put the policy framework in place that we want to develop a domestic business but we are exposed to a worldwide market.

I really applaud the federal government's approach in terms of the renewable fuel standard, particularly at the levels being proposed; the ecoENERGY for Biofuels program, which provides some financial assistance to get this business off the ground; and the ecoABC program, which provides the capital support. I think they've used a very logical approach to ensuring that we have a made-in-Canada solution.

[The Chair, Conservative, James Bezan]

Thank you.

Time has expired. I know when you're having fun it goes by quickly. Anyway, we are going to wrap it up here and bring in our next group of witnesses. I want to thank all of you for taking the time out of your busy schedules to come in and provide us with your input.

With that, we're going to suspend for five minutes just to allow our room to switch around.

[The Chair, Conservative, James Bezan]

We'll bring this meeting back to order and start our clause-by-clause.

Joining us, as witnesses, are Department of Environment officials. We have John Moffet, director general, legislation and regulatory affairs; Bruce McEwen, chief, fuels section--so this is his baby; and Rachel Baxter, counsel, legal services. Welcome.

We also have, from Agriculture and Agri-food Canada, Peter Neufeld, policy economist, strategic policy branch, and Greg Strain, acting executive director, food safety and quality policy.

Welcome, all of you.

[Guy Lauzon, Conservative, Stormont—Dundas—South Glengarry, ON]

Mr. Chair, before we start, I wonder if we could get a bit of a timeline as to how we're going to proceed, until when, and what you're thinking.

[The Chair, Conservative, James Bezan]

I think we'll work at this until shortly after 12 o'clock, when we will suspend to join the young farmers for lunch on Queen Street, and if we need to, we will come back and pound away at this until it's done, or until the budget speech anyway.

Agreed?

[Wayne Easter, Liberal, Malpeque, PE]

Yes, we agree.