Mr. Chairman, on behalf of GreenField Speciality Alcohols, thank you for the opportunity to present our views on the Canada-EU comprehensive economic and trade agreement.
Let me begin by telling you a bit about GreenField.
We are the leading specialty alcohol producer in Canada, with a focus on corn-based bulk industrial alcohol, packaged alcohol, and fuel ethanol, as well as associated agricultural co-products.
In addition to being the largest producer of fuel ethanol in Canada, we are also the market leader in the production of high-quality industrial alcohol for both domestic and export markets. As well, we are a major producer of grain neutral spirits for the beverage alcohol industry in Canada, the United States, and selected markets around the world.
Our company also manufactures and sells co-products from the alcohol process, including distillers grains, corn oil, and carbon dioxide.
GreenField owns and operates four state-of-the-art manufacturing plants in Ontario and Quebec. All plants are strategically located close to the corn supply. We process more than 60 million bushels of Canadian corn each year. These facilities produce a combined annual output of 650 million litres per year, of which 125 million litres is industrial beverage-grade alcohol and the balance is fuel ethanol.
We are known as one of the top producers of specialty alcohols in North America. Our specialty alcohols are found in a wide range of consumer applications and products. You can find it in paints, solvents, inks, detergents, repellants, pharmaceuticals, disinfectants, and in the food and flavour preparation industry. As well, of course, it is very common as grain neutral spirits used in the production of vodkas and alcoholic coolers and for beverage fortification.
Through its membership within the Canadian Association of Importers and Exporters, GreenField has been actively following the progress of CETA. We are encouraged that the European Union and Canada signed an agreement in principle on CETA last October and look forward to CETA coming into effect. We support the idea of free and open trade between Canada and Europe.
In particular, we have no reservations about the removal of the Canadian tariffs on European alcohol, fuel ethanol, or related co-products coming into Canada. We believe that we are low-cost producers within the global marketplace and are fully prepared to compete fairly on price, quality, and service.
To date, GreenField has had limited export activity into Europe, principally due to the existence of both tariff and non-tariff barriers. The removal of the EU duties on our product—non-denatured alcohol is currently, in euros, at 0.19 per litre and denatured alcohol at 0.11 per litre—would be a welcome first step in advancing our ability to access the EU markets. However, it should be noted that the elimination or the phase-out of the EU tariffs will not in itself lead to any meaningful level of GreenField exports into the EU. Certain non-tariff barriers will need to be addressed and overcome before we truly see open trade of our products.
By way of example, EU Regulations 1829/2003 and 1830/2003 are regulations that deal with genetically modified foods and ingredients. These regulations would apply to any of our alcohol products that might find their way into the food industry. Any products that are derived from a genetically modified organism, such as hybrid corn, cannot be imported into the EU without EU approval, which then requires traceability and mandatory labelling of GMOs also on the final consumer products. Alcohol for human consumption that is derived from genetically modified corn would be considered to be food produced from GMOs.
To make matters more complicated, the responsibility for enforcement of EU regulations for imported GMOs falls on the member states within the EU, each of which has its own food and safety and regulatory bodies.
In our case, the majority of the corn grown in Ontario and Quebec is derived from hybrids and traits that are not presently approved in the EU.
Even though they are perfectly safe and approved for use in food and feed in Canada, the United States, and Asia, there is just no practical way we can operate our plants by trying to source and certify the use of identity-preserved, EU-approved corn hybrids. This disparity between the GMO regulations will continue to act as a non-tariff barrier for many of our alcohols that we produce here in Canada.
Another example of a non-tariff barrier is the European regulatory initiative called registration, evaluation, authorization, and restrictions of chemicals, better known as REACH. A number of our denatured industrial alcohol products are used as chemical intermediaries and require the addition of approved denaturants to meet end-use specifications. Any denatured alcohol products that we wish to export to the EU would be required to be registered under REACH. Complying with the registration and labelling and protocols contemplated under REACH will be extraordinarily complicated and expensive, so you can see that we will continue to have challenges accessing the EU markets unless there is some harmonization of regulations between Canada and the EU.
We are encouraged that the CETA framework contemplates the establishment of a working group to examine biotech issues, such as GMO, with the objective of achieving such harmonization.
Before I conclude my remarks, I would like to comment on the prospects for exportation of fuel ethanol to the EU. Presently, all of our fuel ethanol production is sold in Canada to Canadian oil companies that blend ethanol to comply with federal and provincial renewable fuel standards. Canada is short of fuel ethanol and is a major importer of ethanol from the United States, importing about 1.2 billion litres of its total three billion litres consumed last year. With this structural supply imbalance, it is unlikely that we would be selling significant quantities of fuel ethanol into the EU in the near future.
On the other hand, the prevailing price for ethanol in the EU is higher than in North America, reflecting higher costs of production due to economies of scale, higher feedstock costs, and higher energy input costs. Access to this premium EU market could prove to be important in the future. Currently the EU imports about 20% of its 5% mandated fuel ethanol requirements. There is support in Europe to increase the renewable content in their transportation fuels to 10%, and some European auto manufacturers are recommending a 20% ethanol blended standard by 2025. Long term, there is a future market for Canadian-produced biofuels like ethanol in the EU markets.
Members of the committee, I would like to conclude my remarks by commending the government on bringing the Canadian-European trade deal forward. Through our membership of the Canadian Association of Importers and Exporters and the Canadian Renewable Fuels Association, we at GreenField Speciality Alcohols look forward to staying informed of the progress of CETA and to providing our input.
Thank you.