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Government Bio-energy Policy and Programs
By the Alberta Agriculture and Rural Development. This document is part of the Capturing Feed Grain & Forage Opportunities 2007 Proceedings - "Farming for Feed, Forage and Fuel".Key Points
- The policy drivers leading to the development of a bio-energy sector in Alberta are wide ranging and global in scope.
- The corporate sector is rapidly responding to a “carbon constrained” future and bio-energy development is expected to play a significant role.
- Alberta is uniquely positioned through its strong position in energy, agriculture and forestry to engage in bio-energy development in the future.
- The Government of Alberta has taken a Cross Ministry approach to both the development and delivery of bio-energy programs in the province.
The Energy Economy is evolving and although it will remain petroleum based for the foreseeable future, it is set to diversify in a number of areas. The fact renewables may command 5, 10 or 15 percent of the future market is not as important as that the growth and immediate investment will likely be significant in the near term in the province.
Consumers are increasingly aware of the impact energy development is having on the environment and are actively questioning the sustainability of the future impending growth. Consumers (both residential and industrial) desire a relatively low cost competitive energy supply and at the same time a desire to reduce their respective impact or “carbon footprint”. The market place is increasingly segmented along the continuum of low cost versus zero emissions and it has caused the energy production sector to significantly diversify to meet this market challenge. The energy sector is being pulled by these two somewhat competing drivers as depicted below.
| Traditional Energy Sector Low Consumer Cost – Higher Carbon |
Alternative Energy Sector High Cost Low Emission – Lower Carbon |
|---|---|
| Coal Conventional Oil Synthetic Crude Coal Bed Methane Shale Gas |
Wind Solar Bio-energy Geothermal Hydro Gasification |
| New technology reducing emissions | New technology reducing cost |
| Global Scale and infrastructure | Local scale and infrastructure |
The energy sector is rapidly changing to accommodate the evolving marketplace. In Canada and indeed Alberta the energy sector has lagged other jurisdictions because the key driver of “low cost” was paramount in both the domestic market as well as in key export markets. The traditional petroleum products were best positioned to provide the low cost supply. This is rapidly changing however as other jurisdictions are now heavily diversified in their energy portfolio and are increasingly more competitive and better positioned to meet the emerging environmental drivers. Environmental considerations are rapidly becoming part of the value quotient in addition to the functionality and cost. This is clearly reflected in the emergence of the “low carbon standards” being developed and adoption of life cycle analysis applications being considered. The North American marketplace is no longer about simply meeting the energy requirements of its citizens. The energy products are being scrutinized for environmental impact, sustainability as well as economic benefit and ultimately cost.
Developing an effective bio-energy policy framework is complicated by the fact this area impacts a number of previously independent commodity sectors. Bio-energy development has acted as a catalyst to lead to the convergence of these sectors. The difficulty arises when aligning the potentially conflicting objectives within each of these sectors such as:
- Energy - competitiveness and quality
- Agriculture / Forestry – new market opportunities
- Environment – climate change and sustainability
- Rural Development – family farms and rural sustainability
- Economic Development – shift away from commodity to value add further processing
The consumer products from this emerging sector are destined to trade in the energy market place. Policy makers are faced with a number of over arching macro drivers impacting the energy market place going forward.
Carbon and climate change
- Carbon footprint – all sectors are responding to societal demand to reduce carbon release
- Life Cycle Analysis will be a key driver in the future energy market
Demand
- Competitive pricing – all products compete in a highly competitive commodity market
- Demand is increasing – global growth in spite of efficiency improvements
Supply
- Non-renewables are getting more expensive – extraction costs are rising
- Continuity and consistency of supply – commercial scale is a key consideration
- Market segmentation – distributed power sources are segmenting the supply
Technology
- Cost of renewables – biotechnology and process improvement are reducing the cost
- Non-renewables – developing or adopting technology to dramatically reduce carbon
Investment
- Capital intensive - $47 Billion invested in the oilsands in Alberta in recent years - about $80 billion will be invested in oilsands by 2011 in Alberta
- Clean Tech Funds – rapid move by main stream institutional investment houses to support emerging renewable energy sector
The Government of Alberta developed the following Bioenergy Policy Framework and strategies released in October 2006:
Purpose:
- To facilitate a supportive investment and market climate enabling the utilization of Alberta’s biomass feedstock to produce sustainable bioenergy capitalizing on business and environmental opportunities in a distributed manner.
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Desired Outcomes within Alberta:
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| 1. | Alberta is recognized as an integrated quality supplier of choice in a diversified, distributed energy production system utilizing sustainable biomass energy biorefining technologies. |
| 2. | Provincial bioenergy product manufacturing and use leads to environmental solutions for emission reductions that mitigate land and water impacts like; biosolids, livestock and meat processing waste, septage, municipal solid waste or industrial sludge. |
| 3. | Provincially distributed biorefining energy-processing facilities scaled to be globally cost competitive in the conversion of Alberta's primary biomass feedstocks. |
| 4. | Achieve potential rural, economic and environmental sustainability targets through adoption of global biorefining technology applications and innovation. |
| 5. | Long-term sustainable access created to local and global markets for bioenergy products. |
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Critical Policy Objectives:
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| 1. | Create market pull by integrating renewable energy products into the existing market place. |
| 2. | Attract self-sustaining investment in the medium term to build globally cost competitive production and biorefining processing capacity. |
| 3. | Development that potentially contributes to rural development. |
| 4. | Support new technology development and adoption to meet petroleum market needs in the short term and emerging green chemical market in the longer term. |
| 5. | Bioenergy product standards meet or exceed customer quality expectations. |
| 6. | Environmental benefits are quantified and credited to appropriate production sector. |
| 7. | Strong consumer awareness of bioenergy impact and benefits to result in well informed demand base and community-based decisions. |
Current Programs Available
Alberta
- The $239 million Bio-energy strategy announced in October 2006 supports expanded production and marketing of bio-energy and bio-fuel products. Three programs are in place:
- the Bio-refining Commercialization and Market Development Program;
- the Bio-energy Infrastructure Development Program; and,
- the Renewable Energy Producer Credit Program.
- Applications can be found on the Ministry website for Alberta Energy
Canada
The ecoAgriculture Biofuels Capital Initiative (ecoABC)
The ecoABC Initiative is a federal $200 million four-year program ending on March 31, 2011 that provides repayable contributions for the construction or expansion of transportation biofuel production facilities. Funding is conditional upon agricultural producer investment in the biofuel projects, and the use of agricultural feedstock to produce the biofuel. Agriculture & Agri-Food Canada (Programs & Services)
ecoENERGY for renewable power
The initiative will invest $1.48 billion to increase Canada's supply of clean electricity from renewable sources such as wind, biomass, low-impact hydro, geothermal, solar photovoltaic and ocean energy. It will encourage the production of 14.3 terrawatt hours of new electricity from renewable energy sources, enough electricity to power about one million homes. ecoEnergy website
Biofuels opportunities for producers initiative
An initiative under the Advancing Canadian Agriculture and Agri-Food (ACAAF) Program, is designed to help farmers and rural communities hire experts who can assist in developing business proposals and undertake feasibility and other studies necessary to create and expand biofuels production capacity involving significant (greater than one-third) ownership by agricultural producers.
An additional $10 million was provided to accommodate a second round of BOPI. Once again, the Industry Councils that administer the ACAAF Program will be delivering this additional BOPI funding Biofuels Opportunities for Producers Initiative.
Federal renewable fuel standard
The Federal Government intends to develop and implement a federal regulation requiring renewable fuels. This will be done under the Canadian Environmental Protection Act, 1999 (CEPA 1999). Amendments to the Fuels Division of CEPA 1999 are proposed under Canada's Clean Air Act and are needed for an effective and efficient regulation.
The regulation will require an average annual renewable fuel content of at least 5% calculated based on the volume of gasoline, commencing in 2010. The requirement could be met by renewable content in either the gasoline or diesel/heating oil pools. The Federal Government also intends to put in place an additional requirement for an average 2% renewable fuel content in diesel fuel and heating oil, upon verification of renewable diesel fuel use under the range of Canadian conditions. This is intended to come into effect by no later than 2012.
