Fueling the Future

Today (28th August) two significant energy policy stories hit the media in Atlantic Canada.   Both relate directly to Cape Breton’s recognised leadership in sustainable energy research, practice and policy-making.  First – and very close to home – there was the announcement of the Verschuren Centre contract for assessing prospects for hydraulic fracturing in Nova Scotia.  Second is the release of a much awaited report from the Sydney based Atlantic Council for Bioenergy Cooperative (ACBC): Fueling the Future; Atlantic Canada’s Bioenergy Opportunities Project [1].

The hydraulic fracturing study will run well into 2014, and will doubtless be the subject of more than one of these blogs and a good deal of social and media commentary along the way.   So for today I want to touch on the prospects for bioenergy in our region that are described in today’s ACBC report.

The Global Context

Worldwide interest in biofuel production continues to grow – from corn and sugar based ethanol production in North America and Brazil to biodiesel production in the EU.   According to the Worldwatch Institute, global biofuel production exceeded 100 billion litres for the first time in 2010 due in large part to gasoline blending mandates in countries like Brazil, Canada, China and the United States.  In Brazil (more than 16 million vehicles) and the US (more than 10 million vehicles) the ‘flex-fuel’ automobile market is also booming.  Even tiny Sweden (200,000 vehicles) and slightly larger Canada (600,000 vehicles) are starting to match vehicle and fuel supply opportunities, although the fuelling support infrastructure for gasoline with higher biofuel content needs to expand.

As described in the ACBC report, 52 countries around the world now have biofuels mandates, of which 27 are in the European Union where the Renewable Energy Directive (Directive 2009/28/EC) requires 10% renewables content by 2020 in all member states (7% from biofuels).

Policy Lessons for Atlantic Canada from the Americas

In the US, the Environmental Protection Agency’s Renewable Fuel Standard requires the blending of 36 billion gallons of renewable fuels into the fuel supply by 2022.   The policy is broadly supported by mainstream US environmental organisations such as the Worldwatch Institute and the Sierra Club, subject of course to rigorous life cycle analyses.  As the Sierra Club notes: “In the case of biofuels, this “seed to tailpipe” calculation would include: the crop being utilized as fuel; the kind of land it’s planted on; chemical fertilizers and pesticides applied; harvesting techniques; processing; refining; transportation and emissions after the fuel is burned. [2]

And this is surely the point.   While the world waits for the development of ‘advanced biofuels’ that are less land-intensive from an agricultural production perspective – for example oil producing marine algae fed on sustainably produced sugars from certified sustainable forests –  we need to be developing the infrastructures to decarbonise road and air transportation and domestic oil consumption for heating.  And we should be doing it with the kind of standards that are advocated by mainstream environmental commentators.  Given the environmental and economic opportunity, we should not be waiting for the perfect marriage of feed stocks, fuels, technology and infrastructure before proceeding.

I have no doubt that the US and Brazilian strategies will be seen in due course as smart ‘first mover’ transitions, harnessing a local natural resource (sugar or corn) to an industrial opportunity (automobile and motorcycle manufacturing) with subsequent short term and long term strategic gains for their economies.  And when algal biofuels or other advanced biofuels emerge one day in all their sustainable glory, the US and Brazil will be ready to plug and play the new fuels into their own transportation systems while exporting flex fuel automobiles and aeroplanes to Latin America, Europe and beyond.  This is what the effective integration of energy policy, environmental policy and industrial policy looks like.

The ACBC Report

Among the most compelling arguments presented by ACBC in advocating the development of a ‘local’ biofuels capability in Atlantic Canada is the prospect of US (and therefore Canadian) moves to a 10% and perhaps even a 15% mandate for biofuels in the renewable fuels standards in coming years.  This will be especially likely if the targets can be ascribed increasingly to ‘cellulosic biofuels’ ie biofuels based on crops that do not compete at all with food crops.[3]  The current 22 biodiesel and 22 ethanol plants across Canada would then need to double in capacity (either in size or numbers) to accommodate growth in demand from 600 ML per annum today to 1200 or even 1800 ML per annum. Presently there is just one small demonstration plant in Atlantic Canada – in PEI – producing just 0.3 ML per annum.

Based on economic analysis commissioned from Gardner Pinfold, ACBC asserts that the local demand for a 325 ML biofuels industry (250 ML ethanol and 75 ML biodiesel) will require the building of 13 plants in the region with a $1.49 bn annual boost to the economy and the creation of more than 9000 jobs.

But unless the region amends current policy, we will miss out on this opportunity altogether.  Not only do we not require blending, we inadvertently allowed the creation of our very own loopholes, for example the exemption permitted for the (soon to close) Imperial Oil refinery in Dartmouth.

The Future

One of the challenges that smaller provinces like ours always face is the need to think and act like larger jurisdictions when it comes to strategic investments in energy infrastructure.  The Maritime Link debate exemplified the paradox beautifully.   Only by thinking strategically and long term and partnering with Newfoundland and Labrador are we able to participate in the environmental, social and economic benefits of access to the secure and stable energy resource that the project promises.  And yet the bold vision the Maritime Link project unleashed serious provincial political controversy.  A weaker government may have ducked the debate altogether and less committed investors may have already walked away.  In theory that could still happen, shutting us out from access to regional and international market places for a generation.

Similarly, if we are to realise the environmental, social and economic benefits of biofuels in our region, effectively diverting $1.5bn GDP and 9000 jobs from the rest of Canada (from where we will import 325 ML biofuel otherwise), we must put in place the regional policies that will enable the change.  And we must do it with the consistency and firm vision that effective change requires, which means working in close unison with our sister provinces on regulatory reform within a regional energy strategy linked to measurable industrial, environmental and economic development outcomes.

[1] Interestingly, in 2003, together with Jane Thomson I authored a chapter in a book of the same title: Fueling the Future: How the Battle Over Energy Is Changing Everything.  Edited by green investor Andrew Heintzman and TV newsman Evan Solomon and published by Anansi, this award winning book and TV project explored numerous opportunities for innovation and ingenuity in Canada’s energy future.

[2] http://michigan.sierraclub.org/Low%20Carbon%20Fuel%20Standard-position%20statement.pdf

[3] This is the premise behind the establishment of the CelluFuel plant on the former Bowater site Brooklyn Mill in Queens County.