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A storage container of ethanol at the Iogen plant in Ottawa. (File ohoto)

Dave Chan

The Conference Board of Canada has produced a report that blows away some of the long-held objections to ethanol.

Myth 1: Ethanol contains less energy than is required to produce it. The report shows corn- and grain-based ethanol contains from 1.3 to 2.2 times more energy output than input.

Myth 2: Ethanol is a scam run by farmers and refiners to soak up government grants. The report says taxes paid by the industry to date at least equals the subsidies and grants and that's apart from reducing a huge quantity of greenhouse gas.

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The report, with the exciting title Ethanol's Potential Contribution to Canada's Transportation Sector, is as dry as dust and will require much coffee for a normal reader to get through its 68 pages. As well, it must be pointed out, the report was paid for by the ethanol industry lobby group – the Canadian Renewable Fuels Association. However, economist Len Coad, its principal author, swears it's objective and on the level. It took him half a year to research and write it and then another half a year was spent getting it reviewed by independent experts. It is meticulously footnoted with plenty of back-up for facts presented.

The most interesting thing that struck me is that traditional corn- and grain-based ethanol is getting near the end of the road as a gasoline substitute. By that, I mean that the Canadian industry can just about keep up with the addition of 5 per cent to 8.5 per cent (E5 to E8.5) ethanol to gasoline required by governments, but that's about it. We already import ethanol from the United States in spite of the ethanol industry paying Canadian farmers about a billion dollars a year.

Increasing crop yields should allow farmers to grow enough corn and grain for ethanol to meet government mandates on the arable land currently in production. However, then the system gets maxed out. To get more ethanol and get away from the land use and food for fuel objections, the industry has to make "cellulosic" ethanol work. Fortunately, "the ethanol industry is poised to make major breakthroughs in second-generation technologies," says the report.

Coad, director of energy, environment and technology policy at the Conference Board, told me, "What we see is a commercial demonstration plant in Ottawa for cellulosic ethanol – Iogen. We see the Enerkem project in Edmonton using the organic component of landfill waste. They're using a thermo-chemical process to produce a synthesis gas and then produce ethanol from that.

"We're seeing lots of research and development activity across the country in terms of converting wood waste into ethanol. We're seeing Canadian firms partnering with world leaders in enzyme technologies to convert cellulose or lignin into ethanol efficiently. Canada is among the world leaders in that next generation of technology."

That's all very encouraging, but Canada doesn't have any cellulosic ethanol plants working commercially at the moment. And Canada also lacks any king of retail infrastructure to get E85 ethanol to the tens of thousands of Canadians who own flex-fuel cars. It costs about $70,000 to install E85 pumps at a gas station and there are next to none in service now. For instance, the new service stations along the 401 have zero E85 pumps.

Canada might be a net exporter of oil, but most of the stuff refined and burned in Ontario, Quebec and Atlantic Canada is imported. There is plenty of room for more Canadian-made ethanol and bio-diesel to replace foreign oil.

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The success of second-generation technologies could clear the way to significant reduction of oil imports and the resulting economic advantage to Canada.

Plus it helps that some of the myths perpetrated by the anti-ethanol lobby (i.e. Big Oil) are being swept away.

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