Biodiesel output to go south of border

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Royce Rostecki's Greenway Bio-diesel has obtained licence for Manitoba's first commercial biodiesel plant (WAYNE GLOWACKI / WINNIPEG FREE PRESS)

Manitoba has licensed its first biodiesel plant, bringing the Doer government a step closer to its goal of becoming the first province to mandate the use of the green fuel later this year.

Earlier this year, Greenway Bio-diesel, a subsidiary of Speedway International Inc., was the first company to meet stringent Manitoba standards for biodiesel production.

But its owner, Royce Rostecki, says that as things stand now, he won't produce a single litre for the local market -- he will sell all his production from the new St. Boniface plant to Minnesota, where his U.S. customers receive a $1-per-gallon blending subsidy.

"If we were on a level playing field, we would be winning the race (to produce for the local market), but because everyone else is getting subsidized, it has put Manitoba producers at an insurmountable disadvantage," Rostecki said in an interview.

Greenway Bio-diesel is capable of producing 20 million litres of product a year -- fulfilling a legislative prerequisite for the implementation of a biodiesel mandate in Manitoba.

During the last provincial election, Premier Gary Doer promised a five per cent biodiesel mandate for 2010 that would create demand for 40 million litres of the biofuel, which would be blended with petroleum diesel. But government officials have since indicated that the province intends to introduce some level of mandated use before the end of 2009.

Manitoba producers -- a second one at Arborg is currently working to meet production specifications while a third plant is under construction near Beausejour -- have been shut out in their bid for federal subsidies that have gone to other provinces, Rostecki said.

Meanwhile, producers in other provinces -- notably Ontario and Alberta -- as well as in the United States all have access to more lucrative subsidies, he said. He emphasized that he has no quarrel with the Manitoba government -- he just doesn't think he will be able to compete against richer subsidies offered to competitors elsewhere, especially if they're also able to tap into federal incentives.

Manitoba has announced it will not apply its road tax to biodiesel, a savings of 11.5 cents a litre for producers. But Alberta, for instance, pays a direct subsidy of up to 15 cents a litre to biodiesel producers, while Ottawa is offering up to 20 cents a litre.

Rostecki said he was told by Natural Resources Canada, which operates the federal subsidy, that he got his application in too late and that the program was already fully subscribed. He claimed that other companies have been accepted for the subsidy even though their facilities are still in the concept stage.

A spokeswoman for Natural Resources Canada did not address Rostecki's particular case, but confirmed in an email that companies whose facilities are yet to be built may well be ahead of plants already producing biodiesel in the federal subsidy queue.

Patti Robson said more companies may become eligible for the program in the coming weeks, although Ottawa may not be able to fund all the applicants who have submitted requests to date.

"Should some eligible projects not move forward, other eligible applicants may be considered for funding," she said.

Jim Rondeau, Manitoba's energy minister, said in an interview that he's "written a number of letters" to the federal government and met with federal ministers in an attempt to resolve the issue. He said he'd also like to see the various provincial industry support programs harmonized across Canada.

Rondeau said the government would continue to work with local producers to ensure they can be competitive in supplying the local market.

"If you want a green fuel and you're shipping it around the world, it sort of defeats its purpose," he said.

Gordon Quaiattini, president of the Canadian Renewable Fuels Association, an Ottawa-based industry lobby group, said "it seems really odd" that Rostecki wouldn't qualify for federal funds, adding that the program is not fully subscribed.

"If they're up and operating, or are about to be up and operating, I'd be confused why they didn't qualify for the program," he said in an interview.

As the federal program is currently structured, Quaiattini said, companies applying for subsidies must reach certain construction milestones and begin operating their plants by March 31, 2011. Failing that, Ottawa can take them off the list of eligible recipients.

"We have raised the issue with the government of Canada about a better way in which they can evaluate projects that are more ready to go than others," Quaiattini said.

larry.kusch@freepress.mb.ca

Republished from the Winnipeg Free Press print edition March 20, 2009 A9