As the high price of fuel drags down the bottom line of Canadian businesses, industry officials say more needs to be done before renewable fuels such as biodiesel can play a major role in the country's energy future.
Despite increasing demand, biodiesel - a clean-burning alternative fuel, produced from animal fats or plant oils and blended with petroleum diesel to create a biodiesel blend - finds itself in a niche market, waiting for a breakout opportunity.
"There are a number of companies across the country looking at opportunities to produce biodiesel and that's coast-to-coast and using a variety of different feedstocks," says Kory Teneycke, executive director of the Toronto-based Canadian Renewable Fuels Association. "But this is more than just about having a little biodiesel in all of the fuel of all of the country."
Rather, Teneycke wants to see biodiesel account for a major segment of the fuel used across Canada, as opposed to it being relegated to a niche product that is just used in a small number of municipal and commercial fleets.
"I don't want to diminish the niche markets," says Teneycke, "but it's much better to be five per cent of 100 per cent of the market than 100 per cent of one per cent of the market."
There are only two major Canadian biodiesel plants in operation.
The new Biox Corp. operation at Hamilton Harbour, on the western edge of Lake Ontario, will be able to produce 60 million litres annually when it comes online at the end of May.
The other is in Montreal and has a capacity of about 30 million litres per annum.
Energy giant Suncor is also eyeing the biodiesel market, and is set to roll out a microblending operation in southern Ontario to supply the fuel to municipal and fleet customers. It's looking at its first deliveries in May, says Stephen Spurway, manager of pricing and planning for Toronto-based Suncor Energy Products Inc.
"We saw the opportunity in the market developing for it," says Spurway. "We see it as a viable business and we're trying to be on the leading edge to supply these municipalities and fleets."
The Biox plant already has customers lined up, but the clients are generally not based in Canada, says Scott Lewis, Biox's director of business development.
"The biodiesel market worldwide is really being developed by government policy, as to whether or not they need to include biofuels as part of their fossil-fuel distribution," says Lewis. "Canada has a long way to go."
Meanwhile, biodiesel proponents in Alberta are hoping to accelerate the use of this alternative fuel through the newly- formed Alberta BioDiesel Association (ABDA).
The association has an agenda that includes educating industrial fleet managers - both private and public - about the benefits of switching over to biodiesel, advocating for policy changes on both the provincial and federal government levels to support the emergence of a sustainable biodiesel sector, and ensuring that the product in the marketplace is of certified quality.
"The timing for biodiesel in Western Canada is right now," says ABDA president Ian Thomson. "Western Canadians are looking for a made-in-Canada climate change plan and biodiesel is a perfect fit, and as a rural economic development idea, it has huge potential.
"You only need to look at what is happening in Europe. The big benefit of biodiesel is that I can have a fleet on diesel today and biodiesel tomorrow. You change the fuel, not the fleet."
Thomson, who is also president of the British Columbia BioDiesel Association, says biodiesel is also a clean fuel. "It has much lower emissions and is renewable because it's made from either animal fats or from vegetables oils, and its predominant feedstock is in vegetable oils."
Biodiesel can be used in almost any diesel engine and increases fuel lubricity, a point that will become increasingly important later this year when Environment Canada regulations are expected to require reductions in the amount of sulphur - known to have health effects at high levels - in diesel fuel.
"The current diesel fuel spec is allowed to have 500 parts per million (of sulphur). The new regulation is 15 parts per million (ultra-low sulphur diesel or ULSD) and sulphur is the lubricating part of the diesel fuel - it keeps it from seizing," says Brian Friesen, manager of fleet operations for the City of Calgary, which is involved in a biodiesel pilot project. "By reducing the sulphur, you take away lubricating quality of the diesel fuel."
But biodiesel adds lubrication quality to diesel fuel in older engines, he notes, and "the lubricity of the fuel was one of the big things that concerned us. We had heard about biodiesel, we'd seen it in the marketplace, we've seen it on the radar screen of fuels, and we have had some people put a presentation on for us about biodiesel."
Calgary operates 900 diesel vehicles in its fleet of 2,300.
Of these, only about 75 are included in the pilot project, and a decision on whether or not to continue using biodiesel will ultimately be made by city council.
So far, Friesen says it has been easy to convert the vehicles to biodiesel, and more frequent fuel filter changes have been the biggest issue they've had.
"My own personal opinion is that it's working quite well," says Friesen.
Businesses in B.C. are also experimenting with the fuel. Stephen Szalkai, operations manager at Rempel Bros. Concrete Ltd., says his firm is running a biodiesel test program at the company's North Vancouver ready-mix plant.
"In North Vancouver, we're using 12 mixer trucks, one pump truck and one loader. That's the entire fleet in North Vancouver," says Szalkai. "It's about 15 per cent of our entire mixer fleet."
Noting that there wasn't any special conversion required, Szalkai says there were a couple of reasons they started the pilot project on March 1.
"No. 1 for any corporation is the bottom line. The pricing of biodiesel is now competitive with regular diesel pricing and before that wasn't the case," he says. "The other reason, which is equally important, is that it fits Rempel's objective of being an environmentally caring company. Rempel has been known for its environmental stewardship in the Lower Mainland in the ready-mix industry and this is another way we can help things out."
So far, Szalkai has noticed less smoke from the engines that use biodiesel, and that power levels in those vehicles seem to be equal to those using traditional diesel fuel.
Rempel's project will continue until the end of this year, at which point it will be reviewed.
"We will be looking at fuel consumption on our fleet at the end of the year, and if the results are favourable, Rempel will be looking at putting its entire fleet on biodiesel," says Szalkai.
"When you look at the big picture, you're doing the right thing for the environment by reducing the emissions and, potentially, you are going to help or possibly reduce your maintenance costs on engine wear. And if the present trend continues, you might be saving yourself dollars because biodiesel will possibly be lower-priced than diesel for the long term."
ABDA's Thomson says while biodiesel is just getting off the ground in Canada, high diesel prices and a strong sensitivity to transportation emissions have played a larger role in its acceptance in Europe - and it is now the fastest-growing alternative fuel in the United States.
A number of Alberta biodiesel projects are on the drawing board, including the Calgary Biodiesel Centre in the Municipal District of Rocky View. The plant will use a combination of used cooking oil, new vegetable oil and tallow as the feedstock material. Plant commissioning is planned for the first half of 2007.
"As you can imagine, it's a brand new industry. Biodiesel means a little bit more education for the user," says Patrick Luft, the centre's managing director. "So it's a little bit of a challenge. We're developing the market as we go along as well."
Luft has entered into an agreement with the Australian Biodiesel Group Ltd. (ABG), securing a licence for its biodiesel production technology.
"We have Alberta Environment involved and we're currently in discussions with ABG to have a modular plant built in Australia and shipped over," says Luft, noting that ABG has expertise in biodiesel technology and will help make sure the plant is running properly after it is built.
The planned Calgary centre is owned by Luft and partners, who also own and manage Veggie Velocity, an Alberta-based firm that has been producing biodiesel from waste cooking oil using a small-scale batch process since 2003. The group is arranging financing for construction.
Meanwhile, the Saskatchewan Biodiesel Development Task Force is hopeful it can help influence politicians, especially on the federal level, to move biodiesel adoption forward.
"The canola growers got involved to make sure we didn't miss out on an opportunity to have an industry here and to hopefully help set a policy for a biodiesel industry that's sustainable for all of Canada," says Judie Dyck, co-chair of the year-old task force based in Saskatoon. "We have almost half the canola acres (in Canada) here. This is an opportunity we don't want to miss out on."
The Canadian Renewable Fuels Association's Teneycke also hopes biodiesel will get a major boost from Ottawa. He points to interest from the three major political parties and a commitment by the federal government to a five-per-cent renewable fuel standard by 2010.
About seven million litres of biodiesel are used in Ontario on annual basis, says Roger Smith, director of Fleet Challenge Ontario, part of Fleet Challenge Canada, an organization promoting improvements in energy efficiency and emission reductions among on-road vehicle fleets.
Smith expects that number to reach 21 million litres in just over a year, and newly announced plans from the Toronto Transit Commission to boost the use of biodiesel in its fleet should increase that number, he adds.
It's primarily municipal fleets that account for the large amounts of biodiesel used, says Smith. "Almost every municipal fleet within a 50-kilometre radius of Toronto is using biodiesel."
The only real barrier to employing biodiesel in the private sector has been price, Smith adds - but rising energy prices could help change some minds.
"In terms of total volume, it's very low right now but it's in a rapid growth stage," says Smith in reference to the amount of biodiesel used. "There needs to be more knowledge and awareness. People like doing what they're comfortable with. Until they learn how simple biodiesel is, there's an amount of caution."
Quote . . .
“When you look at the big picture, you’re doing the right thing for the environment by reducing the emissions and, potentially, you are going to help or possibly reduce your maintenance costs on engine wear.”
– Stephen Szalkai, operations manager at Rempel Bros. Concrete Ltd.
(Laura Severs can be reached at laura@businessedge.ca)
