Monday, November 13, 2006
Are we there yet?
Canada is getting on the ethanol and biodiesel bandwagon. But it's moving slowly, DENISE DEVEAU reports
Ian Cameron and Steve Gray, co-founders of Cameron's Coffee, started out with the best of intentions when they vowed to use only biodiesel fuel blends in their small fleet of company cars. But three years later, ask Mr. Cameron how it turned out and he says with regret, "We're not [using biodiesel] any more. We simply couldn't find enough places to get it."
Even when they tried to get a fuel tank installed at the company's plant in Port Perry, Ont., "we couldn't negotiate the distribution costs," he recalls. "What else could we do?"
Such supply problems are gradually being resolved as governments and advocacy groups push to add renewable fuels to gasoline.
One such group, E3 Fleet, is a consortium of fleet managers that works to promote greener alternatives in the transportation industry. The group's website (found at http://www.e3fleet.com) provides an interactive map to help members find nearby alternative fuel stations. Users simply type in their address and the kind of green fuel they're looking for, and the system shows where to find supply stations in their area.
What the map underscores, however, is the fact that in many parts of the country the supply of green fuels is spotty at best. Product distribution has been inconsistent, and incentives to support the infrastructure have been lacking. Driving market adoption while ensuring supply requires many players, from government and refineries to retailers and auto manufacturers.
The Canadian Renewable Fuels Association, among others, is laying the groundwork to raise awareness and lobby government to build a better infrastructure.
The federal government's Renewable Fuels Strategy also promises to kick-start the supply network. It targets an average of 5-per-cent renewable content (either ethanol or biodiesel) in Canadian gasoline and diesel fuel by 2010.
Flexible-fuel vehicles can run on gas that has up to 85-per-cent ethanol content, while a standard combustion engine cannot take any more than 10-per-cent ethanol.
Other countries offer incentives to boost the biofuels industry. Sweden, for example, reduced the registration costs and eliminated parking fees for flex fuel vehicles, reduced excise taxes on green fuels, and set mandates for green fuel requirements at pumping stations.
The demand for the flex-fuel option in cars is growing considerably in Canada, says Phil Petsinis, manager of corporate affairs at General Motors of Canada Ltd.
At least five manufacturers are offering it as an option, he says, and GM has 15 models in which the feature is either optional or standard. "It's seamless to the consumer because it's the internal electronics that make the adjustments. In the future I expect it will be standard on vehicles," he says.
Mr. Petsinis notes that Brazil has had a long-standing policy on ethanol use since the 1970s oil crisis, and the U.S. government is becoming equally supportive. "Half the entire fuel pool in Brazil is provided by ethanol. In the U.S., the government has implemented measures to provide funding support for the infrastructure changes needed to deliver E85 [a fuel blend with 85-per-cent ethanol]," he says.
Mr. Petsinis calls Canada's supply of E85 "quite dismal" but expects to see improvements as more consumers adopt the flex-fuel technology.
"It's all a question of economics and market access," agrees Kory Teneycke, executive director of the Canadian Renewable Fuels Association. "The programs that are in place in other countries that have been very successful aren't in place here right now. Success involves government using a combination of carrots and sticks to encourage early adoption."
He doesn't think supply will be the problem. "The market will supply that which is necessary. The question is will it be Canadian supply?" That depends on the return on investment for producing fuels here, he says.
The demand for biodiesel will not be driven by the consumer market; diesel cars represent less than one per cent of vehicles on Canadian roads. But diesel engines are common in the transportation and commercial sectors, and that's where biodiesel is gaining ground.
"Corporations using biodiesel tend to be stationary fleets such as public authorities like the [Toronto Transit Commission], where the vehicles can all fill up at the same place and stay within the same routes," Mr. Teneycke explains. "Long-haul fleets won't use it until supply is everywhere."
That's not to say industry is sitting back and waiting. One of the largest users of biodiesel fuels in the country is Terminal Systems Inc., a container terminal operator in Vancouver. It uses close to 6 million litres of diesel a year to run 300 engines in its vehicles and machinery. In the past year, TSI converted to a 20-per-cent biodiesel blend, says Ken Kristensen, assistant manager at TSI's Deltaport facility.
"We buy our own raw diesel and blend it ourselves with a soy-based biodiesel," Mr. Kristensen says. To encourage usage, TSI is also considering an on-site fuelling facility for trucks arriving at the terminals.
Unless a company has the volumes and buying power of a TSI, generalized availability of renewable fuel sources could take some time, says Dennis Rogoza of Rogoza Consulting Group, an environmental consultancy in Victoria. "Widespread distribution is a problem. It doesn't make economic sense to transport product thousands of kilometres. It's going to be tough unless all the oil companies do it."
So a strategic approach is needed to create economies of scale. "Companies need to generate the volumes to make it affordable," explains Mr. Rogoza. "The municipal governments in the Greater Vancouver Area, for example, were able to form a buying group to create the economies of scale needed to lower the overall price."
Such efforts will need government support, Mr. Rogoza adds. "[Mandates] could transform the market and turn modest usage levels to massive. Look at California. It just signed a law requiring 50-per-cent reductions in greenhouse gas emissions by 2050. [They said] they could do it, so they made it law."
posted by Mike Shenher @ 10:20 AM