November 01, 2005
An action plan to promote the development of biodiesel as a new economic opportunity for Manitoba producers and rural communities and a clean-energy alternative to fossil fuels was announced today by Agriculture, Food and Rural Initiatives Minister Rosann Wowchuk and Energy, Science and Technology Minister Dave Chomiak.
"We are pleased to act on the recommendations made to us by the Biodiesel Advisory Council earlier this year," said Wowchuk. "Biodiesel provides an opportunity for Manitoba farmers and the rural communities that serve them to capture economic benefit from the fuel they use to operate their machinery."
"Biodiesel joins new-generation hydroelectric power, geothermal, wind and ethanol as one of the pillars our clean-energy strategy," said Chomiak. "Biodiesel is a proven energy source that will help us find made-in-Manitoba solutions to climate change and meet our Kyoto commitments."
The two main components of the program are geared towards
increasing production in Manitoba. Effective immediately, the province will no
longer collect the
11.5 cents per litre fuel tax on 100 per cent pure
biodiesel. This will offer a Manitoba biodiesel tax advantage over regular
diesel of approximately 5.5 cents per litre after provincial sales tax has been
applied. The provincial tax incentive will be reviewed after four years.
The province and Natural Resources Canada will also work
together to provide a
$1.5-million request for proposals (RFP) support
package to Manitoba biodiesel producers who wish to either increase production
of biodiesel or to start a new venture.
The federal funds are from Natural Resources Canada’s Opportunities Envelope and are subject to successful contribution agreements being negotiated with producers who are awarded funding.
The remaining elements of the action plan are:
appointing an independent biodiesel board to review the RFP submissions of interested developers;
establishing a Manitoba-based biodiesel fuel quality testing centre;
developing a preference policy for Manitoba Transportation and Government Services for use of biodiesel in its fleet vehicles;
conducting research on feedstocks and alternative markets for biodiesel co-products;
studying the feasibility of using specified risk materials (SRMs) for biodiesel (SRMs are those components of livestock remains that are restricted due to BSE);
working with private-sector fleet managers to encourage the use of biodiesel;
conducting a long-haul demonstration to demonstrate the benefits of biodiesel; and
opening a biodiesel office to co-ordinate the roll out of the strategy.
"I want to thank the biodiesel council for its work in helping Manitoba develop a more environmentally-sustainable transportation sector," said Transportation and Government Services Minister Ron Lemieux. "We want to work with Manitoba entrepreneurs to develop a new industry that keeps goods and services moving while finding innovative ways to protect our planet."
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BACKGROUND INFORMATION
BIODIESEL INDUSTRY
Biodiesel is made from vegetable oils, animal fats and/or waste restaurant grease.
Approximately 850 million litres of diesel fuel in consumed in Manitoba each year, the majority of which is used in the transportation and agriculture sectors.
Compared to petroleum diesel, pure biodiesel reduces a number of harmful emissions such as:
greenhouse gases reduced by up to 91 per cent
sulfur dioxide reduced by 100 per cent
hydrocarbons reduced by 40 per cent
particulate matter reduced by 70 per cent
methane gas reduced by over 50 per cent
carbon monoxide reduced by 50 per cent
aromatic hydrocarbons (which cause cancer and emphysema) reduced by up to 80 per cent.
Assuming a five-per-cent biodiesel blend, Manitobans can prevent over $42 million at current pump prices from leaving the province in imported fuel costs annually.
Biodiesel can be used in pure form or in blends.
Any diesel vehicle can use biodiesel.
Biodiesel increases lubrication in vehicles reducing maintenance costs.
In December 2003, Manitoba’s Biodiesel Advisory Council, co-chaired by Ernie Doerksen and Bob Dolyniuk, was created. The council released its final report in February 2005.
There are currently two pre-commercial biodiesel production facilities in Manitoba – Bifrost Bio-Blends in Arborg and Celtic Power in Rapid City.
The City of Brandon has been using biodiesel in one of its busses for over a year and has announced plans to increase its commitment to biodiesel.
In June 2005, Manitoba Hydro announced it was purchasing 50,000 litres of Manitoba-made biodiesel to fuel its fleet vehicles. Initial results show cost savings, emission reductions and enhanced engine performance.
The current road tax on diesel is 11.5 cents per litre. Effective immediately, pure biodiesel will be exempt from this fuel tax. This translates to a tax advantage of approximately 5.5 cents per litre over regular diesel after seven-per-cent provincial sales tax is applied. This is in addition to the four cents per litre federal fuel tax exemption. Retailers selling diesel already pre-blended with biodiesel are required to remit fuel tax.
Manitoba Tax Application –
Assume for illustration that biodiesel is selling for $0.85 / litre
|
Before Nov. 1 |
After Nov. 1 | |
|
Biodiesel Selling Price |
85 cents a litre |
85 cents a litre |
|
MB Tax |
11.5 cents a litre fuel tax |
Seven per cent PST |
|
Total Cost |
96.5 cents a litre |
91 cents a litre |
Manitoba Biodiesel Tax Advantage = 96.5 – 91.0 = 5.5 cents per litre
For more information on biodiesel, please contact the Manitoba Biodiesel Office at 204-945-5222. For more information on the RFP program, please contact Bob Brennand at 204-945-7392.