Legislative Electronic Publications -- Province More Than Doubles Tax Incentive To Spur Biodiesel Production

Manitoba Government News Release:
Information Services, Room 29, Legislative Building, Winnipeg, Manitoba R3C 0V8 Telephone: (204)
945-3746 Fax: (204) 945-3988

March 09, 2006

PROVINCE MORE THAN DOUBLES TAX INCENTIVE TO SPUR BIODIESEL PRODUCTION
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Tax Advantage on Pure Biodiesel Builds on Action Plan: Wowchuk, Chomiak

The Manitoba government has eliminated all provincial taxes on Manitoba-produced pure biodiesel in Budget 2006 to further spur development of this clean-energy alternative, Agriculture, Food and Rural Initiatives Minister Rosann Wowchuk and Energy, Science and Technology Minister Dave Chomiak announced today.

"The elimination of the tax on biodiesel further demonstrates our government’s commitment to find innovative solutions to the issues of climate change and rural economic development," Wowchuk said.

"The expanded biodiesel tax advantage builds on the biodiesel action plan announced in November designed to make biodiesel part of Manitoba’s clean energy plan along with hydro, wind, ethanol and geothermal," Chomiak said.

Effective immediately the province will cease to collect both the road tax and provincial sales tax on pure biodiesel that meets the American Society for Testing and Materials (ASTM) fuel-quality standard. The incentive will remain in place for five years to give the industry time to grow. The removal of these taxes provides an 11.5-cent-per-litre advantage over regular diesel and is in addition to the four-cent-per-litre tax break offered by the federal government. The tax advantage applies to the biofuel (ASTM) portion of biodiesel blends.

The announcement more than doubles the 5.5-cent-per-litre biodiesel tax advantage announced as a cornerstone of the province’s biodiesel action plan.

The ministers announced significant progress has already been made on the action plan including:

release of a new $1.5-million support program for biodiesel production in Manitoba, supported by the federal government under the Opportunities Envelope Program administered by Natural Resources Canada;
appointment of an independent biodiesel board that will provide recommendations to government on the support program; and
establishment of the biodiesel office to co-ordinate government activities across departments and to provide the public with a one-stop information hub on biodiesel.

Other elements of the action plan currently under development include:

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; and
conducting a long-haul demonstration to demonstrate the benefits of biodiesel.

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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 by up to 91 per cent,

- sulfur dioxide by 100 per cent,

- hydrocarbons by 40 per cent,

- particulate matter by 70 per cent,

- methane gas by over 50 per cent,

- carbon monoxide by 50 per cent, and

- aromatic hydrocarbons (which cause cancer and emphysema) 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.
For more information on biodiesel, call the Manitoba biodiesel office at 204-945-5222.

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