A call for support for BC’s home-grown biodiesel industry

Starting on January 1st, every vehicle in BC is using biofuel in its tank - 3% for biodiesel (rising to 5% by 2012), and 5% for ethanol. Is this good? Is it bad? What does it mean for BC’s emerging biodiesel industry - and why has the industry suddenly lost its 22% tax incentive?

In the big picture, the change is hugely important, spelling the first organized move away from fossil fuels to power our transport. We need such a move both because of the looming proximity of global peak oil, and because of global warming’s rapidly melting ice-sheets. Whichever way you cut it, we must break free of fossil fuels as quickly as we can.

Is it true, however, that producing biofuel causes more carbon to be released that it saves? For ethanol, the studies show results that vary from a 67% positive to a 29% negative balance, with the overall picture coming out in favour of the positive.

For biodiesel, when it’s made from the oil residues from soybean farming, it achieves an 80% reduction in emissions - and you can still eat the beans. When it’s made from waste restaurant fats, trailing the smell of French fries as you drive, it achieves a 94% reduction.

What matters, in the big picture, is the all-important transition from biofuels 1.0 to biofuels 2.0, made from crop wastes and crops that can grow on marginal lands, and then to biofuels 3.0 made from algae, requiring 50 times less land than biofuels 1.0. The market needs biofuels 1.0 to grow in maturity to biofuels 3.0, so the journey is more important than the initial results.

BC’s Biodiesel Industry

There is a second, more complex aspect of the change, however, that is causing BC’s homegrown biodiesel makers to weep with distress. Before the new regulations kicked in, BC’s biodiesel producers enjoyed a 22 cents per litre tax exemption, being exempt from the 15 cents BC motor fuels tax; the 4 cents carbon tax; and the 3.5 cents urban transit tax - all in the name of building the industry.

All these incentives have now been eliminated, since the government argues - quite rightly, in the big picture - that the 3% market requirement will do far more to stimulate the industry than the tax incentives did.

The problem is that all the newly required biodiesel is being shipped in from the US, to the tune of 180 million litres a year. America has incentives for its biofuel producers that BC’s producers do not enjoy, so that’s where the biodiesel comes from.

For BC’s small emerging biodiesel market, the loss of the 22 cents tax incentive will spell immediate commercial death, unless some other way can be found to create a “made in BC” production incentive.

It seems equally absurd that homegrown B100 biodiesel, being made by enthusiasts around the province from waste cooking oils, should be subject to the carbon tax, when it is 94% carbon neutral. (The 6% comes from the natural-gas derived methanol needed to make the biodiesel.)

The BC Tax Policy Division’s argument is that they have no means of knowing which gas pump is selling which mix of biodiesel, and so it will be impossible to levy a differentiated tax - but the number of companies and coops selling B20 to B100 is probably less than 20 in the entire province, so it should not be difficult to create a special permit that allows them to continue to receive the carbon tax break that their fuel deserves - and the other tax breaks too, since this is an industry that needs to be encouraged.

This calls for action - so if you can, please contact the Hon Colin Hansen, Minister of Finance, 250 387-3751 or colin.hansen.mla@leg.bc.ca, asking for BC’s home-grown biodiesel industry to continue to be supported through changes introduced in the February budget.