A national wish list

Scott Thurlow, the president of the Canadian Renewable Fuels Association, came armed with a shopping list of requirements to push the biofuel sector forward. Topping the list was a national bioeconomy strategy.

“The United States has one, although not without its challenges,” Thurlow told the 110-plus delegates at the CanBio conference. “Europe has had one for years. Canada does not, and it’s a priority for our members moving forward.”

Thurlow would also like to see the monetization of carbon in Canada, so that industries helping to dramatically reduce the economy’s carbon footprint, such as the bioenergy sector, get the credit they deserve, and that such efforts receive in other jurisdictions. He also noted that as the automotive industry strives to make the significant fuel consumption reductions required of it by legislation in the U.S. and elsewhere, it will require gasoline with increasingly higher octane levels. “The best way to achieve those higher levels is through ethanol blending. We’ll need to develop the fuelling infrastructure to allow for that higher ethanol level.”

Yet perhaps the most important step to increasing renewable fuel manufacturing in Canada, especially second-generation biofuels like cellulosic ethanol, is additional strategic investments to manage the massive capital required for commercialization.

“I don’t like to talk subsidies when you see the return on investment that the biofuel industry has already shown in Canada; I prefer to talk strategic investments. And when you look at the strategic investments Canada has already made in the oil and gas sector, it makes those in the biofuels sector look like rounding errors.”

Thurlow added that some challenges are outside our control in Canada. A major impediment to developing cellulosic ethanol in Canada is the flow of corn ethanol from the U.S. He noted that 40 per cent of the ethanol consumed in Canada is currently from the U.S. “It’s cheap, and as far as the market is concerned up here it is indistinguishable from cellulosic ethanol.”

Still, despite that and the ongoing need to reduce pre-treatment costs, Thurlow remains confident in the industry’s future, both through increased demand for this high-octane blending tool as well as the potential for value-added products in the biorefinery model.

Today’s bioenergy
Joining Thurlow on the executive panel was Ken Shields, CanBio chair and Conifex CEO. Conifex runs two large sawmills in northern B.C., producing upwards of 350 million board feet per year in lumber. The company recently secured financing for its $100 million combined heat and power (CHP) project being constructed at a shuttered Abitibi-Bowater pulp mill in Mackenzie, B.C. Shields explained how the investment fit into the company’s growth plans, and some of the lessons they learned along the way.

“One of the big benefits of projects like these is the creation of greater and more stable employment opportunities in remote communities like Mackenzie. In our case we’re looking at reducing our lumber costs by $40 per thousand board feet by adding this asset, which moves us up to the next quartile in lumber productivity. That means that the next time U.S. housing slows down, we’re in a much more solid position to keep running.”

Yet despite that, he notes that the tenure system in provinces like B.C. are still in their infancy when it comes to bioenergy and the bioeconomy. Not only are bioenergy producers like Conifex’ separate division 100 per cent dependent on the main resource commodity they stem from, but there is still a relaxed attitude toward underutilized fibre in most of Canada.

“I’d guess that 100,000 tonnes per year of fibre are not being captured for each sawmilling operation like ours in the B.C. Interior. Growth in the bioeconomy will require a change in our approach to tenure in Canada.”

Financial challenges
Following the executive panel was a bioeconomy financing panel that addressed the hurdles to funding large commercial projects, especially those relying on new technologies. Jeff Passmore of Passmore Group Inc. suggests co-developing with partners that can help with financing and share the risk; looking at brownfield sites from old industries rather than developing greenfield infrastructure from scratch; and extracting multiple streams from the resource, with the highest-value product taken first.

“If we look at the oil refinery model developed over the years, you’ll see a small fraction of the volume produced driving a large part of the revenue. They make their money off the petrochemicals, not the gasoline.”

Finally, Passmore noted that Canada is blessed with some significant government support that projects should look to, or get help in, accessing.

CanBio also used the occasion to launch its new logo, as well as explain its new focus on cross-association collaboration. •