OTTAWA (CP) - The world's first straw-based ethanol plant will be built
abroad using Canadian technology unless Ottawa matches hefty loan
guarantees offered by the U.S. and Germany, says the company that
developed the process.
"It's a bit of a horse race," says Jeff Passmore, executive
vice-president of Iogen. The small Ottawa-based company, with the help
of federal funding, created the gasoline alternative that's touted as a
holy grail of pollution-cutting biofuels.
"We're looking at building a plant in Canada, the U.S. and Germany,"
Passmore said in an interview. "At the end of the day, it's going to be
a business decision."
Cellulose ethanol trumps corn-based ethanol because its production does
not demand the fuel and chemicals involved in grain farming. Instead, it
uses "farm garbage" in a process that converts plant fibre from wheat
straw into cellulose ethanol, electricity and carbon dioxide.
The ethanol is blended with gas to power vehicles, and the next year's
wheat crop absorbs the carbon dioxide, says Iogen.
Compared with gasoline, ethanol derived from cellulose reduces carbon
dioxide emissions by more than 90 per cent, says the company.
Environmental groups agree that cellulose ethanol is a potentially
revolutionary creation that should be commercially produced here.
Trouble is, Canada has a long history of funding new technologies only
to the point that they become commercially viable, says Kory Teneycke,
executive director of the Canadian Renewable Fuels Association.
"When it comes to commercializing Canadian technologies, there are few
programs or incentives to take it that last step.
"Iogen is just the latest example of this. We raise the goose ... and
then ship it to the U.S. for a dollar when it actually comes time to lay
those golden eggs."
Passmore says the final touches are being put on a U.S. loan-guarantee
offer that would see Iogen build its first plant in Idaho. Germany has
also shown keen interest and would be willing to offer similar backing,
he said.
Such financial help is needed because banks won't risk the hundreds of
millions of dollars required to commercially launch a new technology, he
said.
"They won't lend debt financing unless it's guaranteed by a strong
guarantor such as a government.
"In Canada we tend not to favour loan guarantees," Passmore says. His
company is now in accelerated talks with federal officials about a
potential package that could include other options such as repayable
contributions, he said.
Environment Minister John Baird, who represents an Ottawa riding, is
especially interested, Passmore said.
No comment was immediately available from the federal government.
North central Saskatchewan, near Birch Hills, is the favoured Canadian
location for a plant that would employ up to 190 people.
Environmental groups such as Pollution Probe say Ottawa is reticent
about appearing to be offering a kind of corporate welfare.
"There's this fear that the public will find out that the government put
up some incentive and somebody profited from it in industry," says
executive director Ken Ogilvie.
This case is different, he says.
"Coming out of the other end of an investment in cellulosic ethanol is a
huge market, and a huge environmental benefit."
If ethanol began to replace gasoline, such federal support could be
withdrawn, Ogilvie said.
"But in the short run, we've got to get from here to there."
A wide range of so-called "flex-fuel" cars are now available that can
take fuel with up to 85 per cent corn-based ethanol. But there are only
about 1,000 compatible fill-up stations in the United States, and none
in Canada.
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