February 14, 2005

PEI calls for biodiesel facility expressions of interest

The establishment of a biodiesel facility in Prince Edward Island moved a step closer this month as Premier Pat Binns and Environment, Energy and Forestry Minister Jamie Ballem released a request for expressions of interest (EOIs) for establishment of an oil seed extraction and biodiesel manufacturing plant in the province. The deadline for EOIs is February 23, 2005. Submissions will be evaluated by the PEI Biodiesel Working Group which consists of representatives from the Departments of Environment, Energy and Forestry; Agriculture, Fisheries and Aquaculture; and Development and Technology.

Premier Binns said biodiesel has both environmental and economic benefits for PEI. "Each year, Islanders use 100 million litres of diesel fuel and almost 200 million litres of fuel oil to heat homes. Replacing a portion of these imported fossil fuels with biodiesel would not only provide a measure of energy self-sufficiency, it would reduce greenhouse emissions which contribute to climate change," he explained. "Add to that the opportunities it presents for farmers to grow energy crops, and we believe there is potential for a biodiesel plant in PEI. This request for expressions of interest will help us identify how we can make this happen."

Biodiesel, produced from renewable resources such as canola, recycled vegetable oils and animal fats, contains no petroleum, but can be blended with petroleum diesel or light fuel oil to create a biodiesel blend. The typical ratio is 80% petroleum diesel or light fuel to 20% biodiesel, a blend known as B20. Most diesel equipment and oil furnaces can use blends up to B20 without any modification. This would reduce greenhouse gas emissions by 16%. For PEI, this would mean a reduction of 128 kilotonnes of greenhouse gases--the equivalent of taking about 20,000 cars off the road. This is more than half the emission reduction target which PEI committed to in the Climate Change Action Plan signed by New England Governors and Eastern Canadian Premiers.

Ballem said the province would like to see a biodiesel facility with an annual production of 60 to 100 million litres of biodiesel. While the lower production capacity would meet the needs of the PEI market, the higher capacity would enable the province to become a biodiesel supplier for the Atlantic region. The facility would include an oilseed extraction plant where canola seed would be crushed and the oil pressed out and sent to the biodiesel plant to be refined.

The provincial government has set out a number of guidelines for a biodiesel facility which companies submitting EOIs must meet. Chief among these, said Ballem, is that the facility would have to use approximately ten million litres of canola oil a year, which would provide the opportunity for farmers to grow canola as part of a three-year crop rotation. As well, there would have to be an opportunity for the farmers who are producing the canola to have a share of ownership in the facility. Agricultural operations would also be one of the primary users of the biodiesel produced, as they use about 40 million litres of diesel fuel annually.

"Study has shown the province could produce about 12,000 hectares of canola a year with potential yields of 2.5 tonnes per hectare, so Island farmers could supply ten million litres of canola oil a year," he said. "This is an opportunity for agricultural producers to grow canola in rotation, get a higher return per hectare than other rotation crops, and use the biodiesel in their operations. It's a perfect blend between agriculture, environment and energy."

The request for EOIs also asks companies to provide details on the size of a biodiesel facility, describing the technical systems to be used, capital and operating cost estimates, and an ownership model and financing approach. Ballem said the EOIs may come from a range of companies, from those interested in providing the technical systems for a biodiesel facility to those interested in building it and turning it over to the province, or those interested in building, owning and operating the facility. The government is open to all options at this point, provided the ownership model includes PEI canola producers.

Depending on the level of information received in the EOIs, Ballem said the next step could be to issue a request for proposals or begin negotiations with one or more companies expressing interest in the project.

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