Canadian government to end biofuel subsidy programme by 2017

The Canadian government has decided to close its biofuels subsidy programme, citing failure to achieve production targets.

Natural Resources Minister Joe Oliver said that the government will refrain from extending funds to biodiesel producers under Ottawa’s ecoEnergy program for construction of new facilities, reported The Globe and Mail.

Existing commitments, however, would continue until the expiry of the program in 2017, the Minister was quoted as saying in a letter.

"The government will not redesign or reopen the ecoEnergy for biofuels programs to new applicants," Oliver said.

"During this time of fiscal restraint and challenging global fiscal realities, our government has committed to ensuring that we balance our budget."

The government had closed new applications under the program in 2010, despite many companies seeking funds to construct new biodiesel plants.

Ottawa has, until recently, paid $672m to companies for the production of grain-based biodiesel as part of the $1.5bn subsidy; eventually, the payouts are only expected to reach $1bn by the end of 2017.

Oliver reiterated that companies were unable to produce and sell the required quantities of biofuel as per the mandated targets.

Most of the renewable fuel required to meet the country’s 5% ethanol in the gasoline target, was supplied by the ethanol industry.

But, Oliver said that ethanol producers do not have any new plant proposals that would necessitate the continuation subsidy program.

Industry body Canadian Renewable Fuels Association president Scott Thurlow countered that its members were ready to construct new plants.

"They have shovel-ready projects which if the programs was reopened, they could absolutely make good on the Prime Minister’s commitment to have 600 million litres of domestic biodiesel production in place," Thurlow said.