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Viewing cable 06OTTAWA3639, CANADA ANNOUNCES PROGRAMS TO PROMOTE PRODUCTION,

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Reference ID Created Released Classification Origin
06OTTAWA3639 2006-12-22 16:10 2011-04-28 00:00 UNCLASSIFIED Embassy Ottawa
VZCZCXRO2785
RR RUEHGA RUEHHA RUEHQU RUEHVC
DE RUEHOT #3639/01 3561610
ZNR UUUUU ZZH
R 221610Z DEC 06
FM AMEMBASSY OTTAWA
TO RUEHC/SECSTATE WASHDC 4672
INFO RUCNCAN/ALL CANADIAN POSTS COLLECTIVE
RHEHAAA/WHITE HOUSE WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RUEAEPA/EPA WASHDC
UNCLAS SECTION 01 OF 02 OTTAWA 003639 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR WHA, EB AND OES 
DOE FOR POLICY AND INTERNATIONAL 
WHITE HOUSE FOR CEQ 
EPA FOR OFFICE OF THE ADMINISTRATOR AND INTERNATIONAL 
AFFAIRS 
USDA FOR FAS/OAMYOST; FAS/OGA/JNUTTALL/PJARRELL; 
FAS/OCRA/CALEXANDER/MCHESLEY/BZANIN/PSIMMONS 
 
E.O. 12958: N/A 
TAGS: ENRG EAGR SENV CA
SUBJECT: CANADA ANNOUNCES PROGRAMS TO PROMOTE PRODUCTION, 
USE OF BIOFUELS 
 
REF: OTTAWA 3561 AND PREVIOUS 
 
1.  Environment Minister Rona Ambrose and Agriculture 
Minister Chuck Strahl announced in Saskatoon on December 20 a 
C$345 million program to promote the use of renewable fuels 
in Canada.  They billed the program as the next element of 
the Conservative government's environmental agenda, but this 
time with a tie-in to agriculture.  The program overall will 
mandate renewables content in gasoline (5 percent by 2010) 
and diesel and heating oil (2 percent by 2012).  On the 
production side, the program will fund efforts to bolster the 
development of biofuels and other bioproducts, and to create 
new market opportunities for Canada's agricultural producers 
under the Agricultural Bioproducts Innovation Program and the 
Capital Formation Assistance Program for Renewable Fuels 
Production. 
 
Benefiting the Environment - and More 
------------------------------------- 
2.  Ambrose, of course, pitched the effort as environmentally 
friendly, claiming "(o)ur government understands Canadians' 
concerns around the quality of the air we breathe," and 
fulfilling the Harper government's commitment to meaningful 
action.  Strahl, on the other hand, stressed the support the 
programs would provide for Canada's "bio-based economy" in 
creating additional opportunities in the agricultural sector. 
 Ambrose described the program as a win-win solution for 
Canada, with the citizenry overall reaping environmental 
benefits, farmers and rural communities profiting from 
greater demand for their products, and industry gaining 
support to develop a viable domestic biofuels industry and 
cementing Canada's place in the growing "bio-economy." 
 
3.  Reactions to the announcement were mixed.  The biofuels 
lobby predictably applauded it.  "This is the best type of 
Christmas announcement," the Canadian Renewable Fuels 
Association gushed.  On the other side of the debate, the 
David Suzuki Foundation has been critical of the Tory 
renewable fuels strategy from the start, claiming "the amount 
of greenhouse gas emissions that will be cut by boosting 
ethanol production is virtually insignificant."  Commentary 
in the press, noting the huge increase in ethanol production 
that will be required, suggested the measures will bring more 
benefit to farmers and producers (and investors) than to the 
environment. 
 
Just the Facts 
-------------- 
4.  As to specifics of mandating renewables content in fuel, 
the government intends to use the authority it already has 
under the Canadian Environmental Protection Act (1999) and 
the revisions to CEPA proposed in the Clean Air Act.  The 
government calculates the 5 percent requirement for gasoline 
will amount to about 2.1 billion liters of renewable fuel per 
year in 2010.  The 2 percent mandate for diesel fuel and 
heating oil will require another 600 million liters in 2012. 
The government admits these regulations will be complex and 
take around two years to develop.  They will also require 
extensive consultation with provinces, territories, affected 
sectors and other stakeholders.  The government plans to 
begin discussions, consultations and studies early next year. 
 
5.  The Capital Formation Assistance Program for Renewable 
Fuels Production will receive $200 million over four years to 
QFuels Production will receive $200 million over four years to 
provide incentives (repayable, and capped at the lesser of 25 
percent of costs or $25 million per project) to encourage 
agricultural producer participation in new renewable fuels 
production capacity.  The Agricultural Bioproducts (i.e., not 
just biofuels) Innovation Program ($145 million over five 
years) will support cross-sector research networks conducting 
scientific R&D and commercialization related to the 
advancement of a Canadian bio-based economy with grants of up 
to $25 million per network. 
 
6.  According to the government, Canada's transport sector 
accounts for more than 27 percent of greenhouse gas 
emissions.  It calculates that the new regulations will 
require enough renewable fuel to reduce emissions by about 4 
million tons per year, the GHG equivalent of taking almost 
one million vehicles from the road.  By way of comparison, 
 
OTTAWA 00003639  002 OF 002 
 
 
Canada's total GHG emissions in 2004 came to 785 million tons 
(according to OECD data), meaning the transport sector would 
have contributed just under 200 million tons.  In 2004, (the 
latest available data) total ethanol production and 
consumption in Canada amounted to approximately 250 million 
liters ) just 0.7 percent of the country's total gasoline 
consumption - according a Canadian Renewable Fuels 
Association analysis.  Limited industrial biodiesel 
production in Canada began in late 2005. 
 
Building Out the Overall Environment Strategy 
--------------------------------------------- 
7.  The Ambrose/Strahl announcement billed these programs as 
just the latest element of the Conservative's overall plan on 
the environment, and they certainly should act to reduce 
Canada's greenhouse gas emissions.  Government officials had 
told Embassy as far back as late summer that the overall 
environmental plan would be rolled out in tranches, beginning 
with the Clean Air Act tabled in Parliament in late October 
(reftels).  In addition to the Clean Air Act, the government 
also announced stricter regulation of harmful chemicals as 
part of its new Chemicals Management Plan on December 8. 
 
Visit Canada's Classified Web Site at 
http://www.state.sgov.gov/p/wha/ottawa 
 
DICKSON