The federal government published Renewable Fuels Regulations under the
Canadian Environmental Protection Act,
1999 on September 1, in the Canada Gazette, Part II. The
Regulations require an average renewable fuel (ethanol) content of
five per cent in most gasoline beginning on December 15, 2010. A
trading system is permitted to reduce the cost of compliance.
"Subject to technical feasibility", an average annual 2
per cent renewable requirement may also be added for diesel fuel
and heating oil. If so, the government predicts that up to 4 Mt of
reductions in greenhouse gas (GHG) emissions and some tailpipe
gases (e.g., carbon monoxide, benzene and 1,3-butadiene) could
occur in 2012.
The actual benefit from the regulations its harder to predict.
First, the 5 per cent renewable fuel content requirement in
gasoline will require 2 billion litres of renewable fuel each year.
Due to the lower energy yield2 from the ethanol-blended gasoline,
the total demand for gasoline will increase by 4.4 billion litres
over the 25-year period. As a result, consumers will experience an
increase in gasoline purchases of approximately $23 for 2011, and
petroleum consumption will go down by much less than 5%.
Second, the predicted benefits are based only on emissions from
transportation fuels at the point of use, and ignore the
environmental costs of producing the fuel. The government expects
ethanol in eastern Canada to be made from corn, and ethanol in
western Canada to be made from wheat. It is highly controversial
whether burning corn or wheat-based ethanol provides any
environmental benefits, when you take into account the large amount
of fossil fuels used to grow the food. There could also be
significant economic and social impacts from burning large amounts
of food as transportation fuel. Ethanol has clear environmental
benefits only when it is based on waste materials, such as
cellulose left over from other processes, but this is not yet
The regulatory impact statement also reveals some questionable
manipulation of the government numbers. For one thing, the 4 Mt GHG
reduction assumes that government will mandate a renewable content
of diesel and heating oil, which it has not committed to do. For
another, the costs of the regulation have been calculated using an
8% discount rate, which minimizes the importance of future costs.
Benefits, however, have been calculated using a 3% discount rate,
which makes distant future benefits look much more substantial.
Bottom line: the renewable fuels regulation is a better win for
the agricultural lobby than it is for those concerned about climate
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Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
The Government of Alberta recently announced a number of policy changes that will impact the Alberta Electricity Market, composed of its generators, transmitters, distributors, retailers, electricity consumers and wholesale electricity market.
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