2013-08_Fueling_the_Future_Atlantic_Bioenergy.pdf

Fueling the Future: Atlantic Canadas Bioenergy Opportunities Project

Project Report APRI Project No. 200344

Atlantic Canadas Bioenergy Opportunities Project APRI No. 200344

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Acknowledgments

This report was produced by the Atlantic Council for Bioenergy Cooperative (ACBC) under the leadership of Ken Magnus, Chief Executive Officer in partnership with BioAtlantech New Brunswick, with funding from the Atlantic Canada Opportunities Agency.

The project team recognizes the work, cooperation, support, and assistance of:

ACBCs Executive and Board of Directors

BioAtlantech

Gardner Pinfold Consulting

Dr. Gerrard Marangoni

Interprovincial working groups in New Brunswick, Nova Scotia and PEI, including their respective departments of Energy, Agriculture and Economic Development.

Atlantic Canada Opportunities Agency (ACOA)

Cape Breton University Verschuren Centre for Sustainability in Energy and the Environment (CSEE)

Collge communautaire du Nouveau-Brunswick (CCNB)

This report is based on information gathered between March 2012 and May 2013.

Disclaimer: This report is funded by the Atlantic Canada Opportunities Agency (ACOA) under the Atlantic Policy Research Initiative, which provides a vehicle for the analysis of key socio-economic policy issues in Atlantic Canada. The views expressed in this study do not necessarily reflect the views of ACOA or of the Government of Canada. The author is responsible for the accuracy, reliability and currency of the information.


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Executive Summary

Introduction & Purpose

The biofuels sector provides Atlantic Canada with the opportunity to position its assets wisely, and to use them to build a sustainable biofuels industry in this region. With the development of initial and first generation biofuels production facilities across Canada and elsewhere in recent years, Atlantic Canada can capitalize on those experiences to determine how they may best apply here. With the regulatory push to spur industry at the federal level, the regional innovative capacity, recent and ongoing research, access to academia, and the availability of renewable resources, there is ample room for a large scale commercial biofuels industry development to take shape in Atlantic Canada.

Acting in the capacity of Atlantic Canadas lead bioenergy association, ACBCs mission is to educate and promote the development of a sustainable bioenergy industry in Atlantic Canada and to establish provincial and federal government policy and programming that will allow for the development of a bioenergy industry in the Atlantic region.

ACBCs vision statement is: a vibrant, sustainable bioenergy industry, producing in Atlantic Canada, for Atlantic Canada, with a near term outlook to export and supply outside of the region to meet the increasing demands of the United States biofuels market.

To this end, Atlantic Canada needs both federal and provincial government policy and programming (P&P) designed to meet its needs for growth. With this project, ACBC intends to clarify, assess and reveal the regions bioenergy; build a business case for a bioenergy sector in the region; identify the economic impact of that sector; and ultimately make recommendations for the necessary policy and programming.

This project is ground-breaking. This type of information is not currently readily available in Atlantic Canada; and, data and findings that do exist elsewhere cannot provide a realistic and accurate picture of this regions potential. This project and its findings will be an instrumental starting point to provide governments and industry players with an understanding of the potential for bioenergy in the Atlantic region and clear recommendations for moving forward to deliver the economic opportunity, jobs and environmental benefit for Atlantic Canadians.

Methodology

The information contained in this report is the result of in-person interviews; online surveys; research analysis; engagement and discussion with industry and government stakeholders provincial and federal, elected and non-elected; and finally, significant analysis, deliberation and recommendation from the ACBC Board of Directors and its members.

Its findings are validated through the analytical work of Gardner Pinfold, one of Canadas leading economic consultants, who were contracted to assess the feasibility of this sector, as well its economic impact. This firms background, expertise, and strong reputation for quality research and methodological reporting provide important credibility and calculated proof for the arguments and recommendations this project makes.


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This project was delivered through methods including: an asset inventory, research analysis a feasibility model, an economic impact analysis and recommendations.

Assets & Opportunity

The biofuels industry in North America is driven mainly by the Renewable Fuels Standards (RFS) introduced by various levels of government in Canada and the U.S. To meet the RFS mandate in Atlantic Canada, the region would have to produce in excess of 250 ML of ethanol and approximately 75 ML of biodiesel. In fact, the potential biofuel opportunity is seen as significantly greater since fuel produced with energy beets and other potential feedstocks specific to this region would qualify as a blendstock under the U.S. RFS2. There is also a substantially larger export market opportunity not defined in this report but that could easily double demand.

Atlantic Canada is rich in natural resources and it is these natural resources where the biomass assets lie. The regions provinces have a long history of agriculture, forestry and marine biomass and consumption. This, combined with the regions extensive technological research capacity (numerous academic and institutional research organizations) provides the right backdrop for the industry to grow and develop.

Agriculturally, there is sufficient crop acreage to produce a number of potential feedstocks including corn, wheat, barley, soybean, canola and sugar / energy beet as well as provide farmers the opportunity to develop new crops and rotations, putting underutilized land back into production. An emerging biofuels industry could create demand for suitable crops that are not currently grown, or not grown in sufficient quantities, at acceptable costs, to meet industry requirements. Cellulosic biomass crops (including marine and forestry sectors) also offer potential, once the production technology to support it is commercialized; new technologies and applications present significant opportunity in this region.

References in this report to biofuel production volumes in Atlantic Canada are represented by the numbers suggested above and demonstrated in the below table; it confirms that Atlantic Canada has and can produce the necessary feedstock to build a viable biofuels industry, and that stakeholders are ready and capable to support its development and growth, with the proper tools in place.


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L 5% Blend Ethanol 10% Blend Ethanol 2% Blend of Bio-diesel

Nova Scotia Fuel Energy

Motor gasoline 1.195 BL 59 MML 118 MML

Diesel Fuel Oil 889 MML 18 MML

Heating Oil 904 MML 18 MML

New Brunswick Fuel Energy L 5% Blend Ethanol 10% Blend Ethanol 2% Blend of Bio-diesel

Motor gasoline 1.129 MML 56 MML 112 MML

Diesel Fuel Oil 1.189 MML 24 MML


PEI Fuel Energy L 5% Blend Ethanol 10% Blend Ethanol 2% Blend of Bio-diesel

Motor gasoline 230 MML 11.5 MML 23 MML

Diesel Fuel Oil 132 MML 3 MML


Newfoundland Fuel Energy L 5% Blend Ethanol 10% Blend Ethanol 2% Blend of Bio-diesel

Motor gasoline 670 MML 33.5 MML 67 MML

Diesel Fuel Oil 521 MML 10.42 MML

Heating Oil 611 MML 12.22 MML


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STRENGTHS

Significant & diverse biomass

Open territory - development, policy and programming

Renewable Fuels Standards

Established lead agency

Strong research and academic community

Existing producers, plants

Interested governments

WEAKNESSES

Lack of awareness, understanding

Perception that region cannot deliver volume

Renewable Fuels Standards

Behind industry pace

Federal funding spent

No strong government champion

Lackof experience as a sector

OPPORTUNITIES

Outside investment interest

Cellulosic capacity

Close proximity for export

Shared desire to end imports

Traditional industries (feedstocks) available to support sector

Federal mandate for renewable fuels production

Regional priority for economic development and employment

THREATS

Current reliance on imported biofuels

Global economic challenges

Provincial governments face fiscal constraint

Limited will for provincial mandates, policy and programming

Resistance towards implementing RFS

SWOT ANALYSIS

SWOT Analysis

Stakeholders have identified a number of internal and external factors that are favorable and unfavorable to building a bioenergy sector in Atlantic Canada.

The SWOT analysis is based on the following definitions:

Strengths characteristics that provide it an advantage.

Weaknesses (or Limitations) characteristics that create a disadvantage

Opportunities: external factors in the environment that could improve performance (e.g. make greater profits)

Threats: external factors in the environment that could cause trouble


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Feasibility

To understand the true cost and potential return on investment for production facilities in Atlantic Canada, Gardner Pinfold Consultants Inc., were contracted to develop a tool that producers and lending agencies could use to analyze prospective ethanol and biodiesel fuel projects an Atlantic Biofuels Feasibility Model.

The model is designed to help assess the financial viability of biofuels production options in Atlantic Canada, based on six key factors: feedstock types, plant scale, pre-construction and construction costs, financing, operating costs and revenues.

After entering information for each of these six areas, the Model calculates production results and financial indicators to assess the potential performance of a biofuel plant. The Model can evaluate up to six plants simultaneously and provide a summary of results for all six on a final comparison sheet, with a profile of the inputs for each plant. A side-by-side comparison gives operators the opportunity to evaluate the performance of plants that might have different feedstocks or different capacity. Additionally, model users could adjust any number of other variables such as feedstock price, interest rates, % equity, revenue, or capital costs to different levels, to see how they might impact the overall performance of a plant.

This ability to assess the impact of different variables can also help operators identify what they need to make a plant financially attractive to bank lenders or private investors. For instance, a potential plant may initially appear to have an 8-year payback period; but, a combination of variables like low-interest loans, capital cost assistance, feedstock subsidies, and salary rebates could be examined to determine what might bring the payback period down any number of years.

This model will allow industry proponents and their associated partners and investors to consider several options that may be applicable to their region, and their particular expertise, to help assess the financial viability of biofuels production options in Atlantic Canada.

Economic Impact

The firm of Gardner Pinfold Consulting Inc. was also engaged to assess the economic impact for the biofuels sector in Atlantic Canada, to provide industry and government with a tool to improve the understanding and further the development of a biofuels industry in this region. The study set out to answer the question: If a bio-fuels industry were to develop in the Maritime Provinces, what would be its impact? Because current biofuels production in this region is not operating on the scale needed to meet federal ethanol and bio-diesel mandates, there is no basis to document economic impacts.

The information in this study will provide prospective investors, lenders and governments with a better understanding of the scale of the industry and how its development and operation would affect the economies of each of the Atlantic Provinces, tracing the direct impacts of the bio-fuels industry itself, as well as the indirect impacts of those industries supplying it with goods and services.


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The main objective of this study was to quantify both the direct and spin-off impacts of developing and operating a biofuels industry in the Atlantic Provinces; to do so, it uses the Statistics Canada Inter-provincial Input-Output Model, because it produces direct, indirect and induced impact results and it produces results at a high level of resolution. Normally, this model uses the gross value of the output, the revenues generated through sales of the final product, to measure economic impact. But, because there is no established biofuels industry in the Maritime Provinces, this study instead uses the value of the commodities used in the production process.

The report states that economic impact can be measured by four indicators: GDP, employment, labour income and tax revenue.

For the purpose of estimating economic impacts, this study used the above mentioned volumes 250 ML ethanol and 75 ML biodiesel as the basis for a biofuels industry in the Maritimes. The study also assumes that biofuels plants have a capacity of 25 ML. Accordingly, this region would require 13 plants to meet the full 325 ML capacity.

The analysis shows then, a one-time regional economic benefit of plant construction totalling approximately $373.1 M in GDP, over 5,000 FTEs, an average total income of $256.1 M and average total tax revenue of $81.9 M.

Once biofuels plants are operational, the region will see positive economic impact, year over year. Again, based on the operation of 13 plants to meet the full 325 ML capacity in this region, the annual economic impacts will total up to $244 M in GDP, nearly 5,000 FTEs, an annual income of $125 M and an annual tax revenue to federal and provincial governments of close to $50 M.

New Brunswick Nova Scotia Prince Edward Island

Maritime

Provinces

(GDP, Income & Tax in $000s Employment in FTE)

1 Plant 5 Plants 1 Plant 4 Plants 1 Plant 4 Plants 13 Plants

GDP

Direct 8,430 41,140 5,845 23,380 7,925 31,700 96,220

Indirect 8,145 41,855 9,455 37,820 8,710 34,840 114,515

Induced 2,804 12,883 2,708 10,831 2,235 8,940 32,654

Total 19,379 95,878 18,008 72,031 18,870 75,480 243,389

Employment

Direct 15 85 30 120 20 80 285

Indirect 224 1,210 240 959 269 1,076 3,245

Induced 104 510 95 378 99 394 1,283

Total 343 1,805 364 1,457 388 1,550 4,813

Income

Direct 930 5,270 1,845 7,380 1,240 4,960 17,610

Indirect 6,720 35,020 7,055 28,218 7,430 29,720 92,958

Induced 1,275 5,865 1,300 5,202 1,020 4,080 15,147

Total 8,925 46,155 10,200 40,800 9,690 38,760 125,715

Tax revenue

Corporate 715 3,532 629 2,516 694 2,774 8,822Personal 1,607 8,308 1,836 7,344 1,744 6,977 22,629

Sales & excise 890 5,850 1,143 4,572 1,590 6,360 16,782

Total 3,211 17,690 3,608 14,432 4,028 16,111 48,233Source: Tables 2 and 4.

Note: NB plants composed of three biodiesel and two sugar beet ethanol.


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Finally, these figures represent annual impacts for an industry with a long-term life expectancy, of 25 years or more. Operating at its full potential, year over year, a biofuels industry will result in significant long-term economic impact for the Maritime provinces. Combining these two identified economic impacts for the region over a 5 to10 year period, including the time and resources to build the plants and the overall operations of the plants could result in a $Billion economic impact, with potentially $300 to $500M in government tax revenue and thousands of jobs.

Recommendations

Throughout the duration of this project, ACBC worked with its industry association members, Atlantic bioenergy stakeholders, Maritime Canada production facility proponents, industry producers & refineries, industry distribution companies, research and academic professionals, provincial and federal government officials and bioenergy stakeholders at large.

The result, after 18 months of engagement and information sharing, are numerous findings, which lead to most importantly, the proposal of recommendations to support the development of a biofuels production industry in Canada and achieve the economic and environmental impacts the industry holds for this region. They present significant immediate impact, in addition to other short and long-term benefits for Atlantic Canada, demonstrating that support for this sector can result in jobs, economic development and opportunity for multiple other sectors in the region.

These recommendations are based on experiences and working solutions from other parts of Canada, North America and the world, with proven track records for government support and industry success, including a demonstrated return on investment. They are an initiative for government collaboration and industry cooperation, seeking commitment from both the Government of Canada and the provincial governments of New Brunswick, Prince Edward Island and Nova Scotia and will require an aggressive and committed plan of action form all parties.

The following four recommendations are proposed as the key public policy instruments required to set the stage and drive industry development for Atlantic Canada.

RECOMMENDATION #1

IMPLEMENTATION OF RENEWABLE FUELS REGULATIONS

Specifically:

The government of Canada continue to finalize and implement the renewable fuels regulations as legislated.

The Maritime Provinces adopt complimentary provincial renewable fuels legislation.


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This report repeatedly suggests that a proposed and potentially successful biofuels industry for the Maritime region is based on the indented national implementation numbers, and would provide for an industry production scale of well above 300 ML of biofuels, produced locally, and providing local economic and environmental benefits. Implementing a Renewable Fuels Standard on a provincial basis, that is equal to that already in place nationally, eliminates current gaps in policy, puts an end to the confusion, and solidifies the commitment to succeed in this arena.

RECOMMENDATION #2

NATIONAL & CORRESPONDING PROVINCIAL CAPITAL ASSISTANCE PROGRAMMING

Specifically:

Atlantic Biofuel Capital Development Initiative: The introduction of a Government of Canada capital assistance program for Atlantic Canada creating the opportunity for equity investment by primary feedstock producers in the region.

Provincial Biofuel Capital Initiative: The Provinces of NB, PEI, and NS introduce a corresponding and complimentary provincial capital assistance program, to expand on and to include the opportunity for equity investment by primary feedstock producers and / or other provincial residents, companies or organizations.

ACBC and its membership believe that it is important to create the best opportunity for local ownership of newly constructed biofuels production plants. Local production, in our opinion should be owned by local people whenever possible. Local ownership will help create more local jobs and economic spin-offs for local economies. Capital assistance programming can provide the opportunity for farmers, communities and local residents at large to participate in the value-added biofuel production industry in the region through investment ownership.

This recommendation is potentially of little or no cost to governments and tax payers, as this is a repayable loan. Furthermore, these loans could be held by the lenders (provincial and federal) pending the completion of a feasibility study and overall approved financial package from its investors/stakeholders and all other lenders, thereby mitigating further government risk. All other approvals and commitments must be in place and both the federal government and the applicable provincial governments could present a set of criteria that must be met prior to approval.


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RECOMMENDATION #3

MATCHING FEDERAL & PROVINCIAL PRODUCTION INCENTIVES

Specifically:

Atlantic Biofuel Production Initiative: The Government of Canada introduces a production incentive program for qualifying regional producers. Program eligibility would expire after a regional production capacity of 325 million litres is met or upon a fixed date of program eligibility applications.

Provincial Biofuel Production Initiative: The Provinces of NB, PEI and NS create and introduce a Provincial production program initiative, with compatible terms, conditions and time lines.

Atlantic Canadas production of biofuels must be competitive with other production plants throughout Canada and North America. To compete, the region must first be on a level playing field. In order for the industry to succeed in this part of the country, it must be able to provide quality product, at a competitive price, and at a guaranteed production volume. The minimum production for domestic consumption within this region, based upon the blended amounts suggested in recommendation #1 is well over 300 million litres per year. Production incentives can secure the ability for local production to successfully meet its financial obligations, pay back its loans and compete in the marketplace for the long term.

Even though the industry here is just now getting its legs, an Atlantic specific program that provided a matching provincial / federal production incentive would be the final piece to ensure industry development in this region. It would result in a direct payout or cost to government; however, as identified through the Gardner Pinfold analysis, the economic impact of a biofuels industry of this scale, in this region, over a 5 year period, has the potential to exceed $1B. The contribution for this type of program would only be utilized if the industry builds to the recommended capacity suggesting that the anticipated economic benefit of over $1B would be realized by our local communities. This has the potential to be a very good investment with great results.

RECOMMENDATION #4

ESTABLISH A REGIONAL WORKING GROUP COMPRISED OF INDUSTRY, GOVERNMENT AND ACEDEMIC REPRESENTATIVES

Specifically, the working group would have the following responsibilities and tasks:

Primarily, to consider the recommendations of this report and initiate a broader dialogue on the potential for development of this industry in this region;

And further, to identify additional opportunities to participate in the national dialogues in this policy area;

And continue to build relationships between, and across governments to further examine programs and incentives related to bioenergy.


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Seek to strengthen coordination, engagement and partnerships between industry, government and academia, in particular with the respect to research and development, and other technological innovation.

Identify other project-specific items on an ongoing basis that could be initiated and implemented through the working group organization.

Atlantic Canada is a small region, both in terms of population and geographic proximity. To build an industry consisting of 8-15 plants, development on a regional scale versus by individual province just makes sense. An effective policy for industry development, on a regional scale, must come through collaboration among all players in the region. Interprovincial and federal/provincial relations will be not only valuable, but essential to this regions success.

In this industry, like many others, one of the key pieces in the puzzle is adequate, appropriate, and applicable research and development. This is particularly true for this industry, at its current stage of development. As Atlantic Canada emerges into the biofuels production arena, the region must consider different technologies, feedstocks and overall applications to the future of this industry. The background research required for this report has reinforced ACBCs understanding that industry and academia must work together in order to progress together. Our members and our stakeholders recognize that R&D is not only important, but essential, and when done in consultation and partnership with industry has the potential to yield impressive and economically beneficial results.

This recommendation could in fact be the most important; by bringing together government partners, facilitating research and development, and building a solid foundation for progress, this working group will be the catalyst to eventually drive forward all recommendations in this report and bring the Atlantic Canada biofuels industry to a whole new level.

ACBC and its membership are confident that these recommendations demonstrate the first collaborative effort of an organized and established pan-Atlantic industry group.

This report clearly indicates that accepting, approving and implementing all of these recommendations will provide the right circumstances to create exciting opportunities and positive change for this region of Canada.


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Conclusion

This report is the result of a comprehensive project spanning 14 months of research, engagement and information sharing to the ACOA team and regional stakeholders. It details numerous findings and proposes four recommendations that hold great economic promise for Atlantic Canada and its stakeholders in the biofuels industry.

Together, the recommendations represent the first collaborative effort of an organized and established pan-Atlantic industry group a long-term, committed and documented interaction with biofuels and bioenergy stakeholders through the New Brunswick, Prince Edward Island and Nova Scotia, as well as national and regional input for an informed and dedicated community of industry leaders and supporters.

This report has been prepared by the Atlantic Council for Bioenergy Cooperative Limited (ACBC) in collaboration with BioAtlantech, New Brunswicks lead bioscience agency, with all reasonable skill, care and diligence, and taking account of the resources devoted to it by agreement with the client.

Information reported herein is based on the interpretation of data collected and has been accepted in good faith as being accurate and valid.

TABLE OF CONTENTS

Preface 1

Introduction 2

Methodology 3

Assets and Opportunity 4

Introduction to Bioenergy Feedstock 4

Regional Opportunities for Cellulosic Biofuels 7

Improving Production Costs of Ethanol and Biodiesel via the Integration of 9 other Biodiesel Conversion Technologies

Other Second Generation Feedstocks 13

The Agricultural Picture 16

Anticipated Feedstocks in Atlantic Canada 17

Preferred Feedstocks for the Maritimes 23

Consideration of Non-Agricultural Feedstock for the Region 27

Stakeholders in Atlantic Canada 28

Stakeholder Survey Results 28

Bioenergy / Biorefinery Research Network 31

Market Capacity 33

Current Renewable Fuel Facilities across Canada 34

The Potential for Advanced Bioenergy Technology in Atlantic Canada 38

The Atlantic Opportunity Regional Consumption and Export 43

Research Analysis 47

SWOT Analysis 47

Testing and Analysis for Quality Control 52

Policy and Programming 53


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Atlantic Canada Biofuels Feasibility Model 67

Economic Impact Study 72

Recommendations 78

Conclusion 85

Appendices

Appendix A Stakeholder Survey Summary of Results

Appendix B Atlantic Canada Research Network

Appendix C The Case for Cellulosic Ethanol

Appendix D Cellulosic Biofuels Production & Demonstration Facilities in Atlantic Canada

Appendix E Bioenergy Technology in Atlantic Canada

Appendix F Letter to Federal Ministers

Appendix G QA / QC Capabilities and Capacity

Appendix H Provincial / Territory Contacts

Appendix I Atlantic Canada Biofuels Feasibility Model

Appendix J Economic Impact of a Biofuels Industry


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Preface

The biofuels industry is an emerging and dynamic industry; it is still, in many respects in the early stages of development. For example, the Canadian Governments Renewable Fuel Standard (RFS) came into effect only recently. The requirement for 5% ethanol content in gasoline became mandatory across Canada - with the exception of designated regions, including the far north and Newfoundland and Labrador on December 15th, 2010. And July 1st, 2011 marked the official start for implementing the required renewable fuel content for biodiesel, with a delayed schedule for Atlantic Canada originally set for January 1st, 2013. There remains some uncertainty on the biodiesel implementation schedule for Atlantic Canada, which is likely to now come into force mid-year 2013, and proposed amendments may all together remove the home heating fuel requirement on a national basis.

The biofuels sector provides Atlantic Canada with the opportunity to position its assets wisely, and to use them to build a sustainable biofuels industry in this region. With the development of initial and first generation biofuels production facilities across Canada and elsewhere in recent years, Atlantic Canada can capitalize on those experiences to determine how they may best apply here. With the regulatory push to spur industry at the federal level, the regional innovative capacity, recent and ongoing research, access to academia, and the availability of renewable resources, there is ample room for a large scale commercial biofuels industry development to take shape in Atlantic Canada.

Note: This report makes reference to the region, as well as both Atlantic Canada and the Maritimes. The overall picture of bioenergy is applicable to Atlantic Canada as a whole; however, biofuels specific discussions may not reference Newfoundland or remote Northern regions of Canada where they are currently exempt for the Canadian Renewable Fuels Regulations.


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Introduction

Acting in the capacity of Atlantic Canadas lead bioenergy association, ACBCs mission is to educate and promote the development of a sustainable bioenergy industry in Atlantic Canada and to establish provincial and federal government policy and programming that will allow for the development of a bioenergy industry in the Atlantic region.

ACBCs vision statement is: a vibrant, sustainable bioenergy industry, producing in Atlantic Canada, for Atlantic Canada, with a near term outlook to export and supply outside of the region to meet the increasing demands of the United States biofuels market.

To this end, Atlantic Canada needs both federal and provincial government policy and programming (P&P) designed to meet its needs for growth. With this project, ACBC intends to clarify, assess and reveal the regions bioenergy assets; build a business case for a bioenergy sector in the region; identify the economic impact of that sector; and ultimately make recommendations for the necessary policy and programming. Furthermore, it is the intention of ACBC to be the ongoing liaison between industry and government(s) now and into the future as this industry develops and matures, and to be the authority for future economic development initiatives and job creation opportunities for bioenergy industry development in Atlantic Canada.

This project is ground-breaking. This type of information is not currently readily available in Atlantic Canada; and, data and findings that do exist elsewhere cannot provide a realistic and accurate picture of this regions potential. This project and its findings will be an instrumental starting point to provide governments and industry players with an understanding of the potential for bioenergy in the Atlantic region and clear recommendations for moving forward to deliver the economic opportunity, jobs and environmental benefit for Atlantic Canadians.


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Methodology

The information contained in this report is the result of in-person interviews; online surveys; research analysis; engagement and discussion with industry and government stakeholders provincial and federal, elected and non-elected; and finally, significant analysis, deliberation and recommendation from the ACBC Board of Directors and its members.

Its findings are validated through the analytical work of Gardner Pinfold, one of Canadas leading economic consultants, who were contracted to assess the feasibility of this sector, as well its economic impact. This firms background, expertise, and strong reputation for quality research and methodological reporting provide important credibility and calculated proof for the arguments and recommendations this project makes.

This project is delivered through the following methods:

Asset Inventory to define the regions existing biofuels market, including an assessment of its current resources (feedstocks), its stakeholders (producers) and its potential for growth (what will work in the future, and when).

Research Analysis to reveal the strengths, weaknesses, opportunities and threats for this sector.

Feasibility Model through contract with Gardner Pinfold, to understand the true cost (whats needed to build this industry) and potential return on investment for bioenergy production facilities.

Economic Impact Analysis through contract with Gardner Pinfold, to analyse the research and using the Statistics Canada Input-Output Model, calculate the economic impacts of this sector and provide a sliding scale of analysis based on the minimum and maximum potential of the industry.

Recommendations - based on the information gathered, to support the opportunity for growth of the bioenergy sector in this region.


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ASSETS & OPPORTUNITY

Introduction to Bioenergy Feedstock

Bioenergy is energy contained in living or recently living biological organisms, a definition which specifically excludes fossil fuels. Plants get bioenergy through photosynthesis, and animals get it by consuming plants. Organic material containing bioenergy is known as biomass. Humans can use this biomass in many different ways, through something as simple as burning wood for heat, or as complex as genetically modifying bacteria to create cellulosic ethanol which can be burned as fuel. Since almost all bioenergy can be traced back to energy from sunlight, bioenergy has the major advantage of being a renewable energy source. However, it is important that bioenergy be harnessed in a sustainable fashion.

A specific plant or substance used for bioenergy is called a feedstock. Feedstocks are usually converted into a more easily usable form, typically a liquid fuel. Feedstocks refer to the crops or products, like corn, wheat, canola and waste vegetable oil that can be used as or converted into biofuels and bioenergy. Each feedstock has advantages and disadvantages in terms of how much usable material they yield, where they can grow and how energy and water-intensive they are to use.

Almost any plant-based material can be an ethanol feedstock. All plants contain sugars, and these sugars can be fermented to make ethanol. Some plants are easier to process into ethanol than others - because starch or cellulose need to be processed in order to provide sugars for fermentation. Some don't require many resources to grow, while others need many resources (inputs), as well as intensive care and support in order to flourish. Some plants are used for food as well as fuel, while others are cultivated exclusively for biofuels or other uses. Even plant-based wastes can be made into biofuels. Climate, soil and inputs all define the types, amounts and costs associated with determining the types of plants that can be grown in different geographic areas.

Biodiesel refers to a vegetable oil- or animal fat-based diesel fuel consisting of long-chain alkyl m methyl, propyl or ethyl esters. Biodiesel is typically made by chemically reacting lipids i.e. ., vegetable oil, animal fat (tallow) with an alcohol producing fatty acid esters. Biodiesel is meant to be used in standard diesel engines, distinguishing it from the vegetable and waste oils used to fuel converted diesel engines. Biodiesel can be used alone, or blended with petrodiesel and can also be used as a low carbon alternative to heating oil.

This report will identify regional feedstocks that are most likely to work for Maritime Canada, now and into the future, both in agricultural and non-agricultural feedstock supply.

Note: Reference to biomass, for purposes of this report, is not wood or grass-based pellets. The bioenergy pellet industry is a different discussion for a different mandate and time.

Biomass for this report is organic feedstocks (resources) for liquid biofuels and biogas. In both cases, the supply and demand for biomass is critical, and we believe there are sufficient amounts available in Atlantic Canada on which to establish a domestic and export biofuels industry.

ACBC and this project support and promote the use of Atlantic-based biomass for the development of the biofuels and biogas industry here.


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Ethanol Feedstocks

Starch and Sugar-Based Ethanol Feedstock

Nearly all ethanol is derived from starch- and sugar-based feedstocks. The sugars in these feedstocks are easy to extract and ferment, making large-scale ethanol production affordable. Corn is the leading U.S. crop and serves as the feedstock for most U.S. and Canadian domestic ethanol production; wheat is the second most predominant feedstock used in Canada Small amounts of energy beets, wheat, milo (sorghum) and sugarcane are also used on smaller scales

Cellulosic Ethanol Feedstocks

Cellulosic feedstocks are non-food based feedstocks that include crop residues, wood residues, and dedicated energy crops and industrial and municipal wastes. These feedstocks are composed primarily of cellulose and may contain hemicelluloses, and lignin - typically lignin is extracted to provide process steam for production. The complex, rigid nature of these feedstocks makes it much more challenging to release the sugars for conversion to ethanol; this difficulty in converting the biomass to sugars results in a higher conversion cost to corn and wheat based ethanol. Cellulose conversion is technically feasible but as of yet the conversion costs are considerably higher than that of sugar and starch based ethanol conversion processes; however this gap is narrowing and will benefit further from timing and research and development. So, when reports indicate that certain specific cellulosic ethanol is 5 to 10 years in the future, they are not referring to technical feasibility but to improvements in the technology that will provide economic feasibility.

Most plants and trees are made of inedible cellulose. Cellulose, in the form of firewood has been used as a basic form of bioenergy for millennia. Recent advances in bioenergy, ranging from the simple biomass pellets to the complex cellulosic ethanol, have created a need for high-yielding feedstocks.

The crops under consideration are mostly grasses and trees, which as perennial crops may also provide a range of environmental benefits over annual crops like corn and soybeans. The yields of cellulosic feedstocks are much higher because any part of the plant can be used. Cellulosic feedstocks also don't compete with food; they are seen as the best hope for large-scale, sustainable biofuel production. Crops, like switchgrass and miscanthus, which are grown purely for energy and have no use as food or fiber, are also called dedicated energy crops.

Cellulosic technologies that can use these feedstocks include Cellulosic ethanol, biomass-to-liquids, gasification, biogas and others.

Examples of Grass based energy crops

1. Miscanthus 2. Prairie grasses 3. Switchgrass

Examples of Trees based energy crops

Short rotation soft woods (hybrid Willow, industrial hemp, alders, poplar) Wood waste materials (slash, woodchips, sawdust, MSW Municipal Solid Waste))


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Other cellulosic feedstocks offer many advantages over starch- and sugar-based feedstocks, including alders and willow, which are currently being explored in the Maritime region. They are more abundant and can be used to produce more substantial amounts of ethanol to meet fuel demand. They are waste products or, in the case of trees and grasses grown specifically for ethanol production, can be grown on marginal lands not suitable for other crops. Less fossil fuel energy is required to grow, collect, and convert them to ethanol, and they are generally not crops that are used for human food. There are challenges with harvesting, collecting, and delivering cellulosic feedstocks, but researchers are studying these challenges in an effort to find solutions.

There are many industry producers and proponents of cellulosic biofuels, at several stages of development and delivery. In many cases cellulosic biofuels are being produced, but not considered as profitable as traditional or 1st generation biofuels. The traditional methods of producing ethanol from cellulose involve pre-treatment to break up the fibers to allow the removal of lignin which is an inhibitor of fermentation. The cellulose and hemicellulose are then hydrolyzed to simple sugars using either enzymes, or a strong acid or strong base. The fermentation of the resulting sugars is still often not as efficient as the fermentation of sucrose or starch based sugars due to trace amounts of other chemicals from the biomass that effect yeast growth and metabolism.

An alternative method for producing biofuels from cellulose that is being researched by a few groups in Europe, Canada and the USA is the production of biocrude using high temperature and pressure and upgrading this biocrude to diesel or gasoline using catalysts. This catalyst process is identical to the process used by the petroleum refining industry to produce gasoline and diesel from crude oil. As this technology improves and develops it will most likely supersede the current cellulosic biofuels process that is the major focus of many companies in the USA and Canada (e.g. Mascoma, Poet, Iogen etc.).

Neste Oil from Finland is using this process commercially to produce green diesel from palm oil. Alphakat (www.alphakat.de/temp.company.php) in Germany and Kior (www.kor.com) in the USA are also developing processes for converting forestry and agriculture biomass. A new company called Cellufuel was recently formed in Nova Scotia and has developed its own proprietary green diesel technology with plans to build a pilot plant in 2013-2014 and commercial plants across Canada starting in 2015.

However, this renewable diesel fuel faces the same challenges as biodiesel does in the region with respect to the lack of policy and programming at the provincial level.

Government policy and programming, in coordination with research and industry development is, and will be key to the pace and success of cellulosic biofuels production around the world. Commercialization of these processes is a funding priority of the U.S. Department of Energy's Biomass Program, as well as the government of Canada through Sustainable Development Technology Canada (SDTC). However, Canadian funding is not as significant as the U.S. based programs and should be enhanced.


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Regional Opportunities for Cellulosic Biofuels

A recent study completed by Halifax Global for ACOA focused on the opportunities for cellulosic biofuels in Atlantic Canada. The report indicates an opportunity for Nova Scotia, Newfoundland and possibly New Brunswick to repurpose idle assets or to integrate with existing mills to produce biofuels. Nova Scotia has the most available wood biomass that is not secured by the industry for pulp and paper or lumber production. The development of a biofuels sector in Nova Scotia focused on using woody biomass would have a significant impact on the rural regions of the province as well as providing a local supply of renewable fuel. However, while the biomass is available, the lack of provincial biofuel mandates and specific programming will make it challenging to establish this sector.

The most recent development in Nova Scotia that will help with the development of the conversion technology from forest biomass is the establishment by Innovacorp Inc. of a bioprocessing incubator complex on the former Mersey-Bowater mill site in Liverpool. This site will provide an excellent place for companies developing biofuels process from forest biomass to pilot and demonstrate their processes. It would also make sense that if the process demonstration was to take place in Nova Scotia that the first commercial plant would also be located there.

Source: Milley, Peter. 2012. Assessment of cellulosic Biofuels Potential in Atlantic Canada.

Example Theoretical Ethanol Yields of Selected Cellulosic Feedstocks

Feedstock Conversion to Liquid Biofuel

Corn Stover (stalks and cobs) 1500 litres/acre; not cellulosic under RFS 2

Straw (Wheat, barley and oats) 280 litres/acre; not cellulosic under RFS 2

Wood Waste 200 litres / Dry Ton

Switch grass 1000 litres/acre based on a yield of 20 tons/acre

Miscanthus 1000 litres/acre based on a yield of 20 tons/acre

Sweet Sorghum 1000 litres/acre

Reed Canary 500 litres/acre

Timothy 300 litres/acre

Willow 420 litres/acre

Poplar 1000 litres/acre

Municipal Waste 400 litres/Dry Ton

Sources include: http://www.oilgae.com/, http://www.fao.org/, https://bioenergy.ornl.gov/, http://www.greenfacts.org/en/index.htm, http://www.greenfuels.org/

Notes: 1) It is still not known whether switch grass, miscanthus, sorghum can be successfully grown in our region and if so, what sort of yield we can expect. There are studies underway in each of the provincial departments of Agriculture. 2) Production acreages and yields are variable based on market demand and agronomic production practices (varieties, fertilizer usage, etc.)


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Example Theoretical Ethanol Yields of 1st Generation Feedstocks (non- cellulosic)


Corn 940 litres/acre

Wheat (spring) 430 litres/acre

Barley 361 litres/acre

Oats 220 litres/acre

Rye 186 litres/acre

Triticale 240 litres/acre

Energy Beets 3500 litres/acre

Under RFS2 Advanced Biofuel

Potatoes 570 litres/acre

Waste alcohol 190mls/gallon (based on a 5% ethanol w/v waste stream

Sources include: http://www.oilgae.com/, http://www.fao.org/, https://bioenergy.ornl.gov/, http://www.greenfacts.org/en/index.htm, http://www.greenfuels.org/ ACBC Board Members

Notes: 1) Estimated supplies of feedstocks may already have other markets and may not be available for use in the production of biofuels. Alternatively, while they might be sold into other markets currently there is nothing to stop suppliers switching markets if they can obtain a higher or competitive price. This also has value for crop rotation.

2) Production acreages and yields are variable based on market demand and agronomic production practices (varieties, fertilizer usage etc.).

3) Ethanol conversion yields litres/acre is based on regional yield averages. In comparing our starch based cereals with other regions of Canada and the USA, our % starch is usually slightly lower and the Atlantic region experiences a lower yield/acre due to our shorter growing season.

4) While the yield of ethanol per acre (for potato) is very high, the value of the potato as a food crop is much too costly to use as a feedstock for ethanol production. However approximately 10% of all the potatoes produced in the region are not able to be sold for food due to appearance, size etc. These are referred to as culls, and these culls can be used for ethanol production. Currently there is no guaranteed market with a guaranteed price for these cull potatoes.

5) Energy Beets while the substrate used for the production of ethanol from the sugar beets is sucrose, the large yield per acre and low input of energy required to convert the sucrose to ethanol, results in a carbon foot print comparable to the use of cellulosic feedstocks. So while it is does not produce `cellulosic ethanol` it would be correct to say that it produces an ethanol equivalent to cellulosic ethanol.


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Improving Production Costs of Ethanol and Biodiesel via the Integration of other Bioenergy Conversion Technologies

Biomass can be converted to a combustible gas by biological processes such as anaerobic digestion (biogas), or a thermochemical process, gasification (syngas). The integration of these processes with ethanol and biodiesel production improves both the economics (allowing a smaller scale) and the environmental sustainability of the process. One of the major challenges facing ALL bioprocessing companies in the region (e.g. pulp and paper) is the high cost of energy in Atlantic Canada, compared to the rest of Canada and to the USA, resulting in a non-competitive price point for the final product. The only solution to high energy costs is the integration of an alternative energy source as part of the process that can reduce energy costs and keep the opex as low as possible over the long term. While the integration of bioenergy to offset energy costs improves the opex, it will increase the initial capex by 20-25%.

Biogas

In anaerobic digestion, methane biogas is produced from organic feedstock. The feedstock can be wet organic material such as manure, sewage sludge, industrial effluents, and agricultural and forest residues. Biogas from anaerobic digesters is composed primarily of methane, which can be used to generate the electricity and /or steam heat necessary for processing other feedstocks into ethanol and biodiesel. One of the Atlantic regions primary challenges when it comes to comparing production costs with commercial operations in the USA, Western and Central Canada is the lack of access to low cost electricity or natural gas. In order to be able to competitively produce ethanol and biodiesel in the region energy cost will be a factor. One way of accomplishing this is via the integration of an anaerobic digester producing methane for combined heat and power. This integration of biogas into the process is often referred to as a closed loop production processes where waste streams of the ethanol and/or biodiesel process are used to partially or fully fuel the process. In addition to energy production the anaerobic digester produces a natural fertilizer by-product that can be used in the crop production, again potentially reducing the cost and carbon foot print of the feedstock being grown.

The primary use of biogas is as a local fuel for the generation of combined heat and power (heat and electricity). However biogas is similar in composition to natural gas and can be used as a compressed transportation fuel (requires a natural gas vehicle or a converted diesel engine). Biogas can also be treated using a steam process to produce bioethanol.

The biogas industry in Canada is growing rapidly, with over 20 farm digesters in operation across the country and an anticipated 40-plus farm-based digesters in Ontario alone by the end of 2013. The increase in Ontario can be directly attributed the provincial Fee-in-Tariff program in place which offers guaranteed pricing for renewable electricity production from the provincial government. There are currently only two functional commercial biogas digester systems in Atlantic Canada with another two more in development. One of the commercial systems is located at the Cavendish Farms processing complex in PEI where the biogas is used to provide up to 30% of the complexs heat supply (the remaining 60% is provided with natural gas transported from the Enbridge pipeline in Sackville New Brunswick). The other commercial system is located in St. Andr New Brunswick on a Dairy Farm. This biogas digester is owned and operated by Laforge Bioenvironmental and uses the biogas to produce electricity and heat (CHP). The current system has a production capacity of 600kwh and will soon be expanded to 1.6 MWH. Laforge is exploring the


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possibility of producing compressed biogas for transportation fuel for use on the farm and in its waste collection vehicles.

Atlantic Bioenergy Corp., with its demonstration facility based in PEI, produces ethanol from energy beets. Its proprietary and innovative process has an anaerobic digester as its energy source. It converts all the processing plants by-product streams to energy. Not only does this reduce production costs and produce a fertilizer by-product for crop production, it also results in the ethanol product being classified as an advanced biofuel in the USA (Currently the only advanced biofuel available in the USA is from South America Sugar Cane Ethanol).

The biogas sector has the potential to be more economically and environmentally viable than the ethanol and biodiesel sectors. However the policy and programming related to biogas production at both the farm and industrial level are sadly lacking in the region. Nova Scotia is the only jurisdiction with some programming and policy, whereas PEI and New Brunswick have no policy and programming related to biogas production.

Gasification

Gasification is a thermochemical process that occurs when biomass is heated in an oxygen-starved environment (containing approximately 1/3 of the air needed for complete combustion) to produce a synthetic gas (i.e. syngas), which contains carbon monoxide and hydrogen. Any reasonably dry biomass can be converted to syngas, which can also be used as a fuel for combined heat and power generation. Source www.nrcan.gc.ca .

Gasification is most suited to the conversion of lignicellulosic residues that are not easily degraded microbial for biogas production. In regions where forest residues and construction and demolition waste is abundant, the use of gasification power and heat generation can reduce energy costs in the production cycle. Waste materials from the primary process (ethanol and/or biodiesel) can also be converted to energy using gasification. There are currently no projects in the region that use gasification. The Cape Breton University, Verschuren Centre for Sustainability in Energy and the Environment will focus research efforts on gasification and its applications for converting forest biomass to both heat and electrical energy. Again, because Nova Scotia has a Community-Feed in Tariff program and a need for alternative electricity, it is the most likely region to begin developing gasification in the energy sector. New Brunswick, with a large amount of forest residues, could also take advantage of this technology, but a lack of programming and policy are hindering current development.

Biodiesel Feedstocks

Biodiesel can be produced from a large variety of feedstocks, including vegetable oils, animal fats and recycled cooking oils (also known as yellow greases):

Virgin oil feedstock canola, rapeseed and soybean oils are most commonly used, soybean oil alone accounting for about ninety percent of all fuel stocks in the US and Canada. It can also be obtained from field pennycress and jatropha and other crops such as mustard, jojoba, flax, sunflower, palm oil, coconut, hemp.

Waste vegetable oil (WVO), also called waste cooking oil (WCO).


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Animal fats including tallow, lard, yellow grease, chicken fat and the by-products of the production of omega-3 fatty acids from fish oil.

Algae, which can be grown using waste materials such as sewage. Oil from halophytes such as Salicornia bigelovii which can be grown using saltwater

in coastal areas where conventional crops cannot be grown, with yields equal to the yields of soybeans and other oilseeds grown using freshwater irrigation.

Mink oil anaerobic digestion of mink waste carcasses for the production of biodiesel.

Feedstock yield efficiency per unit area affects the feasibility of ramping up production to the huge industrial levels required to power a significant percentage of vehicles. In Canada, the most common vegetable oils are from dedicated crops such as soybean and canola. Since canola has a higher oil content, lower cloud points and pour points, and is in a large net export position compared to soy, it is considered a better feedstock for biodiesel production. Currently, biodiesel produced in Canada is mainly made from yellow grease and animal fats, which are the most cost-effective feedstock, and generate relatively fewer GHG emissions than others. As newer large scale production plants come on line in Canada, for example Archer-Daniels-Midland (ADM) in Alberta and Milligan BioTech in Saskatchewan, canola continues to become a more predominant biodiesel feedstock in Canada.

Example Theoretical Biodiesel Yields of Selected Feedstocks


Canola 300 380 litres per acre

Tallow Difficult to estimate

Soybean 240 litres/acre

Sunflower 320 litres/acre

Hemp 150 litres per acre

Flax 190 litres/acre

Camelina 235 litres/acre

Mink oil/fat 0.25 kg oil/carcass

Fish oil / waste 0.7 litres/litre of fish oil produced from waste

Extracted oil is ~ 11% of total weight of fish waste

Waste Cooking Oil (WCO) or Waste Vegetable Oil (WVO)

Difficult to estimate.

WVO in the region estimated to be 12 MML/Yr

Microalgae 19,000 litres/acre

5000-15000 gal [theoretical laboratory yield]. Extrapolated from the ability to have successive harvests over a year long period. Assumes 100% utilization rate

Seaweed 400 litres/acre

Sources include: http://www.oilgae.com/ , http://www.fao.org/ , https://bioenergy.ornl.gov/ , http://www.greenfacts.org/en/index.htm, http://www.greenfuels.org/ ACBC Board Members


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Notes:

1) Canola production in the Maritimes is also increasing. Industry estimates put total acres for Nova Scotia, New Brunswick and P.E.I. at 13,000 acres in 2011, up from 6,000 acres in 2010 and 1,000 in 2006. P.E.I. had 3,000 acres of canola the past few years.

2) Estimated supplies of feedstocks may already have other markets and may not be available for use in the production of biofuels. Alternatively while they might be sold into other markets currently there is nothing to stop suppliers switching markets if they can obtain a higher price.

3) Production acreages and yields are variable based on market demand and agronomic production practices (varieties, fertilizer usage etc.).

4) Because canola is considered by this report to be a very possible first choice agricultural feedstock. It is necessary to make the following comment, in relationship to the above table and the conversion to liquid biofuel of 300 litres per acre.

300 litres per acres is based on calculations by www.canolainfo.org and the Manitoba Canola Growers, that one bushel of canola will make 11 litres of oil, and that the Canadian Canola Growers estimate an average 35 bushels per acre. So, one acre should produce 385 liters of oil.

Recovery of oil to biodiesel is 9.95 percent, so this number could be as high as 380. 300 litres per acre is therefore a reasonable minimum. For purposes of this report we have used a range

of 300 to 380 litres, which would be accurate for future discussion purposes.

5) All the waste tallow and cooking oil that could be used for biodiesel production in the region is currently collected and processed by 2 companies: 1) Rothsay rendering and 2) SF Rendering. Both companies have biodiesel production capacity. Rothsay (rendering) has a biodiesel facility producing 1 million litres of biodiesel per week in Montreal PQ. All the collected oil and tallow suited for biodiesel production from the Atlantic Region is shipped to Montreal for conversion and sold into the Ontario and Northern US markets. SF Rendering currently does not produce biodiesel because the price it can obtain for tallow and waste oil in the animal feed market is higher than they can obtain for biodiesel. While the waste fat and oil is collected by these companies for free or a small pickup charge they do not pay for the resource. If the price of biodiesel was sufficient to allow companies to purchase waste oil and fat the resource would belong to the highest bidder.

6) Biodiesel potential yield from microalgae and macroalge are guesstimates as these feedstocks are still in the early stage development. The initial evaluation of these resources indicates that they far out-produce the traditional plant based oil resources.

Waste Cooking Oil

Many advocates suggest that waste vegetable oil is the best source of oil to produce biodiesel. Early indication suggests that less than half of the current requirement for biodiesel production in New Brunswick may be supported by waste oil. Production plants would likely have a much lower initial capital cost associated with them, because they would not require a crushing facility like canola and soybean feedstocks. However, the quality of the used oil determines the overall production cost and yields of the biodiesel produced from the oil. Moderately degraded fats and oils tend to be less expensive to produce than heavily degraded materials.

Canola

Agricultural production of Canola for biodiesel in New Brunswick, Nova Scotia and PEI is a very realistic and immediate potential feedstock for Atlantic biodiesel production. Reference to production capacity of canola in these three provinces, and its potential for meeting biodiesel demand for this region and for export, will be identified later in this report.


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Animal Waste and Animal Fats

Animal fats are a by-product of meat production and cooking. Although it would not be efficient to raise animals (or catch fish) simply for their fat, use of the by-product adds value to each of these industries (hogs, cattle, poultry, aquaculture). Today, multi-feedstock biodiesel facilities are producing high quality animal-fat based biodiesel.

A $5-million dollar plant is currently being built in the U.S., with the intent of producing 11.4 million litres (3 million gallons) of biodiesel from some of the estimated 1 billion kg (2.2 billion pounds) of chicken fat produced annually at the local Tyson poultry plant. Similarly, some small-scale biodiesel factories use waste fish oil as feedstock. An EU-funded project (ENERFISH) suggests that at a Vietnamese plant built to produce biodiesel from catfish (basa, also known as pangasius) with an output of 13 tons/day of biodiesel (produced from 81 tons of fish waste -in turn resulting from 130 tons of fish). This project utilizes the biodiesel to fuel a CHP unit in the fish processing plant, mainly to power the fish freezing production side.

Another project currently underway closer to home is Newfoundland and Labrador Marine Institutes biorefinery demonstration project. This project was started in late 2011 with a target completion date of December 2013. The scope includes processing waste streams from the local and federal fisheries (including salmon, snow crab, shrimp, groundfish) and organic municipal wastes, to produce fish meal products, bio actives (chitin and chitosan), marine oils (for human and animal consumption) and eco energy including biodiesel, as well as electricity and heat through anaerobic digestion. The project received substantial federal and provincial support to the tune of $800,000- as well as buy-in from 2 major industry partners. The objectives of the project are simple: to demonstrate technical and economic feasibility, promote full utilization of resources and minimize waste and generate eco energy and revenues to support the local sector.

Note: The current national renewable fuel standards exempt Newfoundland and Labrador.

Other Second Generation Feedstocks

While humans have been growing grasses and trees for millennia, there are completely novel crops being considered as bioenergy feedstocks. Even more than cellulosic feedstocks, developing techniques to cultivate these crops at a scale deemed acceptable for production continues to pose some major challenges. However the utilization of marine biomass for bioethanol and biodiesel production is undoubtedly a sustainable and eco-friendly approach for renewable biofuel production.

Using algal biomass as feedstock for bioethanol production is promising, because of the large amounts of carbohydrates embedded in the physiology in algal cells. Oleagenous (oil-bearing) algae are a particularly attractive material, because its oil can initially be extracted for biodiesel production, and then its high-carbohydrate residue can be processed for ethanol fermentation. Compared to terrestrial plant biomass (which is also a popular biofuel-ethanol feedstock), algae have exponentially higher growth rates.


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Algae (microalgae)

The production of biofuel from algae involves three basic steps: algae growth, biomass

extraction, and post processing.

In the first stage of large scale algae biofuel production, algae are grown in a network of bioreactors on an agricultural scale. The collected biomass is then processed through several mechanical, drying, and chemical steps to yield the final biofuel product. The finished biomass is suitable as a direct substitute for coal, petcoke and related fossil fuels. Biocrude can also be extracted from the biomass and further processed into biodiesel in the third step through a chemical process that results in biodiesel that meets the appropriate regulatory standards for use in the existing fuel distribution system (for example US ASTM D6751).

Note: The NRC research facility in Halifax is the Canadian Centre of Expertise in Microalgae production for oils.

Seaweed (macroalgae)

Seaweed to biofuels has an interesting potential application for Atlantic Canada, as promoted recently in the January 2012 edition of Scientific America (http://www.scientificamerican.com/article.cfm?id=genetically-engineered-stomach-microbe-turns-seaweed-into-ethanol ) where an article demonstrated how an altered version of the E. Coli bacteria had been used to unlock a treasure trove of sugars found in brown kelp.

The authors sell how this seaweed, completely devoid of lignin, is capable of ethanol production of 1,500 gallons per acre, which is 50% more than sugar cane and roughly triple that of corn.

Seaweed and the technology to unlock its sugar potential has the oil world a buzz with national and multi-national companies working to exploit regions abundant in this natural resource. Bordered by the ocean, Atlantic Canada is a region rich in brown kelp and as technologies to harness this resource become more available, Atlantic Canada is sure to benefit.

There is already a commercial market for macroalgae in North America and elsewhere, mainly as food or as feedstock for polysaccharide and hydrocolloid extraction, which is relatively small when compared with the scale of cultivation needed for macroalgae to be considered a significant contributor to the biomass needed to meet RFS production goals. However, the resource potential here is high, and the ability of the worlds oceans to produce marine biomass as a biofuel feedstock supply is still considered largely untapped.

This opportunity to produce and process marine biomass is an important opportunity for the Atlantic Region. With the exception of British Columbia we are the region with the greatest access to marine environments. While the use of these marine biomass resources (other than fish processing wastes) will not provide the biomass for biofuel production in the next 5 years (domestic supply) they will definitely be a part of any industry expansion and fuel export strategy moving forward. It is vital that the region invest in the long-term development and use of these resources as it will not only provide additional production capacity to the industry in the future but it will attract research funding dollars, technology investors in the short term, develop a regional expertise that could be of global significance


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and have the longer term potential to provide revenues from intellectual property and production and processing systems manufacturing.

Woody Biomass/Woodchips

Todays biorefineries convert crops such as corn, soy, and sugar into biofuels, but current research and development if focusing on the next generation of biofuels, which will be produced from multiple cellulose feedstocks including woody biomass, energy crops, and residuals including agricultural and other wastes. Major breakthroughs in cellulosic conversion and commercialization of these new biorefineries are expected in the short term.

Woody biomass has been considered and used as a feedstock for biofuels production throughout many parts of the world. As is the case in many new technologies for biofuel production, prod-cutting fuel from this feedstock is doable, however the questions of profitability still remain an issue. As technologies improve, it is more likely that woody biomass will be used for commercial scale production in this region.

Atlantic Canada obviously has easy access to large amounts of woody biomass feedstock, and additionally has biofuels proponents who have the desire, the interest and the resources to convert woody biomass or woodchips in both ethanol and biodiesel or green diesel.

One example of the move to commercial scale production in the United States is ZeaChem Inc. (www.zeachem.com) who is phasing in operations of new integrated facility for cellulosic ethanol production as a result of their recent Series C financing ($25Millon). We believe Atlantic Canada also has the potential to move into commercial scale production with the use of this regional feedstock. For example:

a) CelluFuel Inc. is a Nova Scotia based company founded by four forestry veterans with experience in industry and finance. Their objective: to become the pioneer in the commercialization of transportation biofuels, based on woody biomass, in Eastern Canada. CelluFuel has already raised $500,000 from a New York buyout shop with strong links to the biofuel industry, and they have licensed proven technology in the most energy-efficient process they could find for producing energy from wood products. CelluFuel is currently establishing a presence in the former Bowater Mersey paper mill in Brooklyn, Nova Scotia to produce biodiesel from wood waste, believed to be the first step in an ambitious plan for 10 plants within the next six years.

b) Groupe Savoie has the potential to become a leader in next generation biofuels production in Atlantic Canada. With nine industrial facilities two sawmills, one pallet plant, one component plant, one pellet plant and dry kilns in St-Quentin, N.B.; one component plant and a dry kiln in Kedgwick, N.B.; one pallet production and recycling plant in Moncton, N.B.; and, one sawmill in Westville, Nova-Scotia Groupe Savoie has a significant amount of its own woody biomass residuals, which it intends to use to supply feedstock for a commercial scale biofuels production facility in Atlantic Canada. Research and development is currently underway.


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The Agricultural Picture

In the Canadian agriculture sector, large farms dominate production, accounting for only 2.5% of farms, but 40% of revenues. In 2007 and 2008, as commodity prices have risen, farm market receipts and net farm income for grain and oilseed farms have also increased. Canada ranks as the second largest in the world for the availability of arable land per person which also accounts for Canada being a large producer and exporter of agricultural products. Canadas share of land suitable for agricultural production accounts for only a small percentage (5%) of the total land in use without a loss in energy content.

Source: http://www.statcan.gc.ca

The agriculture, forestry, fishing and hunting sectors contributed nearly 2.2% to Canadian GDP in 2007, of which crop production accounted for approximately 54.5%. The crop production sector employed nearly 298 844 persons. In 2007, the value of crops exported was nearly $13 billion while imports totaled $6.4 billion with the United States being the largest trading partner, followed by Japan.

Source: http://www.ic.gc.ca/eic/site/icgc.nsf/eng/home

In addition to reductions in GHG emissions, one of the key drivers for supporting renewable fuels production and use is the benefit that it can bring to the agriculture sector and rural Canada. Increased renewable fuels production in Canada will result in increased local demand for feedstocks and new markets for Canadian agricultural producers crops. For example, biodiesel facilities can provide a market for off-grade canola, which is not suitable for the food or feed market.

Providing agricultural producers with the opportunity to invest in and develop profitable renewable fuels projects that use agricultural products as inputs will help to create a positive stream of income that could be more independent of commodity price swings. This would also encourage an approach that goes beyond simple commodity production to focus on new ways to add value to biomass produced on farms. This would also encourage an approach that goes beyond simple commodity production to focus on new ways to add value to biomass produced on farms. Renewable fuel plants would inject additional spending into the local rural economies, broadening their tax base and generating additional jobs at the local level.

Further expansion of the renewable fuel industries in Canada is expected to rely on feedstock supplied by the Canadian agricultural sector. However, the projected level of renewable fuel production in Canada is not expected to impair the agriculture sectors ability to provide agricultural commodities for traditional uses, such as for food production and livestock feed. Consequently, downstream industries such as meat and food processing are not expected to be impacted with respect to production, employment, price and trade. Furthermore, impacts on consumer food prices are not expected.


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Anticipated Feedstocks in Atlantic Canada

Stakeholders have identified several biofuels feedstocks in Atlantic Canada: energy beets, canola, feed wheat, corn, soybeans, camelina, barley, alders, grasses, forestry waste, municipal waste, rendering / tallow, fish oil, yellow grease, cellulosic / straw, algae, and more.

Basically all feedstocks will work for biofuels production; the question is what is most applicable in this region for availability, ability to produce, cost effectiveness for production facilities, and acceptability by the industry and the public. Atlantic Canada has ample land base and agricultural ability to produce sufficient feedstock for regional biofuels, based on the Canadian RFS, and also has sufficient land and agricultural resources to supply feedstock to produce biofuels for export.

According to Statistics Canada, (2006) the total area of land on farms in NS, NB and PEI is approximately 2.5 million acres, of which just over 1 million acres is cropland. Nova Scotia Agriculture for example identifies that there is 1 million hectares (ha) of land suitable for agriculture in NS alone. 40,000 ha or 98,842 acres are underutilized (source: www.statcan.gc.ca) and could be available for biofuels production. Although it is difficult to identify the number, it is commonly understood that since 1930 there had been hundreds of thousands of acres of farm land that has come out of agricultural production, and has gone back to unused lands. Some would suggest that number is as high as 1.1 million acres.

The Agricultural Biomass Availability for Bioenergy Applications in Nova Scotia report by Michael Main, NSAC May 22, 2008 suggests:

40-60 thousand hectares or land could be available for biomass crops, providing up to 750,000 tonnes biomass fuels (13,500,000 GJ/y).

Manures could provide up to 300,000 GJ/y of biogas Minimal crop residues are available Development depends on strong energy prices and supportive policy Perennial grass or coppice have the greatest sustainable potential

In Atlantic Canada, the discussion regarding food vs. fuel, in our opinion is irrelevant, based on two key considerations:

Current production facilities in other parts of Canada that use canola, wheat and corn for feedstock, traditionally use non-food grade production of these crops.

Based on the number of acres available for agricultural production in Atlantic Canada, that are currently being cropped, and the large amount of acres that are available for crop, supplying feedstock for energy does not impact food supply. Furthermore bringing agricultural land into production for biofuels, from existing land, will help the agricultural community add an additional crop into their crop rotation strategy, and will add another opportunity for sales of their agricultural commodities.

Bringing underutilized land back into production for biofuels feedstock, creates the opportunity for an emerging industry to develop; it has potential for agricultural value add, and when the value to produce food on these new acres occurs, the land will have been brought back to useable condition in order to grow traditional food crops.


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Prince Edward Island

Statistics on Agriculture in PEI

Source: www.statcan.gc.ca and provincial departments gathered from engagement of agricultural officials and feedback from the inter-provincial roundtable.

In 2011, Prince Edward Island continued to report the largest area of potatoes in the country with 86,560 acres.

Soybean area in Prince Edward Island increased 351.6% since 2006 to 51,116 acres in 2011, making it one of the major field crops in the province. Prince Edward Island accounted for 72.5% of the Maritime province's total in 2011. In the Maritimes, soybean area increased 352.8% since 2006 to 70,492 acres in 2011.

Farm area: Total farm area in Prince Edward Island (2011) is 594,324 acres; the average area per farm (2011) is 398 acres.

Of the total farm area in Prince Edward Island in 2011, 69.1% (410,712 acres) was reported as cropland the total area in field crops, hay, fruits, field vegetables, sod and nursery.

Proportion of cropland, Prince Edward Island, 2011

Composition of cropland Percent of cropland*

* Totals may not equal 100% due to rounding

Source: Statistics Canada, Census of Agriculture, 2011

Field crops 65.0

Hay 31.2

Fruits 3.1

Vegetables 0.6

Sod and Nursery 0.1

The majority of cropland (96.2%) was reported as field crops and hay. The proportion of field crops (including potatoes) increased to 65.0% in 2011. Conversely, the proportion of hay decreased to 31.2%. Increased prices for cash crops coupled with declining beef cattle and pig numbers led to a shift from forages and crops traditionally used for feed to more profitable cash crops. Other crops, including vegetables, fruit, sod and nursery production, accounted for an additional 3.8% of total cropland.

Grains and oilseeds are the largest groups of crops grown on PEI. Grains are primarily grown in rotation with potato crops. In 2010, Statistics Canada estimated that there were 99,000 acres of wheat, oats, barley and mixed grain and 44,000 acres of soybeans seeded on the island. Barley accounted for 50,000 acres. Milling wheat is grown for the production of flour. One third of the soybean acreage in 2009 was exported to Japan to be processed into tofu and miso. Canola is being grown and pressed for oil that is used for food and fuel. The remaining grains and soybeans are fed to livestock on the island.

Largest area of potatoes in Canada

Soybean crop on the rise

Total farm area = 594, 324 acres

69.1 % cropland grains and oilseeds


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New Brunswick

Statistics on Agriculture in NB

Source: www.statcan.gc.ca and provincial departments gathered from engagement of agricultural officials and feedback from the inter-provincial roundtable.

Corn for grain, soybeans and canola areas: In 2011, corn for grain in New Brunswick accounted for 10,611 acres, soybean area was 10,600 acres and canola area was 9,002 acres.

Farm area: Total farm area in New Brunswick (2011) was 0.9 million acres; the average area per farm is 359 acres.

Of the total farmland (2011), 37.5% (351,231 acres) was reported as cropland, the total area used in field crops, fruits, vegetables, sod and nursery.

Proportion of cropland, New Brunswick, 2011



Source: Statistics Canada, Census of Agriculture

Field crops 40.8

Hay 49.7

Fruits 8.5

Vegetables 0.5

Sod and Nursery 0.4

The majority of cropland (90.5%) in New Brunswick was reported as field crops and hay. Field crops (including potatoes) represented 40.8% of reported cropland.

Area Under Crops in NB Acres

Hay and field crops, 2011

Spring wheat (excluding durum)

3,624

Winter wheat 573

Buckwheat 1,676

Alfalfa and alfalfa mixtures

31,988

All other tame hay and fodder crops

142,484

Barley 23,144

Canola (rapeseed) 9,002

Corn for grain 10,611

Corn for silage 6,995

Dry field peas 34

Fall rye 205

Flaxseed X

Area Under Crops in NB Acres

Forage seed for seed 108

Mixed grains 945

Mustard seed 0

Oats 23,324

Other field crops 55

Potatoes 51,814

Soybeans 10,600

Spring rye 485

Sugar beets 0

Sunflowers X

Total corn 17,606

Total rye 690

Triticale 0

Top 3: Corn, soybeans, canola

Total farm area = 0.9 million acres

37.5 % cropland

Abandoned farmland 12,000+ hectares available for redevelopment


22

The New Brunswick Department of Agriculture provides estimates between 11,400 and 21,400 hectares of abandoned farmland suitable for redevelopment for modern agricultural purposes.

For purposes of this assessment, abandoned farmland was defined as land that has grown up into goldenrod, has sporadic small bushes, or has standing grass not cut and could easily be developed for modern agricultural purposes. Lands that had 50% or more woody species or fields that had completely reverted to woody vegetation were not included in the inventory as they would be considered equivalent to a tree stand or forested area in terms of cost and ability to develop the lands for agriculture.

Several factors have contributed to the abandonment of farmland, including: the transition from small family farms to larger mechanized farms; poor soils, poor topography, poor drainage, poor location; and urban sprawl and development.

Nova Scotia

Statistics on Agriculture in NS

Source: www.statcan.gc.ca, St. Marys University and provincial departments gathered from engagement of agricultural officials and feedback from the inter-provincial roundtable.

In 2011, Nova Scotia was the only province in Canada to show an increase in the number of farms since 2006, reporting a total of 3,905 farms and accounting for 1.9% of Canadas 205,730 farms.

Increased area of corn for grain and soybeans: The area of corn for grain in Nova Scotia increased 77.4% since 2006 to 13,701 acres in 2011, while soybean area more than tripled to 8,776 acres.

Farm area: Total farm area in Nova Scotia (2011) is 1.0 million acres; the average area per farm was 261 acres.

Of the total farm area in Nova Scotia in 2011, 27.6% (280,889 acres) was cropland the total area used in hay, field crops, fruits, field vegetables, sod and nursery.

Proportion of cropland, Nova Scotia, 2011



Field crops 18.8

Hay 58.9

Fruits 18.7

Vegetables 2.4

Sod and Nursery 1.2

Source: Statistics Canada, Census of Agriculture

Corn, soybeans on the rise

Total farm area = 1 million acres

27.6% cropland

90,000 hectares of unused land available for biofuels development

Atlantic Canadas Bioenergy Opp

2013-08_Fueling_the_Future_Atlantic_Bioenergy.pdf

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