10% Ethanol Blends In Ontario Gasoline Comes Clean

In Ontario during the last provincial election many farmers were poised to rush the polls come Election Day.  However, the Liberals were bailed out when their main opposition the Conservatives chose to fall on their own sword with their policy on faith based schools.  It was a heated debate, but in the end keeping the status quo on “faith based schools” saved the Liberals.

During the campaign I asked one lonely question to candidates in my local riding.  I asked, “Do you support the Ontario Ethanol Growth Fund and do you still support Ontario moving to a 10% ethanol blend by 2010”?  With the faith based school issue swirling around me, it was if I had asked about the pineapple crop in Greenland.  Each candidate exclaimed the virtues of ethanol and said they supported a lot more than 10%, even 85% ethanol at the pumps.

So when Ontario Premier Dalton McGuinty was quoted saying he’d have to rethink Liberal policy on 10% ethanol blends by 2010, I wasn’t too surprised.  I had asked the question last year because I suspected there was no way the Liberal government would go through on that commitment.  I was also thoroughly disappointed in the answer given to me that night, because nobody including the Liberal incumbent had a clue what I meant.  It was an example of how tenuous Ontario’s ethanol policy has become.  Even the inmates in the government asylum didn’t know about it.  Depending on this bunch to ensure our biofuel future doesn’t give one solace.

I don’t include Premier McGuinty and provincial agriculture minister Leona Dombrowsky in “that bunch”.  In fact, if it weren’t for them we wouldn’t have had the 5% standard in Ontario.  However, “that bunch” can be influenced by just about anything, so with greater society unduly howling about biofuel and food costs, we shouldn’t be too surprised if McGuinty is seen backpedaling.

The truth is the Ontario promise for 10% biofuel in our gasoline was never going to come true.  For instance as far back as two years ago I was challenging groups about the 10% biofuel requirement.  In essence Ontario in 2008 still doesn’t produce enough ethanol to satisfy our 5% requirement.  We have to import from Brazil or wherever we can get it cheapest.   So moving to 10% always represented something, which meant more imports and less benefits for Ontarians.  So the backpedaling this past week should be seen in that context.  Premier McGuinty knows the Ontario ethanol sector has problems and moving to something, which is unattainable in this political environment, is simply not adding up.

Nonetheless I grow corn in Ontario.  There are also lots of you who grow it in Quebec and a few more in Manitoba.  So “we” want ethanol plants and we want a biofuels policy, which guarantees 10% ethanol.  The problem in 2008 is getting there.

What are the options here and what interests are at war in our society pushing green biofuels over to the dark side?  In other words is society better off by putting some biofuels into their tank or are they better off filing up their tank 100% from Alberta’s tar sands?  I’ll leave that for your perusal, however, I think it’s pretty obvious a combination of corporate and political forces are coming together to limit agricultural biofuels.  Big oil has an agenda too.

Nonetheless it’s way to early to write “ethanol’s obituary.”  It’s pretty obvious from the June 10th and June 30th USDA reports that corn demand is being rationed.  However, it’s also obvious that in the era of high oil prices, ethanol is making gas cheaper.  In fact ethanol prices have pushed toward the $3/US gallon mark and with corn backing off a bit ethanol is profitable.  If there is a way for ethanol people to make some money, you can bet they will find it.

What I find interesting in the US is all the Brazilian ethanol that is coming in, jumping over the 54-cent import tariff and winding up in American gasoline.  For instance analysts from FC Stone said last week that Brazil will export 3 billion litres or about 793 US gallons to the US this year.  Finding a way to get Midwest ethanol to Florida and California has proved a challenge.  Shipping it from Brazil and jumping that tariff is one answer.

The challenge for Canadian corn farmers and biofuel boosters is to maintain some semblance of government support to get biofuel capacity up and running.  With $520 million committed to Ontario’s ethanol industry up until 2017, I don’t think farmers can blame Premier McGuinty.  He was only stating the obvious.  Nonetheless a call from Canadian and Ontario farm groups for clarity on the ethanol issue might be an option.  Simply put, we’ve come too far to turn around now.  Toughing it out in this current political environment is surely job one.