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Introduction

1. Energy represents one of the defining challenges of the 21st century for
governments, for business and for civil society.Many experts anticipate the global
supply will tighten in the years ahead, and that energy prices will inevitably escalate.
The International Energy Agency (IEA) is predicting a 40% increase in global crude
demand by 2030. More than 70 percent of electricity in the United States is
generated using fossil fuels such as coal, oil, and natural gas.The environmental
impacts from this generation are considerable, ranging from air and carbon pollution
to the myriad consequences of mining and drilling for fuel. Obtaining energy from
clean, renewable resourcesgreen powercan provide both environmental and
economic value, and a growing number of American companies are making the
switch.In recent years, the market for green power in the United States has grown
exponentially, a good example being wind power. In 1989, U.S. wind farms
generated 2.1million megawatt-hours (MWh) of renewable electricity,and in 2005,
wind farms in 31 states3 generated 14.6 million MWh of renewable electricity,4 an
increase of 595 percent.According to the U.S. Energy Information Administration,the
55.15 million MWh of renewable energy generation in 2005 was equal to 1.5 percent
of the countrys total electricity generation. In 2030, 177.13 million MWh of
renewable electricity are expected to be generated, equal to 3.3 percent of the total
electricity generation.Although many types of green power are not diffi cult to
procure, the overwhelming amount of information available can make this confusing
to do, especially for newcomers. Accordingly, this guide was designed to cut through
the clutter and provide the essential information for companies wanting to green
their energy supply. It is intended specifi cally for offi ce- and retail-based companies
and organizations, defi ned as those that do not have manufacturing operations.
Examples include fi nancial institutions; real estate, retail, law, and publishing fi
rms;universities; and nonprofi t organizations. The readers of this guide do not need
an energy background to understand the information.
THE DEFINITION OF GREEN POWER
2. Green power, also referred to as renewable energy, can be used to generate
both heat and electricity. The World Resources Institute (WRI) views green power as
energy generated from resources that are commonly accepted as having a relatively
low impact on the health of humans,animals, and the ecosystem. These energy
sources include
(a) Solar
(b) Wind
(c) Biomass
(d) Landfill gas
(e) Geothermal
(f) Certified hydropower.
3. Unlike fossil fuels, these resources do not contribute to emissions of carbon
dioxide (CO2), which causes global warming. Although power derived from nuclear
energy is not polluting, it is not considered a green power source because it is not
renewable and spent nuclear fuel carries environmental and health risks. In addition,
some hydropower projects can have signifi cant adverse environmental impacts on
water quality, river flows, and fish populations and thus are not considered green.

4. Types of Green fuels:(a) First Generation Green Fuels


(i) Vegetable oil
(ii) Bio alcohols
(iii) Bio ethers
(iv) Biogas
(v) Solid biofuels
(b) Second generation green fuels
(c) Third generation green fuels

5. First Generation Green Fuels


First-generation green fuels are biofuels made from sugar, starch, vegetable oils
using conventional technology . The basic feed stocks for the production of first
generation green fuels are often seeds or grains such as wheat, which yields starch
that is fermented into bioethanol, or sunflower seeds, which are pressed to yield
vegetable oil that can be used in biodiesel. These feed stocks could instead enter
the animal or human food chain, and as the global population has risen their use in
producing green fuels has been criticized for diverting food away from the human
food chain, leading to food shortages and price rises.

Vegetable oil
Edible vegetable oil is generally not used as fuel, but lower quality oil can be used for
this purpose. Used vegetable oil is increasingly being processed into biodiesel, or
(more rarely) cleaned of water and particulates and used as a fuel. To ensure that
the fuel injectors atomize the fuel in the correct pattern for efficient combustion,
vegetable oil fuel must be heated to reduce its viscosity to that of diesel, either by
electric coils or heat exchangers. This is easier in warm or temperate climates. MAN
B&W Diesel, Wartsila and Deutz AG offer engines that are compatible with straight
vegetable oil, without the need for after-market modifications.

Bio-alcohols
Biologically produced alcohols, most commonly ethanol, and less commonly
propanol and butanol , are produced by the action of micro-organisms and enzymes
through the fermentation of sugars or starches (easiest), or cellulose (which is more
difficult). Bio-butanol (also called bio-gasoline) is often claimed to provide a direct
replacement for gasoline, because it can be used directly in a gasoline engine (in a

similar way to biodiesel in diesel engines).

Bio-ethers
Bio ethers (also referred to as fuel ethers or fuel oxygenates) are cost-effective
compounds that act as octane enhancers. They also enhance engine performance,
whilst significantly reducing engine wear and toxic exhaust emissions. Greatly
reducing the amount of ground-level Ozone, they contribute to the quality of the air
we breathe.

Solid bio-fuels
When raw biomass is already in a suitable form (such as firewood), it can burn
directly in a stove or furnace to provide heat or raise steam. When raw biomass is in
an inconvenient form (such as sawdust, wood chips, grass, agricultural wastes),
another option is to pelletize the biomass with a pellet mill. The resulting fuel pellets
are easier to burn in a pellet stove.
Examples include wood, sawdust, grass cuttings, domestic refuse, charcoal,
agricultural waste, non-food energy crops (see picture), and dried manure.

Biogas
Biogas is produced by the process of anaerobic digestion of organic material by
anaerobes. It can be produced either from biodegradable waste materials or by the
use of energy crops fed into anaerobic digesters to supplement gas yields. The solid
byproduct, Digestate , can be used as a biofuel or a fertilizer. In the UK, the National
Coal Board experimented with microorganisms that digested coal in situ converting it
directly to gases such as methane.

6. Second Generation Green Fuels.Supporters of green fuels claim that a more


viable solution is to increase political and industrial support for, and rapidity of,
second-generation biofuel implementation from non food crops, including cellulosic
biofuels. Second-generation green fuel production processes can use a variety of
non food crops. These include waste biomass, the stalks of wheat, corn, wood, and
special-energy-or-biomass crops (e.g. Miscanthus). Second generation (2G) green
fuels use biomass to liquid technology, including cellulosic biofuels from non food
crops . Many second generation green fuels are under development such as biohydrogen, bio-methanol, DMF, Bio-DME, Fischer-Tropsch diesel, bio-hydrogen
diesel, mixed alcohols and wood diesel.

7. Third Generation Biofuels. Algae fuel, also called oilgae or third generation
green fuel, is a bio fuel from algae. Algae are low-input, high-yield feed stocks to

produce bio fuels. It produces 30 times more energy per acre than land crops such
as soybeans. With the higher prices of fossil fuels (petroleum), there is much interest
in algaeculture (farming algae). One advantage of many biofuels over most other fuel
types is that they are biodegradable, and so relatively harmless to the environment if
spilled.The United States Department of Energy estimates that if algae fuel replaced
all the petroleum fuel in the United States, it would require 15,000 square miles
(38,849 square kilometers), which is roughly the size of Maryland.
Second and third generation green fuels are also called advanced biofuels.
Algae, such as Botryococcus braunii and Chlorella vulgaris, are relatively easy to
grow, but the algal oil is hard to extract. There are several approaches, some of
which work better than others.

Indian Perspective.
8. Jatropha Jatropha incentives in India is a part of India's goal to achieve energy
independence by the year 2012. Jatropha oil is produced from the seeds of the
Jatropha curcas, a plant that can grow in wastelands across India, and the oil is
considered to be an excellent source of bio-diesel. India is keen on reducing its
dependence on coal and petroleum to meet its increasing energy demand and
encouraging Jatropha cultivation is a crucial component of its energy policy.
The Government of India has identified 400,000 square kilo-metres (98 million acres)
of land where Jatropha can be grown, hoping it will replace 20% of India's diesel
consumption by 2011.

9. Implementation Aspects. The former President of India, Dr. Abdul Kalam, is one
of the strong advocaters of jatropha cultivation for production of bio-diesel. In his
recent speech, the Former President said that , out of the 600,000 km of wasteland
that is available in India over 300,000 km are suitable for Jatropha cultivation. Once
this plant is grown the plant has a useful lifespan of several decades. During its life,
Jatropha requires very little water when compared to other cash crops.There are
various current issues with green fuel production and use, which are presently being
discussed in the popular media and scientific journals. These include the effect of
moderating oil prices
(a) The "food v/s fuel" debate.
(b) The Carbon emissions levels.
(c) The Sustainable green fuel production.
(d) The Deforestation.
(e) The Soil erosion.
(f) The Impact on water resources.
(g) The Human rights issues.
(h) The Poverty reduction potential.

10. Types of Green Fuels


(a) Corn Ethanol. A fuel derived from the sugars in corn and other plants. Pure
ethanol is usually blended with gasoline. "E10"10 percent ethanolis
common today. E8585 percent ethanolis the highest practical blend; some
gas is still required for combustion in most climates.
(b) Cellulosic Ethanol. A biofuel refined from cellulose, the fibrous material that
makes up most of the plant matter in wheat, switch grass, corn stalks, rice
straw, and even wood chips.
(c) Biodiesel. A renewable fuel made from vegetable oil or animal fats, including
soybeans, canola oil, and even used cooking oil. Its sometimes mixed with
conventional, petroleum-based diesel to help cut down on tailpipe emissions.
(d) Clean Diesels.Diesel is refined from petroleum, like gasoline, but the
pollution it produces is harder to control. "Clean diesel" vehicles burn the fuel
more efficiently and trap pollutants better. New low-sulfur diesel fuel also pollutes
lessmuch like unleaded gasoline, compared with leaded.
(e) Hybrids.There are several kinds of hybrids. In general, todays models have a
battery-powered electric motor that drives the car at slower speeds and a gas
engine that kicks in at higher speeds. The engine also helps recharge the
battery, along with energy captured from the rotation of the wheels during
deceleration.
(f) Plug-In Hybrids.Same principle as for ordinary hybrids: Theres an electric
motor and a gas engine, except that the battery powering the motor would be
recharged from an electrical outlet, at home or someplace else. The motor would
power the car until battery power waned. Then the gas engine or another
secondary power source would kick in.
(e) Electric Vehicles.Any car with a battery-powered motorincluding every
variety of hybridis an electric vehicle to some extent. A pure electric vehicle
would be run entirely by the battery-powered motor.
(f) Hydrogen/Fuel Cells.The concept is similar to hybrids: an electric motor would
drive the car much of the time. In this case, the motor would be charged by
something under the hood called a fuel-cell stack, which converts hydrogen and
oxygen into electricity that flows to the battery. The on-board fuel would be
hydrogen.
11. What's Good about Green Fuels.
(a) Corn Ethanol.Its renewable, and corn is plentiful in the United States.
Burning corn ethanol can cut greenhouse-gas emissions by as much as 20
percent, compared with gasoline. Producing ethanol generates fewer
emissions, too.
(b) Cellulosic Ethanol.A lot. Its renewable and can be made from nonfood
plants. It also has much greater "energy bounce" than gasoline or corn
ethanol, which means it generates far more energy than it takes to produce.
Greenhouse-gas emissions are lower than those from gas, too.

(c) Biodiesel.Biodiesel is renewable, from domestic sources, and can be used


with any diesel engine. It also has more energy than gasoline, which raises
mileage. Like ordinary diesel, it offers good torque characteristics in cars,
which drivers notice as power and acceleration.
(d) Clean Diesels. Diesel contains more energy than gasoline, so cars get
about 30 percent better mileagewith greater torque, which drivers feel as
low-end acceleration. The extra energy also makes diesels ideal for towing
heavy loads, which is why many trucks are diesel-powered.
(e) Hybrids.Hybrid mileage can be 25 to 30 percent higher than that of
ordinary gas-powered cars. Thats because the electric motor, which requires
no gas, does most of the work during driving conditions where the gas engine
is least efficientlike stop-and-go urban driving. Since they burn less fuel,
hybrids emit fewer greenhouse gases, too.
(f) Plug-In Hybrids.Powering the battery from the electrical grid could be much
cheaper than gasoline. If owners charged up overnight, theyd be tapping into
off-peak power that costs utilities lessso some savings could be passed on
to consumers. Plug-ins could also get higher mileage than todays hybrids,
with fewer emissions.
(g) Electric Vehicles.As with plug-in hybrids, electric vehicles could be cheap
to fuel, given the relatively low cost of electricity drawn from the power grid
through an ordinary outlet. Power drawn overnight at off-peak rates could cost
one-fourth the equivalent of gasoline.
(f) Hydrogen/Fuel Cells.Many things. Hydrogen is widely available, in natural
gas and water, for instance. The only tailpipe emission is water. Pound for
pound, hydrogen fuel has more inherent energy than gasoline, which could
mean higher mileage: A prototype Honda fuel-cell vehicle gets the equivalent
of nearly 70 miles per gallon.
12. Whats Bad about Green Fuels.
(a) Corn Ethanol.It contains one third less energy than gas, which means
mileage is 30 to 40 percent lower. Massive ethanol production could cause a
shortage of corn available for food and destroy habitat. It could also increase
smog in urban areas.
(b) Cellulosic Ethanol. There are few expected downsidesexcept that the
technology doesnt yet exist to mass-produce it. If cellulosic ethanol becomes
a widespread fuel, it would be a boon for agricultural regionswhile nations
with little arable land would be left out.

(c) Biodiesel. Mileage is higher than for gasoline but a bit lower than for
conventional diesels. And while it may help reduce greenhouse-gas
emissions, biodiesel may actually raise the levels of other pollutants. It can
also cause fuel-system problems in cars, especially at low temperatures.
(d) Clean Diesels. The extra technology in clean diesels can raise the cost by
$3,000 or more, compared with gas models. And clean diesels still emit more
smog-causing pollutants than the cleanest gas-powered cars. Producing more
low-sulfur diesel could also increase greenhouse-gas emissions from refining.
(e) Hybrids. Big battery packs and other components can add $2,000 or more
to the cost, compared with conventional models, and it can take years to pay
off the premium through lower gas bills. The batteries, usually lodged in the
rear cargo area, also reduce storage space. And the batteries in todays
hybrids require nickel, which is costly.
(f) Plug-In Hybrids.The large battery packs would take up extra space, add
weight to the car, and degrade performanceand right now theyre too
expensive and unproven for mass production.
(g) Electric Vehicles.The batteries required for an all-electric vehicle would be
even bigger than those needed in a hybridso big that the car would need to
be designed around the battery. For now, theyd be very expensive, too.
(h) Hydrogen/Fuel Cells.While it can be extracted from water, the cheapest
source of hydrogen is natural gas, an unrenewable hydrocarbon. Theres no
distribution system or standardized method of storage, which is crucial since
hydrogen fuel is a gas that must be kept under high pressure.

13. Where would it be Most Useful.


(a) Corn Ethanol. Mild blends are widely available. But E8585 percent
ethanol, 15 percent gasis found only at about 1,500 filling stations in the
United States., mostly in the Midwest. That number will grow, since the 2007
energy law mandates a fourfold increase in ethanol production by 2022.
(b) Cellulosic Ethanol.Wherever its available. Once its produced, cellulosic
ethanol will be the same as corn ethanol, fit for any flex-fuel vehicle capable of
running on E85.
(c) Biodiesel.For now, biodiesel seems most useful as a blend used in
conventional diesel-powered automobiles. Some enthusiasts retrofit their cars
to run on pure biodieselalthough that can void the warranty and cause other
problems.

(d) Clean Diesels.For large vehicles that generally get poor mileage and trucks
used for heavy hauling. A number of states with the toughest emissions
requirementslike California, New York, and Massachusettseffectively ban
older diesels, although clean diesels should meet their standards.
(e) Hybrids.Theyre great for people who take lots of short trips or drive
frequently in traffic. At highway speeds, theres less of a payoff, since the gas
engine does most of the work. Hybrids perform better in warm climates than in
cold ones, since low temps can degrade battery effectiveness.
(f) Plug-In Hybrids.As with hybrids in general, plug-ins would be best for people
who make a lot of short trips or commuters who drive frequently in traffic, since
thats when the battery-powered electric motor would be doing most of the
work.
(g) Electric Vehicles.Theyd make most sense for commuters and others who
typically drive short distances. Once the battery charge is depleted, theres no
real advantage to an EVsince it has to run on a gas engine or some other
power source.
(h) Hydrogen/Fuel Cells.Fuel cells make sense for most types of vehicles. One
enduring challenge is "cold start" the ability to power up at temps as low 30
below zero Fahrenheitwhich means fuel cells are ill-suited for the coldest
climates. That may be resolved by the time other technology matures.
14. How Much will it Cost
(a) Corn Ethanol.Its often a bit cheaper than gasbut not a bargain, since
mileage is lower. At $2.50 per gallon, for instance, it takes about $3.30 worth of
E85 to drive the same distance as a gallon of $3 gas. Cars must also be
specially outfitted to run on E85.
(b) Cellulosic Ethanol.Unclear, because its not mass-produced yet, but
estimates suggest it would be considerably cheaper than gas on a per-mile
basisperhaps less than $1 per gallon.
(c) Biodiesel.Properly refined biodiesel tends to cost more than gasoline. But it
varies. Some restaurants can be persuaded to give away used cooking oil, which
will power certain cars. If production ramps up, costs should come down, but its
not clear that will happen.
(d) Clean Diesels.The price of diesel is usually a bit higher than gasoline, and
new low-sulfur diesel is more expensive still. Diesel engines cost more, too.
Some drivers might recoup the extra cost through better mileage.

(e) Hybrids.They can be pricey. At about $23,000, for instance, the Honda Civic
hybrid is roughly $4,000 more than a basic conventional model. The Lexus
RX400h, at nearly $42,000, tops the comparable RX350 by about $5,000. But
theres always some payback from lower gas bills, fewer refueling stops, and, in
some cases, tax breaks.
(f) Plug-In Hybrids.Not sure, because the battery technology isnt mature. But
with the right batteries, plug-ins could be cheap to fuel. At overnight, off-peak
rates, the cost of electricity might be one-fourth what an equivalent amount of
gasoline would cost.
(g) Electric Vehicles.The electric-powered Chevy Volt, due in 2010, will have a
price tag of about $30,000with GM most likely subsidizing the battery pack.
Fueling it from home, however, could cost 80 percent less than filling a car with
$3 gas.
(h) Hydrogen/Fuel Cells.If mass-produced and widely distributed like gasoline,
the cost of hydrogen fuel could be equivalent to $2 per gallon or less. Plus, fuel
cells are about three times as efficient as gas engines, which means better
mileage. But building an infrastructure to deliver hydrogen would cost billions,
which would certainly add to consumers cost.

15. When's it Coming


(a) Corn Ethanol.Ethanol has been around for many years but hasnt caught on
because the fuel isnt widely available, and for most drivers its more expensive
on a per-mile basis. Virtually all cars can run on mild blends like E10, and most
automakers build E85-capable cars or plan to.
(b) Cellulosic Ethanol.Five years, perhaps. Its not quite around the corner, but
its probably closer than hydrogen-powered cars. Backing by big companies like
General Motorsand the possibility of technology breakthroughscould speed
adoption.
(c) Biodiesel.Refiners already produce about 250 million gallons of biodiesel per
yearbut thats barely 1 percent of all diesel consumed in the United States.
And diesels themselves represent a small portion of the car market here. The
industry could gather steam if there are tax breaks or other subsidies.
(d) Clean Diesels.A couple of clean diesels, like the Mercedes-Benz E320 sedan,
are on the market now, with other models from automakers such as Volkswagen,
Audi, and Hyundai on the way.

(e) Hybrids.By the end of 2008, there will be nearly two dozen hybrids on the
market, including sedans, crossovers, luxury makes, full-size SUVs, and pickup
trucks.
(f) Plug-In Hybrids.Unknown. Theres not yet an affordable battery that can
handle the deep charges and discharges that would occur under normal use in a
plug-in. Prototype lithium ion batterieslike those in power tools and laptops
are promising, but its not clear if they can be scaled up for something as big as
a car.
(g) Electric Vehicles.GM built an electric car in the 1990sthe EV1that flopped
because it had limited range, with no backup engine, and carried just two people.
Tiny Tesla Motors is building a $100,000 all-electric car, due in 2008, using
several thousand laptop-style lithium-ion batteries strung together.
(h) Hydrogen/Fuel Cells. Could still be 10 or 20 years away. There are major
technical hurdles in terms of producing the fuel, distributing it widely, and storing
it in cars.
16. Whats Taking so Long
(a) Corn Ethanol. In some farm states, where the corn is grown, there are plenty
of ethanol stations. But there are no pipelines from there to major population
centers, and the fuel hasnt caught on nationwide because it doesnt really save
drivers money.
(b) Cellulosic Ethanol. Its more difficult to break down the cellulose in plants
than the starch that generates corn ethanol. Researchers are working on new
enzymes and manufacturing processes to make it easier and cheaper to
produce cellulosic ethanol.
(c) Biodiesel. Demand for biodiesel isnt as strong as for other oil alternatives,
partly because diesel engines represent a small portion of the American car
market. Even in Europe, where diesel cars are far more popular, biodiesel fervor
has faded because raising the right crops might cause deforestation.
(d) Clean Diesels. Diesels are popular in Europe, where gas is more expensive,
but in the United States, pollution problems have relegated them to a small sliver
of the car market. If clean diesels pass muster in Californiawhich sets the
standards for several other statesthe technology could make a comeback.
(e) Hybrids. Theyre available now. The next step will be "dual-mode" hybrids
that have two electric motors, are more efficient, and are more suitable for big
SUVs and pickups that have four-wheel drive and heavy towing capability. The
first dual-mode hybrids are the Chevy Tahoe and GMC Yukon SUVs.

(h) Plug-In Hybrids.The battery technology. The nickel-metal hydride batteries


used in todays hybrids dont hold enough energy to be viable for plug-ins and
cant handle the deep charges and discharges needed. Lithium-ion batteries
might work, but nobody has mass-produced one thats safe, reliable, and potent
enough for a car.
(j) Electric Vehicles.The batteries. An EV battery pack must be able to
withstand thousand of deep charges and discharges. Lithium-ion batteries like
those used in laptops, cell phones and power tools have the most potential
but nobodys mass-produced one big enough to power a car safely and reliably.
(k) Hydrogen/Fuel Cells.Researchers are still searching for cost effective ways
to produce the fuel, transport it, and store it in a car. An even bigger problem is
building a hydrogen infrastructure comparable to a gas station on every corner,
which would cost billions and require the unprecedented cooperation of
automakers, energy companies, and the government.

There is some debate as to how hard it will be to fi nd oil in the years


to come. There is little debate about the diffi culties associated
with using that oil.
Combustion of fossil fuels to fulfi ll the world demand for energy is
the most signifi cant source of GHG emissions. The transportation
sector accounts for 25-30% of all GHG emissions.
How will we meet our energy needs as oil supplies become
increasingly inaccessible or limited to places of sensitive
ecology? How do we meet our energy needs while working to
reduce the emissions that contribute to climate change? How
do we supplement the supply of transportation fuel in a more
sustainable but still economic way?
There is little doubt that we need to grow beyond oil to pursue
alternatives that are good for our economy, for our environment,
and for Canadians. In speaking about the transportation sector,
there is only one viable, practical and commercialized alternative:
renewable fuels.
In doing its part to grow beyond oil, the CRFA is guided by the
following key principles:
Support for Advanced Biofuels: among developed nations
there is a global race underway to establish leadership in the
development and production of advanced biofuels. Those who
succeed will lead the world in drawing the benefi ts of clean
energy, new economic growth and a reduced carbon footprint.
Canada is among a handful of nations that have invested in
building the critical mass that will lead to success.
Building a Sustainable Industry: Renewable fuels produced
and consumed in Canada are generating signifi cant GHG
emission reductions, and contributing to the social and
economic well being of Canadians. These are benefi ts that grow
consistently with increased acceptance of renewable fuels. As
the industry shifts toward advanced biofuels, GHG reductions
are poised to reach even greater margins. The CRFA welcomes
measurable standards to objectively confi rm the sustainability
of our industry performance. Moreover, these same standards
of measurement should be applied to all transportation fuels,
including oil.
Building a Competitive Industry: Throughout the world the
renewable fuels sector is confronted by the reality that refi ners
and marketers of gasoline and diesel control the distribution of
motor fuels. Historically, the oil industry has received extensive
public subsidies and support. This serves to intensify their

existing structural advantages and discourage genuine


competition. Policies should encourage the creation of an
effi cient and competitive Canadian biofuels industry that can
compete in a North American market place.
Fiscal Responsibility: Industry and government must fashion
their partnership going forward in the context of changing fi scal
times. Claims against the public treasury must be justifi ed by
the tangible promise of a multi-fold return. Recognizing the
need for fi scal restraint, any programs or measures designed
to encourage the production and use of biofuels must be able
to withstand rigorous cost-benefi t analysis.
Feedstock Neutrality: Government programs designed to
support the industry should be feedstock neutral. Biasing
one feedstock over another will inevitably lead to market
distortions and thwart innovation. This will also encourage the
rapid development of exciting and innovative alternatives such
as municipal waste, discarded corn cobs, forest waste and so
forth.
Investment in Technology: Advanced Biofuels rely on
technological innovation. Policies should support investments
that help industry remain at the forefront of innovation in the
race to commercialize next-generation technologies. This is
how new jobs and economic leadership are fostered.
Quality and Safety: The CRFA supports the CGSB process for
establishing fuel quality standards in Canada. We also support
and willingly assume the obligations of quality specifi cations
for renewable fuels entering the Canadian marketplace.

Federal and provincial governments have


supported and promoted the expansion of
renewable fuels in recent years for sound
and demonstrated policy reasons. Renewable
fuels make solid public policy sense from an
economic, environmental, and societal point of
view, and Canada is well equipped to provide
them. They also constitute a critical aspect of
Canadas determination to be not just an energy
superpower but a clean energy superpower.

Federal Renewable Fuels Strategy


The federal government has created a Renewable Fuels Strategy
to support the development of renewable fuels in Canada. 1 The
strategy is designed to:
Reduce GHG emissions resulting from fuel use,
Encourage greater production of biofuels,
Accelerate the commercialization of new biofuels
technologies, and
Provide new market opportunities for agricultural producers
and rural communities.
Regulatory tools are critical to the success of this approach. The
Renewable Fuels Regulations have proven to be a crucial initiative
in support of the federal commitment to reduce Canadas total
GHG emissions by 17% from 2005 levels by 2020. The objective
of these regulations is to reduce GHG emissions by mandating
an average 5% renewable fuel content based on the gasoline
volume2 and 2% renewable fuel content in the distillate pool.
When fully implemented, the Strategys two regulatory
requirements will ensure a cumulative volume of renewable fuel
that translates into the annual reduction in GHG emissions of over
four megatonnes the equivalent of taking one million vehicles
off the road. The Regulations also promote an integrated and
nationally consistent approach to biofuels across Canada and
set the stage for development of a commercially viable industry
capable of expanding into use of advanced biofuels.
The federal Renewable Fuels Strategy also includes a number of

important incentive programs:


1. Supporting the expansion of Canadian production of
renewable fuels. The ecoENERGY for Biofuels Initiative
will invest up to $1.5 billion over 9 years to boost Canadas
production of renewable fuels.
2. Assisting farmers. The ecoAGRICULTURE Biofuels Capital
Initiative (ecoABC) is providing $200 million in repayable
contributions of up to $25 million per project to help farmers
raise the capital necessary for the construction or expansion
of biofuels production facilities
3. Accelerating the commercialization of new technologies.
A Sustainable Development Technology Canada (SDTC)
initiative provides $500 million over eight years to leverage
private sector investment in establishing fi rst-of-kind
commercial facilities for the production of next-generation
renewable fuels.

Social Benefits.The renewable fuels industry has delivered results that are
measurable and substantive:
(a) Job creation and economic growth
Reductions in GHG emissions
Agriculture benefi ts
Energy security/diversity benefi ts
Social benefi ts to Canadians
Job Creation and Economic Growth
The renewable fuels industry has quickly become a valued engine
of economic growth particularly for rural Canada where new
plants have attracted jobs and economic prosperity. Demand for
feedstock has created new customers and higher incomes for
farm families.
These benefi ts include the creation of new direct employment
from facility construction through to operations, as well as indirect
spinoff benefi ts including additional employment and a broadened
tax base for local governments. The fi rst independent survey dedicated to measuring the economic impact of Canadas
biofuels
sector5 was conducted in late 2009 and early 2010 by Doyletech
Corporation. It canvassed twenty-eight Canadian-based biofuels
facilities that are either in production or in development and found
that the advancement of this new biofuels industry has generated
the following economic impacts:
Jobs Over 1,000 permanent manufacturing jobs have been
created to support ongoing plant operations. Over 14,000 new
direct and indirect jobs were created in construction of new
production facilities.
Direct Investment $2.3 billion in total capital investment.
Construction Benefi t construction of biofuels facilities has
created approximately $3 billion in economic activity. The
biofuels sector expanded the tax base at the local, provincial
and federal levels by $1.5 billion during the construction phase.
Economic Activity the net economic benefi t to the Canadian
economy from the renewable fuels sector is $2.0 billion per
year.
In addition to these positive economic impacts, there are parallel
clean and green results. Renewable fuels belong to the emerging
class of green collar jobs that society is fostering in order to build
the new green knowledge-based economy of tomorrow.
The shift to investment in clean and green technology has begun.
In 2008, global investments in green energy grew to $155 billion.
Many Fortune 500 companies have shifted their investment
strategies towards renewable energy and clean technologies.
Further research surrounding renewable fuels particularly
advanced and next generation biofuels will create new markets
for graduates in advanced technologies such as biochemical and
thermo chemical sciences.

Reductions in GHG Emissions


Renewable fuels signifi cantly reduce GHGs compared to gasoline
and diesel fuel. Newly created advanced biofuels offer still greater
reductions. These gains will help further reduce Canadas carbon

footprint in the transportation sector, which alone accounts for 2530% of the countrys overall greenhouse gas emissions.
Independent studies confi rm that fi rst generation ethanol and
biodiesel enjoys a life-cycle emissions advantage over traditional
fossil fuels. Without even taking into consideration the impact of
provincial mandates, the federal RFS will cut carbon emissions by
4.2 megatonnes the equivalent of removing 1 million cars fro To confi rm this performance, the Canadian renewable
fuels sector
was recently the subject of the fi rst comprehensive in-depth
study6 that compared its environmental performance with that
of fossil fuels. The conclusion: On a life-cycle analysis, ethanol
reduced GHGs at a rate of 62% compared to traditional fossil
fuels, while biodiesel reduced GHGs by a remarkable 99%.
The report shows unequivocally that even at low blend levels
both biodiesel and ethanol have a signifi cant impact on GHG
reductions compared to gasoline and diesel fuel. In short, the
environmental benefi ts of renewable fuels are demonstrable and
indisputable.
The estimated values for GHG reductions (known as the Social
Cost of Carbon, or SCC) used around the world vary signifi cantly.
CRFA estimates of the value of GHG reductions to Canadians,
using a range of possible values for SCC, are consistent with
rigorous and peer-reviewed literature. The results show that
Canadians will gain more than $10.7 billion worth of benefi ts over
the next 25 years from GHG reductions (based on both federal
and provincial RFS requirements for ethanol and biodiesel).

Agricultural Benefi ts
Renewable fuels assist the agriculture sector by:
Increasing local farm gate prices and associated revenue for
farmers.
Decreasing reliance on agricultural support and safety net
payments from governments.
Providing price stability for grains and oilseeds.
Providing forward pricing opportunities to hedge against falling
grain/oilseed prices or rising crop input and fuel costs.
Creating a valuable high protein feed market from the coproducts
of biofuels production.
Clearly, feedstock demand from an ethanol facility increases local
prices for corn or wheat. This price increase has been estimated
at 10-25 cents per bushel depending on geography and seasonal
variations. With a total of more than 200 million bushels of
Canadian grain going into ethanol production today, this means
that more than $50 million of new revenue is going to improve
the farm gate incomes of local farmers. However, while ethanol
has a salutary effect on the price of corn overall, it should also be
understood that ethanol production makes use of industrial grade
corn, not that used for human consumption.
A similar story exists for the biodiesel sector and its use of
soybeans, canola or rendered animal fats. Strong local demand
created by biodiesel facilities will boost the local price of those
commodities, thus providing much needed new revenue for the
farmers or rendering plant.
As a consequence of these fi nancial benefi ts, the federal
government experiences corresponding reductions in pressure
on safety net payments to farmers7. In Canada, reductions in
payments to farmers through a variety of federal and provincial
safety net programs amounted to $1.2 billion in 2008.
Improved farming techniques and crop science advances are
constantly boosting corn yields. For example, corn harvests
reached historic highs in both 2008 and 2009. As these advances
continue to grow, new markets for corn will need to be developed
to prevent a collapse in pricing. In Ontario, for example, the
ethanol industry currently consumes close to 1/3 of the corn
produced in the province. But with the advances being made
with seed genetics, it is expected that corn production will
increase well beyond existing levels of demand by 2020. The
ethanol industry will remain a critical and growing component of
the overall supply/demand balance for corn in Ontario. Moreover,
the production of advanced biofuels will take advantage of waste
agricultural biomass such as corn cobs and stover creating new

markets for Ontarios grain growers. Energy Security/Diversity


While the importance of energy security receives far more
attention in the United States than it does in Canada, it remains an
important consideration for all of continental North America. Longterm
energy price increases are foreseen by most economists and
experts including the International Energy Agency. In addition,
there remains the constant risk of signifi cant energy price spikes
caused by environmental disasters, geopolitical events or other
supply disruptions. For all these reasons and others, diversifi cation
of our energy supply is a critical national imperative.
Although Canada has abundant oil reserves, supply is in the west,
and major demand is in the east. As a consequence, a surprisingly
signifi cant percentage of gasoline and diesel in eastern Canada
must be imported from foreign sources. This exposes much
of Canada to the very same energy supply risks as the United
States. Biofuels represent the potential cornerstone of a Canadian
energy diversifi cation strategy that will help to mitigate the
impacts of future oil supply shocks and dependence on foreign
oil particularly in eastern Canada. As production increases,
the capacity to mitigate long-term exposure similarly rises. The
economic value of this effort cannot easily be calculated but there
can be little question of its signifi cance.

Social Benefi ts to Canadians


The most direct benefi t to Canadians will be cost savings at the
pumps. Ethanol and biodiesel are often priced lower than gasoline
and diesel.9 The cost advantages of ethanol could potentially save
Canadian consumers $2.5 billion over the next 25 years (based on
both federal and provincial RFS requirements) provided gasoline
producers pass their cost savings on to consumers.
Signifi cant savings are also projected with respect to diesel since
under reasonable assumptions, the projected cost of biodiesel for
fuel producers will be less than the projected cost of diesel fuel
over the next 25 years.
More broadly, cost-benefi t analysis experts have estimated that
the federal RFS regulations alone (once both the 5% and 2%
requirements are fully implemented), will generate overall net
benefi ts to Canadians ranging from $6 billion to $9.2 billion over
the next 25 years.
When provincial mandates are taken into account, overall
net benefi ts to Canadians from biofuels are expected to
range from $13 billion to $21 billion over the next 25 years

Challenges
Implementing the 2% Federal Mandate for
Biodiesel

The ethanol industry is well positioned to meet


the additional demand arising from the 5% RFS
mandate starting on December 15, 2010. The
biodiesel industry is equally prepared to meet its
obligations and expand its efforts. However, it is
critically important to establish certainty as to
the prescribed date for the 2% RFS requirement
for biodiesel.
The Government of Canada fi rst published its intention to require
2% renewable content in diesel fuels and heating oil in December
2006. The framework for the regulations were published by
Environment Canada on September 1, 2010 in the Canada
Gazette, Part II as part of the regulations pertaining to 5% RFS.
However, the 2% renewable requirement is subject to successful
demonstration of technical feasibility under the range of Canadian
conditions and no start date or fi rst compliance period for the 2%
mandate has been established. The 2% federal mandate would
require approximately 500 million litres per year of renewable
diesel use.
Although biodiesel is widely used throughout the world, including
numerous cold weather jurisdictions similar to Canada, the

CRFA, and other industry participants, participated in a suite


of technical feasibility studies in order to fulfi ll the regulatory
requirement. A broad range of studies were completed, including
the Alberta Renewable Diesel Demonstration (ARDD) project
(2007-2009) and an assortment of National Renewable Diesel
Demonstration Initiative (NRDDI) projects (2008-2010) funded by
Natural Resources Canada. The fi nal NRDDI studies concluded in
June 2010 and, along with the ARDD study, confi rm the technical
feasibility of biodiesel use in Canada.
The federal government has been clear in its commitment to
implement the 2% renewable diesel requirement in 2011. There
are no reasons or rationale for not proceeding with fi nal regulatory
approval of a start date. Any delay will have a signifi cant negative
impact on existing biodiesel production and investment decisions
on planned production capacity expansion. Indeed, now that the
government has completed all of its technical feasibility studies,
which represented the last remaining requirement to implementing
the 2% mandate, the CRFA has formally requested a start date of
April 1, 2011. This would result in a fi rst compliance period ending
on December 31, 2012. This would provide regulated parties a
21-month initial compliance period including two summers and
one winter as some stakeholders have sought.
The risks of delaying beyond April 2011 are severe. Further delays
will almost certainly retard the build-out of additional capacity and,
quite possibly, would result in some existing biodiesel capacity in
Canada being lost. In addition, currently, fi nancing for a number
of biodiesel projects is being withheld by lenders due to a lack of
planning certainty regarding the 2% RFS implementation schedule.
The bottom line is that jobs would be lost, new investment would
be at risk and valued momentum would stall.

Longer Term Vision


Over the long term, a more robust vision is
required that would revisit and/or renew a
number of the key policy instruments that have
supported the sectors growth over the past
fifteen years.
In this respect, three broad priorities have been identifi ed:
Market access is imperative to ensure that projects enjoy
access to customers once production is online. Experience
has shown that without regulatory imperative, the oil industry
will not blend renewable fuels.
Government support must be transparent, predictable and
competitive with other jurisdictions including the United States
and there must be long-term certainty with any renewed or
reformed investment program.
Technology development must be a priority for the federal
government if the industry is to realize the competitive
advantages of advanced biofuels and continue to reduce our
GHG footprint.
More specifi cally, the industry believes future policy action will,
over the longer-term, be required in the following areas:
Expansion of the Renewable Fuels Standard the Canadian
renewable fuels industry is committed to working with
governments to expand the existing renewable fuel requirements
to 10% and 5% respectively. These expanded mandates will
be necessary to ensure adequate levels of market access as
Canada is poised to commercialize advanced technologies
and biofuels. This must, in turn, be directly linked to the
capacity for Canadian renewable fuels production to expand.
The nature and scope of future mandates should consider the
adoption of escalating RFS carve-outs for cellulosic biofuels
(i.e. as presently provided under the US RFS(2) legislation).
The precise time horizon for these expanded mandates should
be addressed by industry and the Interdepartmental Working
Group as part of its ongoing deliberations.
Targeted Tax Measures as an alternative to program funding,
the industry believes government should consider revenue
neutral targeted tax measures that would help incentivize

expanded advanced biofuels investment and production. For


example, the implementation of a refundable tax credit for
domestic production of advanced biofuels (including ethanol
and biodiesel) could propel commercialization efforts.
Monetizing Carbon Credits a key element of a fi nancially
sustainable advanced sector will be the ability of producers to
monetize the value of the industrys carbon advantage. This
will require that GHG credits created from the displacement of
petroleum by renewable fuels accrue to the biofuels producers.
Expanding Biofuels Blend Levels higher content renewable
fuels will be critical to the future transportation fuels mix.
The Environmental Protection Agency in the United States
has authorized the expansion and use of ethanol to E15 for
vehicles 2007 and newer and will shortly expand this coverage
to older vehicles. Already we have seen E85 blends promoted
in competitor jurisdictions. Biodiesel blends from B5 to B20
and even B100 have been used in fl eet demonstration trials
in Canada. To encourage such development, federal policies
will be required that incentivize a staged increase in ubiquity
of fl ex-fuel vehicles and encourage refi ners and marketers to
increase the number of blender pumps and E85 fueling stations
throughout the major transportation corridors in Canada.

Ethanol
Fuel ethanol is a high octane, oxygenated fuel component manufactured primarily through the fermentation of sugar.
The sugar is usually
derived from sugar producing crops, the hydrolysis of starch from grains, or through the hydrolysis of lignocellulosic
materials such as
straw, grass and wood. The later approach is not yet widely practiced but is the focus of much development effort.
Ethanol has been used as a motor fuel in North America since the early 1900s. Ethanol gasoline blends were used in
parts of the United
States prior to the Second World War but through the 1950s and 1960s there was no ethanol used in gasoline in North
America. In 1979,
the US Congress established the federal ethanol program to stimulate the rural economy and reduce the dependence
on imported oil. The
production and use of ethanol as a motor fuel in the United States and in Canada has increased continuously since that
time.
There are now over seventeen billion litres of ethanol used in gasoline in the United States and Canada each year. Most
of the ethanol is
used in low-level blends of 5-10% ethanol in gasoline; only about 0.25% of the ethanol is used as E85.
In North America, fuel ethanol is currently produced mostly from starch containing crops such as corn, wheat and
sorghum. Several plants
use a waste sugar stream from other industrial plants such as sulphite pulp mills, breweries, cheese factories, potato
processors and other
food processing plants. The dominant feedstock is corn. There are plans to introduce new technology to convert
lignocellulosic materials
to ethanol. The fi rst of these plants is expected to be built in the next several years.
The basic process involves the enzymatic hydrolysis of starch to sugars and the fermentation of the sugars to ethanol
via yeast. The weak
ethanol solution known as beer is then distilled and dried to produce anhydrous ethanol, which is suitable for blending
with gasoline. There
are a number of process variations that are employed such as dry or wet milling, batch or continuous fermentation, etc.

Biodiesel
Biodiesel is an alternative fuel that can be made from any fat or vegetable oil. It can be used in any diesel engine with
few or no modifi cations.
It can be blended with diesel at any level (for example a 5% blend is known as B5) or used in its pure form (B100).
Biodiesel is made
primarily through a chemical process called transesterifi cation whereby the glycerine is removed from the fat or
vegetable oil. Biodiesel is
thus an ester, if methanol is used in the production process it is a methyl ester and if ethanol is used it is an ethyl ester.
Since it is made from
plant or animal oils it is a renewable fuel.
Biodiesel is produced and widely used in Europe both as low level blends and as pure fuel (B100). Biodiesel production
and use in North
America has lagged behind the development in Europe although use of biodiesel and interest in the fuel has been
expanding rapidly in
recent years.
The production and use of biodiesel reduces greenhouse gas emissions due to its renewable nature. It is also a clean
burning fuel and the
emissions of many of the exhaust contaminants are reduced with the use of biodiesel.

Most biodiesel is produced by the same basic chemical reactions. There are variations of this process that are
employed by different
process developers to process different biodiesel feedstocks. Most biodiesel is also produced from methanol but other
alcohols can be
used and there have been ethyl esters produced and tested.
There are also some different processes that produce a diesel fuel from biomass that some developers also call
biodiesel but it is chemically
different from the fatty acid methyl esters that are sold commercially. In this section the basic biodiesel process, the
commercial applications
of the processes and some of the variants such as different alcohols and developing technologies are described.

The Green Fuel Advantage


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Governments Have
Responded