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

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
06OTTAWA3639 | 2006-12-22 16:04 | 2011-04-28 00:12 | UNCLASSIFIED | Embassy Ottawa

`

    VZCZCXRO2785
    RR RUEHGA RUEHHA RUEHQU RUEHVC
    DE RUEHOT #3639/01 3561610
    ZNR UUUUU ZZH
    R 221610Z DEC 06
    FM AMEMBASSY OTTAWA
    TO RUEHC/SECSTATE WASHDC 4672
    INFO RUCNCAN/ALL CANADIAN POSTS COLLECTIVE
    RHEHAAA/WHITE HOUSE WASHINGTON DC
    RUEHRC/DEPT OF AGRICULTURE WASHDC
    RHEBAAA/DEPT OF ENERGY WASHDC
    RUEAEPA/EPA WASHDC

` `

    UNCLAS SECTION 01 OF 02 OTTAWA 003639

    SIPDIS

    SIPDIS

    DEPARTMENT FOR WHA, EB AND OES
    DOE FOR POLICY AND INTERNATIONAL
    WHITE HOUSE FOR CEQ
    EPA FOR OFFICE OF THE ADMINISTRATOR AND INTERNATIONAL
    AFFAIRS
    USDA FOR FAS/OAMYOST; FAS/OGA/JNUTTALL/PJARRELL;
    FAS/OCRA/CALEXANDER/MCHESLEY/BZANIN/PSIMMONS

    E.O. 12958: N/A
    TAGS: ENRG EAGR SENV CA
    SUBJECT: CANADA ANNOUNCES PROGRAMS TO PROMOTE PRODUCTION,
    USE OF BIOFUELS

    REF: OTTAWA 3561 AND PREVIOUS

    ¶1.  Environment Minister Rona Ambrose and Agriculture
    Minister Chuck Strahl announced in Saskatoon on December 20 a
    C$345 million program to promote the use of renewable fuels
    in Canada.  They billed the program as the next element of
    the Conservative government's environmental agenda, but this
    time with a tie-in to agriculture.  The program overall will
    mandate renewables content in gasoline (5 percent by 2010)
    and diesel and heating oil (2 percent by 2012).  On the
    production side, the program will fund efforts to bolster the
    development of biofuels and other bioproducts, and to create
    new market opportunities for Canada's agricultural producers
    under the Agricultural Bioproducts Innovation Program and the
    Capital Formation Assistance Program for Renewable Fuels
    Production.

    Benefiting the Environment - and More
    -------------------------------------
    ¶2.  Ambrose, of course, pitched the effort as environmentally
    friendly, claiming "(o)ur government understands Canadians'
    concerns around the quality of the air we breathe," and
    fulfilling the Harper government's commitment to meaningful
    action.  Strahl, on the other hand, stressed the support the
    programs would provide for Canada's "bio-based economy" in
    creating additional opportunities in the agricultural sector.
     Ambrose described the program as a win-win solution for
    Canada, with the citizenry overall reaping environmental
    benefits, farmers and rural communities profiting from
    greater demand for their products, and industry gaining
    support to develop a viable domestic biofuels industry and
    cementing Canada's place in the growing "bio-economy."

    ¶3.  Reactions to the announcement were mixed.  The biofuels
    lobby predictably applauded it.  "This is the best type of
    Christmas announcement," the Canadian Renewable Fuels
    Association gushed.  On the other side of the debate, the
    David Suzuki Foundation has been critical of the Tory
    renewable fuels strategy from the start, claiming "the amount
    of greenhouse gas emissions that will be cut by boosting
    ethanol production is virtually insignificant."  Commentary
    in the press, noting the huge increase in ethanol production
    that will be required, suggested the measures will bring more
    benefit to farmers and producers (and investors) than to the
    environment.

    Just the Facts
    --------------
    ¶4.  As to specifics of mandating renewables content in fuel,
    the government intends to use the authority it already has
    under the Canadian Environmental Protection Act (1999) and
    the revisions to CEPA proposed in the Clean Air Act.  The
    government calculates the 5 percent requirement for gasoline
    will amount to about 2.1 billion liters of renewable fuel per
    year in 2010.  The 2 percent mandate for diesel fuel and
    heating oil will require another 600 million liters in 2012.
    The government admits these regulations will be complex and
    take around two years to develop.  They will also require
    extensive consultation with provinces, territories, affected
    sectors and other stakeholders.  The government plans to
    begin discussions, consultations and studies early next year.

    ¶5.  The Capital Formation Assistance Program for Renewable
    Fuels Production will receive $200 million over four years to
    QFuels Production will receive $200 million over four years to
    provide incentives (repayable, and capped at the lesser of 25
    percent of costs or $25 million per project) to encourage
    agricultural producer participation in new renewable fuels
    production capacity.  The Agricultural Bioproducts (i.e., not
    just biofuels) Innovation Program ($145 million over five
    years) will support cross-sector research networks conducting
    scientific R&D and commercialization related to the
    advancement of a Canadian bio-based economy with grants of up
    to $25 million per network.

    ¶6.  According to the government, Canada's transport sector
    accounts for more than 27 percent of greenhouse gas
    emissions.  It calculates that the new regulations will
    require enough renewable fuel to reduce emissions by about 4
    million tons per year, the GHG equivalent of taking almost
    one million vehicles from the road.  By way of comparison,

    OTTAWA 00003639  002 OF 002

    Canada's total GHG emissions in 2004 came to 785 million tons
    (according to OECD data), meaning the transport sector would
    have contributed just under 200 million tons.  In 2004, (the
    latest available data) total ethanol production and
    consumption in Canada amounted to approximately 250 million
    liters ) just 0.7 percent of the country's total gasoline
    consumption - according a Canadian Renewable Fuels
    Association analysis.  Limited industrial biodiesel
    production in Canada began in late 2005.

    Building Out the Overall Environment Strategy
    ---------------------------------------------
    ¶7.  The Ambrose/Strahl announcement billed these programs as
    just the latest element of the Conservative's overall plan on
    the environment, and they certainly should act to reduce
    Canada's greenhouse gas emissions.  Government officials had
    told Embassy as far back as late summer that the overall
    environmental plan would be rolled out in tranches, beginning
    with the Clean Air Act tabled in Parliament in late October
    (reftels).  In addition to the Clean Air Act, the government
    also announced stricter regulation of harmful chemicals as
    part of its new Chemicals Management Plan on December 8.

    Visit Canada's Classified Web Site at
    http://www.state.sgov.gov/p/wha/ottawa

    DICKSON

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