American Biodiesel news

By: Matt Goerzen
The Manitoba government has eliminated an 11.5 cent-per-litre tax on biodiesel fuel production in the province as part of its 2006 budget in an effort to fuel growth in the industry.


The tax break was announced yesterday by Manitoba Agriculture, Food and Rural Initiatives Minister Rosann Wowchuk.


"This tax reduction will be beneficial to the industry, " Wowchuk said. "We're hopeful this will result in the creation of at least five or six new plants throughout Manitoba. "


Effective immediately, the province will stop collecting both the road tax and provincial sales tax on pure biodiesel that meets the American Society for Testing and Materials (ASTM) fuel-quality standard.


This five-year tax break provides Manitoba's fledgling biodiesel industry with an 11.5 cent-per-litre advantage over regular diesel. That's in addition to the four-cent-per-litre tax break currently offered by the federal government.


The announcement follows the recent appointment of an independent biodiesel board that will provide recommendations to the government about the $1.5-million provincial industry support program.


"The board is open to hear proposals, " Wowchuk said.


Those proposals will have to include plans for the large amounts of glycerol that result from the production of biodiesel. Glycerol is a byproduct sold to cosmetics, food and pharmaceutical industries.


"Those are some of the things that come out as you move along. "


Barbara Isman, president of the Canola Council of Canada, praised the government for its involvement in the industry.


"I absolutely want to congratulate the Manitoba government on taking a leadership role, " Isman said. "It's absolutely important to create a positive atmosphere. "


While it could take at least a year before biodiesel production sparks an improvement in low canola and soy bean market prices, Isman remains highly optimistic.


"This is actual new demand in the millions of tons that is going to be there consistently. For a good long time we will see production trying to catch up to demand. "


However, she said a further 14.5 cent incentive would be required to make Canadian biodiesel competitive with the United States, which is further ahead in research and production.


"The U.S. has significant funding and incentive plans. In order for us to attract large scale investment, we need to be competitive with the US. "


Isman would also like to see a Canadian set of standards applied to the biodiesel industry, instead of deferring to ASTM standards south of the border.


Gavin Reynolds, co-owner of Rapid City's Celtic Power - one of only two pre-commercial production facilities in Manitoba - said the tax incentive is "significant ".


"It gives you a distinct advantage right off the bat, " Reynolds said. "It's helping us here today. Yesterday we didn't have that advantage. Today we do. Yes it's very positive. "


For the moment Celtic Power is producing biodiesel on a small scale, but once its new processor is completed, the company will be producing 1.5 million litres per year.


Reynolds said Manitoba biodiesel is attracting a lot of attention outside the province.


"The number of phone calls have increased dramatically in the last few months. I just had a conversation with someone in San Antonio. They like the way we're approaching biodiesel. "


The tax break will also benefit up and coming facilities in Westman, including the joint proposal put forward by the Southwest Fibre Co-op and the Souris-Glenwood Community Development Corp.


"It's certainly really good news, " said Southwest's chairman David Stead. "It makes our business plan look even better. "



I think it's great that alternative fuels are being treated better.