Canadian Producers Poised for Carbon Reduction Era

The state of the Canadian ethanol industry at year end. This feature article appears in the December print issue of Ethanol Producer Magazine.
By Susanne Retka Schill | November 14, 2016

Optimism is growing among Canadian biofuel producers as the federal government is embracing carbon reduction strategies in its climate change action plan. “It’s a pretty exciting time for us now,” says Jim Grey, board chair of Renewable Industries Canada (RICanada, formerly the Canadian Renewable Fuels Association). “I think it’s going to bode very well for our industry.”

In early October, Canadian Prime Minister Justin Trudeau announced all provinces will have to choose between implementing a carbon tax or a cap-and-trade system to address climate change. The action plan includes targeted greenhouse gas (GHG) reductions throughout all emitting sectors, including transportation, Grey says. “Obviously, they’re promoting the use of electric vehicles and public transportation, but clearly they understand that blending more ethanol or biodiesel into the fuel pool will have an immediate positive impact on the greenhouse gas reduction targets.” Grey, who is CEO of Ontario ethanol producer IGPC Ethanol Inc., reports that his province will be blending up to 4 percent biodiesel in 2017 and the industry is asking for the ethanol mandate to be raised from 5 to 10 percent, coupled with a GHG reduction component, such as a low carbon fuel standard.

It’s not that there aren’t biofuel critics in Canada, but Grey reports they are definitely not as loud as those in the U.S. Early in October, RICanada criticized a report from the Ecofiscal Commission that called for a rethinking of Canadian biofuels policies.  In its response, RICanada described the commission’s report as skewed and flawed, pointing out Canada’s 26 biofuels production facilities (about half ethanol producers) are great supporters and users of emerging low-carbon technology. “If anything, now is the time to double-down on the success of renewable fuels mandates, not abandon the single largest guaranteed source of emissions reductions from our transportation sector.”

Some of the arguments echo those heard south of the 49th parallel. RICanada criticized Ecofiscal’s finding that the economic costs of the renewable fuel mandates exceed benefits by pointing out the commission used only one report from 2010. “Farm income has actually tripled since biofuels became a significant part of the Candian economy,” RICanada said. Ecofiscal recommended moving away from subsidies, but RICanada pointed out federal support for most biofuels ended in March 2015.
Furthermore, Ecofiscal claimed the effect of biofuels on improving air pollution is negligible when in Ontario, the province’s ethanol growth fund reported a reduction in annual smog days from 15 to 20 per year to two or three.

Grey’s company, for one, is getting ready for higher mandates. In October, the board of IGPC Ethanol Inc. approved the doubling of the Aylmer, Ontario, plant’s capacity from 200 MMly to 400. “If all goes well, we should put shovels in the ground in April and start up in October 2018,” Grey says.  The expansion will be highly integrated into the existing plant, he adds, which makes it a more complex engineering project than just building a second plant alongside the existing one. Engineering and permitting activities have begun, and additional capital is being raised.

The expansion plans come on the heels of two major upgrades. IGPC has installed ICM’s FST technology, which removes the fiber at the front to increase throughput, potentially becoming the feedstock for cellulosic ethanol production. In that upgrade, IGPC boosted its capacity from 170 MMly to 200 MMly. It also installed generating capacity, adding a steam turbine generator to produce roughly 1 MW electric power from existing excess steam energy, along with adding a natural gas fired internal combustion generator to produce 3 MW power. “Ontario has very expensive electricity,” Grey says. Becoming self-sufficient in electric power has brought the plant’s power costs in line with U.S. Midwest producers. The planned expansion will include expanded generating capacity as well.

IGPC isn’t the only producer making big investments. Canada’s largest ethanol producer, GreenField Specialty Alcohols, has several innovative projects unfolding at its four facilities. The company is among Canada’s oldest producers, starting out with a single plant in Tiverton, Ontario, in operation since 1989. In 1998, it opened its first large-scale plant in Chatham, Ontario, and a third plant in Varennes, Quebec, in 2007. Its largest plant, a 254 MMly corn ethanol plant in Johnstown, Ontario, came online, in 2008, along the St. Lawrence Seaway.

While GreenField’s ethanol production is still primarily for fuel, its 2013 name change to GreenField Specialty Alcohols signaled a shift in the business model for the company. Today, 175 MMly of its total 675 MMly capacity is industrial ethanol. Not only is a big part of its ethanol production distilled to industrial specifications, the company has developed its own packaging and distribution network for its commercial alcohol that is used in more than 4,500 consumer and industrial products. In Canada, the company operates packaging facilities for commercial alcohols at Boucherville, Quebec, and Brampton, Ontario. In the U.S., GreenField’s Pharmco-AAPER division owns and operates facilities in Shelbyville, Kentucky, and Brookfield, Connecticut, manufacturing and packaging a wide range of pure and denatured ethanol products. Pharmco-AAAPER also has two warehouses in California, along with warehouses in North Carolina, Texas and Washington.

With a solid distribution network and expanding export sales beyond North America, GreenField boosted its industrial ethanol capacity with a recently completed expansion of its industrial-grade distillation capacity in Chatham, increasing the fuel-industrial split from 50-50 to 25-75, for an industrial capacity of 42 MMly. Along with the industrial-grade expansion, GreenField also invested in a second cogen unit at the plant to begin generating all of the plant’s electric demand, feeding the surplus into the grid.

Chatham’s carbon-reduction strategy goes far beyond cogeneration and even the capturing and purification of carbon dioxide by Praxair. In the past year, the ethanol plant has begun sending its surplus carbon dioxide from fermentation to greenhouses next door. GreenFields’s vice president of business development Barry Wortzman reports work is nearly completed on the system that will deliver the ethanol plant’s waste heat off the stack to help heat the Truly Green Farms greenhouses.

The company has other innovative projects in development. GreenField and Enerkem announced a joint venture to build a 10 MMly cellulosic plant at Varennes, which will use municipal solid waste as the feedstock for Enerkem’s thermochemical conversion process. GreenField also is working on other integrated second-generation technologies, Wortzman adds, that the company expects to roll out in the new year.

Other Producers
GreenField is the largest, but not the only Canadian ethanol company with unique business models. In Lanigan, Saskatchewan, Pound-Maker Agventures was established in 1970 by 50 area farmers looking for alternative markets for their grain, who built a 2,500-head feedlot. A 1991 expansion to 10,000 head included a 10 MMly ethanol plant. Today, the company feeds out 26,000 head of cattle and produces 14 MMly of ethanol. 

Permolex International Ltd.  at Red Deer, Alberta, found a different mix to prosper from, since its ethanol plant was completed in 1998. It integrates three traditionally independent manufacturing processes—flour milling, gluten extraction and ethanol production—that allows the byproducts of one process to be utilized as feedstock for the next, using about 110,000 tons of wheat a year. 

The oil industry’s share of ethanol capacity is slightly higher in Canada than in the U.S. with Husky Energy and Suncor’s combined capacities representing 19 percent of the country’s total while Valero, Flint Hills and Sunoco’s combined capacities are 14 percent of the U.S. total ethanol capacity.

Both large integrated oil companies, Suncor operates the country’s largest ethanol plant, the 400 MMly St. Clair Ethanol facility in Mooretown, Ontario.  Alberta-headquartered Husky Energy operates two, 130 MMly ethanol plants in western Canada at Lloydminster, Saskatchewan, and Minnedosa, Manitoba. The Manitoba plant primarily uses corn along with some wheat, while the Saskatchewan plant primarily uses wheat. At Lloydminster, the ethanol plant is integrated with Husky’s heavy oil upgrader and an on-site cogeneration power facility to increase energy efficiency and reduce emission. In 2012, Husky began capturing carbon dioxide at Lloydminster to reduce emissions and aid in enhanced oil recovery.

Other active ethanol producers include Kawartha Ethanol Inc. operating an 80 MMly corn ethanol plant in Havelock, Ontario. Two Saskatchewan producers use wheat:  North West Bio-Energy Ltd., a 25 MMly plant in Unity and Terra Grain Fuels Inc., a 150 MMly plant in Belle Plaine. Canada also is represented by second-generation biofuel producers Enerkem, Iogen Corp. and Woodland Biofuels all developing cellulosic technologies.

Author: Susanne Retka Schill
Managing Editor, Ethanol Producer Magazine
[email protected]