Study: Canadian ethanol plants provide economic benefits

By Erin Voegele | November 11, 2009
Posted Dec. 4, 2009, at 9:48 a.m. CST

An independent study recently confirmed that Canadian renewable fuels facilities will create new jobs and economic growth for many years to come. The study, which was completed by Ottawa, Ontario-based Doyletech Corp. and funded by the Canadian Renewable Fuels Association, examined the economic impact of an ethanol plant that was recently constructed in Aylmer, Ontario.

Construction of the Alymer-based Integrated Grain Processors Co-op Inc. ethanol plant began in mid-2007. The facility has been operational since Oct. 1, 2008. In addition to producing 162 million liters (43 million gallons) of corn-based ethanol annually, the plant also produces approximately 129,600 tons of distillers grains each year.

The plant is owned by a cooperative made up of approximately 900 members. Ownership is nearly evenly split between regional farmers and other representatives of agriculture-related businesses. The facility was capitalized in part by equity investment by the facilities ownership. Additional capitalization was sourced from a consortium of banks and federal and provincial government incentive programs.

In its study, Doyletech found that construction of the plant contributed to a net spending increase within the region of approximately $275 million, was well as an annual increase of at least $50 million in new economic spending in the region as a direct consequence of the plant's operations.

As a result of plant construction, Doyletech calculated that the facility's economic impact resulted in:

  • The net job creation of 1,152 person-years, which reflects the positive availability of labor in the local and regional area

  • A total spending increase within the local and regional area of $176 million, which reflects the fact that a high proportion of the total investment was spent either in the local community or regional area

  • A net benefit to the municipal government of $7.84 million, which reflects improved property tax collections, slightly reduced welfare payments, and multipliers from indirect and induced spending

  • A net benefit to the provincial government of $44.17 million, which reflects increased provincial sales tax collections, lower welfare commitments, and corporate and personal income tax

  • A net benefit to the federal government of $70.08 million, which reflects increased tax collections and lower employment insurance costs

    As a result of its ongoing operation, Doyletech calculated that the IGPC plant results in:

  • The creation of 55 person-years of employment each year

  • An annual increase in net economic spending in the local community of $54 million, resulting from the plant's operations over and above the net revenues, after costs, obtained by the plant for its product sales

  • An annual benefit of $628,000 to the municipal government, which results from the plant's property taxes and other improved municipal tax collections, lower welfare costs, and indirect employment benefits

  • An annual benefit of $5.16 million to the provincial government, which results from enhanced provincial sales tax collections and income tax, lower welfare costs, and indirect spending

  • An annual benefit of $5.19 million to the federal government from improved goods and services, tax collection and income tax, lower employment insurance spending and corporate tax

    "Renewable fuels are delivering on their economic promise," Gordon Quaiattini, CRFA president said. "These are real numbers coming from real plants, employing real people, in real towns. And, we can see similar results in ethanol and biodiesel all across the country."