OCPA’s ETHANOL BRIEFING NOTES
On September 27, 2003, at a farm near Embro, Dalton McGuinty promised that 5% of gasoline sold in Ontario by 2007 would contain ethanol and said,
“It means at least five ethanol plants, it means at least $500 million in investment, and it means 3,000 direct and indirect jobs. This is a huge boost to rural Ontario. You make ethanol from corn, so we are going to be asking Ontario farmers to grow a lot more corn, so we can put that stuff in our cars and clean up our air.”
· Premier McGuinty’s promise very clearly was to get ethanol plants built in Ontario as a boost to rural Ontario and to Ontario corn producers.
· Introducing a Renewable Fuel Standard (RFS, a type of flexible mandate) makes it a requirement of law that ethanol be sold in Ontario, but does not ensure the ethanol will be produced here or be produced using Ontario corn, which are the two key components of Premier McGuinty’s promise.
· Introducing a RFS, and at the same time eliminating the 14.7 cent/litre provincial road tax exemption on the sale of ethanol, saves the government of Ontario $44 million a year currently and will save the government $110 million a year by 2007 when the target of 5% ethanol in the gasoline pool is met.
· The demand for ethanol in Ontario has grown from 0 in 1996 to 310 million litres in 2004, all without a RFS or mandate. To meet that demand, we already import more ethanol from the U.S. than we produce (current provincial fuel ethanol production is 150 m litres). A RFS forces retailers to sell more ethanol and to secure supplies. Without more production in Ontario, refiners and retailers will simply import more ethanol from the U.S. and Brazil. That is not what Premier McGuinty promised.
· Premier McGuinty promised more corn-based ethanol production in rural Ontario using Ontario corn, not merely more sales of ethanol.
· To keep his promise, Premier McGuinty should ensure ethanol plants are built in Ontario and use Ontario corn. The savings generated by the elimination of the tax exemption for ethanol allow Premier McGuinty to do that. The OCPA developed a plan to help keep the promise. It is time to implement our plan.
· The OCPA’s plan provides assistance directly to new ethanol production projects based on their purchases of source-verified Ontario corn thus maximizing the benefit to rural Ontario. Government assistance for new Ontario corn-based ethanol production is capped (maximum $8 million per project per year) and the program terminates after 4years of participation for each project.