As regular readers
of this magazine know, OCPA has long advocated the benefits of research, development
and commercialization of bio-based products, from renewable fuels to industrial
feedstocks. As well as increasing the market potential for corn and other grain
and oilseed crops, bio-based products also provide a broad range of social and
environmental benefits including reduced greenhouse gas emissions, improved air
and environmental quality, reduced reliance on fossil fuels and a stronger rural
economy.
The global movement towards increased adoption of ‘green’, renewable
resources continues to gain momentum: it has been estimated that biomass will
supply 30 per cent of worldwide needs from chemicals and fuels before 2050.
Ontario is already a leader in industrial applications using feedstock. Corn alone
has more than 1,000 applications, from food ingredients, brewing and household
products to mining, textiles and chemicals. Given the province’s strategic
location as well as our strengths in agriculture, forestry and industrial development,
there is no doubt that Ontario has the potential to be a global leader in the
emerging bioproducts marketplace.
But to achieve that potential, and the associated economic, rural development
and environmental benefits, it is essential to create within the province a business
climate that will attract manufacturers of bioproducts and encourage them to locate
and expand their businesses here.
In 2002, the Ontario government first announced plans to create Tax Incentive
Zones to attract jobs and business investment in designated communities. The concept
of providing tax incentives to encourage the private sector to invest in underdeveloped
or economically depressed areas is far from new. Initiated in the UK in the 1970s,
such programs have become well entrenched in the U.S., where more than 40 states
have created ‘enterprise zone’ initiatives (tax incentives and other
budget measures) geared specifically towards the renewal of designated areas.
One such program, the Michigan Renaissance project, was outlined in the October
2002 issue of the Ontario Corn Producer.
The provinces of Quebec, PEI and Newfoundland and Labrador all provide packages
including significant tax and other incentives to encourage business investment,
diversify the economy and stimulate job creation.
This past May, Ontario’s first Tax Incentive Zone, covering all of northern
Ontario, was announced by Premier Ernie Eves. Beginning in January 2004, eligible
businesses that locate within the zone will be exempt from paying provincial business
education tax, capital tax or employer health tax for the next ten years. Municipalities
will be asked to provide full municipal property tax relief as well.
Both new and expanding businesses are eligible for the program, but must be able
to show that new investments will contribute to the local economy without harming
existing business. For the northern Ontario zone, the focus is on attracting new
value-added businesses such as manufacturing and processing plants in the fields
of silvicultural equipment, mining equipment, millworks and wood products as well
as new waste management and environmental technologies.
According to government sources, additional pilot tax incentive zones are planned
for southern Ontario and are expected to be announced in the near future. From
OCPA’s perspective, targeting such zones to encourage the development and
expansion of bio-based products in rural areas of southern Ontario just makes
sense, meeting not only the economic development goals of the program itself,
but also providing a range of social and environmental benefits.
The use of renewable feedstocks increases carbon storage in the soils and reduces
greenhouse gas emissions, thus assisting in Canada’s environmental commitments
under the Kyoto protocol. Green fuels such as ethanol blends provide significant
reductions of carbon monoxide, ozone and urban smog, potentially reducing the
incidence of ‘smog days’ in southern Ontario.
Ethanol production also creates valuable byproducts such as a high protein livestock
feed that provides a home-grown alternative to the $200 million in feed that Canada’s
livestock producers must import each year. Ethanol provides the base for many
valuable biochemicals – today’s ethanol plants can become tomorrow’s
bio-refineries, leading to a whole range of plant-based, environmentally friendly
products.
Every chemical currently produced from hydrocarbons can also be produced from
carbohydrates – progress is already evident in Ontario and elsewhere. Polylactic
acid (PLA) polymers developed from corn sugar, for example, are used to create
a variety of fibres and biodegradable plastics at a plant in Blair, Nebraska (see
Ontario Corn Producer, May/June 2002). It is believed that processing carbohydrates
such as corn into ingredients used in food, pharmaceuticals and cosmetics as well
as in fuels has the potential to increase industrial markets for plant matter
up to 200 million tons per year.
Ultimately, it is industry, not government, that will determine both the rate
of development and the success of bio-based initiatives. New, ‘green’
technologies must be competitively priced, reliable and scalable for world markets
if they are to be viable replacements for traditional, fossil fuel dependent alternatives.
But if Ontario is to capitalize on its natural potential to lead the development
process, our government must be proactive in attracting the investment that is
an essential
first step.
