Ethanol The Road to a Greener Future

What is Ethanol?

Ethanol: A Renewable Fuel

Ethanol is a liquid alcohol that consists of carbon, hydrogen and oxygen. It can be produced from any biological feedstock (for example, cereal grain) that contains sugar or materials that can be converted into sugar, such as starch. In Canada, ethanol is currently distilled primarily from grains such as corn and wheat. Ethanol can also be produced from cellulose materials such as agricultural and wood wastes, and fast-growing trees and grasses, although cellulosic ethanol technologies are still being developed and are not yet cost-competitive with conventional production processes.

Ethanol Production and Distribution

As of mid-2002, five plants producing fuel ethanol were operating in Canada: one each in Alberta, Saskatchewan and Manitoba and two in Ontario, with a total production capacity of about 175 million litres of fuel ethanol per year. Several other plants were in the planning stage, with the potential to significantly increase Canada's annual production. There are currently about 1000 retail outlets in Canada selling ethanol-blended gasoline, with ethanol sales totalling about 240 million litres per year.

Ethanol for Your Vehicle

Ethanol in Conventional Gasoline Vehicles

It is becoming common practice in North America to blend ethanol with gasoline at concentrations of 7 to 10 percent by volume. All cars built since the 1970s are fully compatible with up to 10 percent ethanol (E-10) in the fuel mixture. All manufacturers approve the use of E-10 blends and warrant their vehicles for this fuel. From a vehicle performance and fuel consumption perspective, low-level ethanol fuel blends are indistinguishable from gasoline. Ethanol is also being blended with gasoline because of its high oxygen content and octane properties.

Ethanol in Special Factory-Produced Vehicles

Ethanol can be used in much higher proportions - up to 85 percent ethanol and 15 percent gasoline (E-85) - in special factory-produced vehicles. A limited but growing number of E-85 vehicles are now being produced by auto manufacturers to test market demand for this product. These vehicles can operate on straight gasoline or on any proportion of ethanol mixed with gasoline, up to the 85 percent limit. For this reason, they are known as flexible fuel vehicles. E-85 fuel requires special dispensing equipment, which is one of the factors preventing its widespread use in Canada.

Ethanol in Diesel Vehicles

As is the case with gasoline vehicles, low-level blends of ethanol and diesel fuel can be used in diesel vehicles without modifications to the engine. However, because of the way they operate, diesel engines present special technical challenges for fuels that contain high levels of ethanol. One of these challenges is that ethanol resists self-ignition. To use high-level ethanol blends in a diesel engine, either the engine must be modified to improve its ability to ignite the alcohol or ignition "improvers" must be added to the fuel.

Benefits of Ethanol

Ethanol and the Economy

The development of a substantial ethanol industry in Canada would not only reduce our dependence on imported oil to manufacture gasoline, but would also mean new markets for Canadian farmers and forest companies, create construction and operating jobs at ethanol production plants and help strengthen and diversify rural economies.

New technologies to produce ethanol from plant fibres could help to make ethanol cost-competitive with conventional fuels, leading to further industry expansion. In addition, promising Canadian technologies could lead to further economic growth opportunities in related biotechnology fields.

Environmental Benefits of Ethanol

Ethanol can play a role in helping Canada to meet its climate change objectives. On a full cycle basis, the use of a litre of E-10 fuel instead of straight gasoline can reduce greenhouse gas emissions by 3 to 4 percent if ethanol is produced from grain, or 6 to 8 percent if it is produced from cellulose.Using E-85 fuel instead of straight gasoline can reduce net emissions by as much as 75 percent.

The combination of ethanol and gasoline results in overall increases in smog-producing volatile organic compounds compared with either pure ethanol or pure gasoline. However, this can be overcome by blending ethanol with a gasoline that has been manufactured to have low volatility.

A high-ethanol fuel such as E-85 also produces lower levels of nitrogen oxides and toxic hydrocarbons such as benzene (a carcinogen) than gasoline does. Although E-85 produces higher levels of formaldehyde and other toxic aldehydes, the resulting concentrations are small and are effectively removed by catalytic converters in recent-model cars.

Government Support for Ethanol

Government Support for Ethanol

At the federal level, the ethanol portion of blended gasoline receives an exemption from the federal excise tax of 10 cents per litre on gasoline. At the provincial level, the governments of Alberta and Ontario currently exempt the ethanol portion of blended gasoline from their road taxes, without restriction on the ethanol source or the content in ethanol. The governments of Saskatchewan and Manitoba offer an exemption from their road taxes for fuel ethanol produced and consumed in their respective provinces. The governments of British Columbia and Quebec have committed to exempt the ethanol portion of low-level ethanol blends from their road taxes when an ethanol plant is built in those respective provinces. British Columbia currently offers a road tax exemption on the ethanol portion of E-85.

The Government of Canada and some provincial governments have also supported the development and use of ethanol fuel through research and development programs. As well, the Government of Canada and some provinces have ethanol-powered vehicles in their fleets for demonstration and public awareness purposes.

Finally, as part of the Government of Canada Action Plan 2000 on Climate Change released in October 2000, the Government of Canada established the Future Fuels Initiative to increase the supply and use of ethanol produced from biomass, such as cellulosic plant fibre and grains. This initiative includes three main components: the renewal of the National Biomass Ethanol Program, which provides contingent loan guarantees to ethanol producers; funds for public awareness activities; and analysis and research.

The Future of Ethanol Fuel in Canada

Ethanol's future as a transportation fuel depends to some extent on how Canada and other nations address the challenge of controlling atmospheric emissions of carbon dioxide and other greenhouse gases. Another important factor will be our ability to produce ethanol at a cost that makes it economically attractive to consumers, relative improved production technology for ethanol and co-products from starch and cellulose-based feedstocks should help to make ethanol production more economical in the future. As well, significant changes will be needed in Canada's fuel distribution and dispensing infrastructure to accommodate high-level ethanol blends. Ultimately, competition between fuels in the marketplace and government policies will determine the role of ethanol as a transportation fuel.

For Further Information

Vehicle Fuels
Office of Energy Efficiency
Natural Resources Canada
Tel.: 1 800 387-2000 (toll-free)
Fax: (613) 952-8169
E-mail: vehicle-fuels@nrcan.gc.ca
Web site: oee.nrcan.gc.ca/vehiclefuels

Canadian Renewable Fuels Association
Tel.: (416) 304-1324
Fax: (416) 304-1335
Web site: www.greenfuels.org