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ecoENERGY for Biofuels Program

Overview
News and Updates
Background
About the Program
About the Incentive
Definitions
Eligible Recipients
Application Requirements
Successful Applicants
Questions and Answers
Related Links
Previous Program Design

Questions and Answers

What are the changes to the ecoENERGY Biofuels Program?

NRCan has revised the structure of its ecoENERGY for Biofuels Program regarding the selection criteria, eligibility criteria, the incentive rate and payment frequency.

Why did NRCan make changes to the Program?

The changes to ecoENERGY for Biofuels were made to provide more predictable and stable payments for renewable fuel production and to ensure the Program supports the most viable, most advanced projects leading to long-term sustainable growth of the renewable fuel industry.

When do these changes take effect?

The changes to the ecoENERGY for Biofuels Program were implemented on December 14, 2009.

Was industry consulted on these changes and do they respond to their needs?

Yes, Natural Resources Canada met with ethanol and biodiesel producers along with the Canadian Renewable Fuels Association to discuss the proposed changes.

Any company who applied or expressed an interest in the Program was provided details of the proposed changes via e-mail and encouraged to submit feedback to the Department.

Why did NRCan make changes to the payment regime?

The change provides stability, predictability and certainty to industry by stating the incentive rate for each year of the duration of the Program.

How is the payment regime different now?

Previously, the incentive rate was calculated quarterly based on market conditions. After the end of each production period, based on industry margin data received from all recipients, incentive rates were calculated up to a maximum rate payable per litre of renewable fuel.

Under the new changes, incentives are paid, based on a fixed declining rate established by the Program instead of on the variable declining rates. This provides more predictability and stability for producers. Below are the incentive rates for each fuel type:

Incentive Rate ($ per L)
Fiscal Year* 2008
-
2009
2009
-
2010
2010
-
2011
2011
-
2012
2012
-
2013
2013
-
2014
2014
-
2015
2015
-
2016
2016
-
2017
Renewable Alternatives to Gasoline 0.10 0.10 0.09 0.08 0.07 0.06 0.05 0.04 0.03
Renewable Alternatives to Diesel 0.26 0.24 0.20 0.18 0.14 0.10 0.08 0.06 0.04
* April 1 of a year to March 31 of the following year.

What change was made to the cap for renewable alternatives to diesel?

The Program is changing the volume cap to a monetary cap for renewable alternatives to diesel. Previously, individual companies could not apply for production of renewable alternatives to diesel totalling more than 30% of the Program's total biodiesel volume target of 500 million litres.

With the change, individual companies producing renewable alternatives to diesel can receive up to 30 % of the Program's $500 million biodiesel reserve. A company producing renewable alternatives to diesel could receive a contribution agreement for up to $150 million.

Why was this change not made for ethanol?

This change was required for biodiesel companies to encourage large-scale facilities that could better compete on a global basis. The litre target for ethanol is 2 billion and the 30% litre cap equates to 600 million litres. This target is already high enough for the ethanol industry to compete on a large-scale global basis.

Why was the Program’s deadline changed from March 31, 2011 to September 30, 2012?

Changing the construction deadline to September 30, 2012 will better align the Program with the ecoABC Program from Agriculture and Agri-Food Canada. Also, given that the previous construction deadline is rapidly approaching, the risk of eliminating companies who miss the deadline by a few months is removed. Companies still have the incentive to finish construction as quickly as possible because the Program pays its maximum incentives in the early years.

How is the eligibility for incentives determined under the Program changes?

Previously, applications to the Program were processed in the order in which their applications were complete. Therefore, successful applicants were determined on a first-come first-served basis should they meet all Program requirement.

Now, new eligibility criteria has been introduced. “Existing producers” will be defined as those capable of producing biofuel by March 31, 2010.“New producers” will be defined as those that, although not producing by March 31, 2010, are able to demonstrate an “advanced state of readiness” as defined by the program.
New merit-based assessment criteria for project selection has been established for projects (new producers) demonstrating the  minimum threshold of “advanced state of readiness”.

When is the deadline for applying to the Program?

Applications to the Program must be received no later than March 31, 2010. This includes the submission of all supporting documentation to the satisfaction of the Program. Applicants are strongly encouraged to submit an application package well ahead of March 31, 2010, as changes to the application or missing documentation will NOT be accepted after the deadline.

What is the definition of an advanced state of readiness for new producers?

Advanced State of Readiness is the minimum threshold as defined by the Program, that includes specific criteria in the categories of financial, project details, environmental, management and contractual arrangements, that projects that will not be producing renewable alternatives to gasoline or diesel by March 31, 2010, will need to demonstrate.

What criteria will be used to evaluate new producers based on the Merit Based Assessment?

The  Merit-based criteria defined by the Program includes, but is not limited to:

  • Financial status;
  • Technical advancement and feedstock usage;
  • Environmental performance and permitting;
  • Management expertise;
  • Economic impact;
  • Market; and
  • Long term advantages/prospects.

For more information, please visit the Merit-Based Assessment Criteria web page.

What happens to existing Contribution Agreements?

All signed Contribution Agreements will be honoured and payments will continue to be made to companies with signed agreements. Agreements will be amended to reflect the new operating parameters including incentive rates and payment regime.

What happens to companies with letters of Conditional Approval?

Companies with Letters of Conditional Approval must still submit a new application to respond to new requirements. If they are deemed to be existing producers under the new rules and they meet all Program eligibility criteria, negotiation of a contribution agreement can begin, subject to funding availability and fuel type needed to meet Program volume targets.

Companies with Letters of Conditional Approval that are new producers must also submit a new application responding to new requirements and detailing their state of readiness. Program administrators will immediately review the applications and assess if the minimum threshold of advanced state of readiness has been met. New producers, who are successful in demonstrating this minimum threshold, will receive a letter informing them that their application will undergo a full merit-based assessment against all Program criteria after March 31, 2010.