IOPD XI 2008 June 17, 2008 Berlin, Germany Biofuels and National Agricultural Policy State of Affairs and Future Prospects: Canada Stewart Gilroy Chair, Canola Council of Canada

Value of Prairie Farm Cash Receipts Wheat (exc. Durum) vs. Canola ($000,000)

Canola: Number 1 Crop in Canada 2007 Canola Farm Cash Receipts > $3.4 billion Number 1 crop in Canada. 3 rd after Beef and Dairy

Canola Industry 2015 Strategy Innovate across the value chain Adapt quickly to change Focus on markets that place value on canola’s specific attributes Build on our ability to contribute to improved consumer health and a better environment Continually monitor and measure performance

Element Target Production Yield 9.1 million T 32 bu/acre 15 million tonnes 35% increase (40.5 bu/acre) Oil content42.5% average45% average Classic to Designer90/1075/25 Meal2000 kcals/kg energy content (poultry) 10% increase (90% of soybean meal energy level) Export Seed 5.2 million T7.5 million T Crush Biodiesel (domestic) Biodiesel (export oil) Food (domestic & export) 3.7 million T 0.05 million T 0.25 million T 3.40 million T 7.5 million T 2.00 million T 0.50 million T 5.00 million T

Shorten Rotations 25% Non-traditional Acres 3% Extra acres due to reduced costs of production 2% MORE ACRES 30% Hybrid Adoption 10% Genetic gain (2% per year) 15% Improved disease, insect resistance 5% MORE YIELD 35% More Production More Oil More Profit MORE CANOLA 75% More Reliably X = New traits (yield, stress, drought) 5% 13 Million30 Bus/Acre9 MMT 15 MMT40 Bus/Acre17 Million

Canola Biodiesel

Biodiesel –Development in Canada Renewable Fuel Standard is key Incentive programs not on parity with the US Infrastructure limited by investment dollars –Food vs. Fuel concerns: 2% in Canada = 1 million tonnes; 2015 target = 2 million tonnes or 13% of production. –Future - Low carbon fuel standards and sustainability.

Why Biodiesel? Substituting just 5% of the diesel we use today with domestically produced biodiesel will generate more than $600 million in capital expenditures and contribute more than $1.1 billion per year additional farm income. Economic Impact Study for a Canola-based Biodiesel Industry in Canada, July 2006, BBI Biofuels Canada

Lowest saturated fat content of any available feedstock (7%) = excellent cold flow properties Good oxidative stability from moderate linolenic acid levels Longer engine life by improved lubricity Proven record in the EU Why Canola Biodiesel?

Mandate – 5% renewable fuel by 2012 (2% renewable diesel) Incentives: Up to $.20 per litre…declining 20% profitability triggers full clawback 150 million L company cap; 7 million L minimum Elimination of $.04/litre federal excise tax Interest free capital based on producer investment Canadian Biofuels Approach

How much canola? Today 3 companies = 70 million litres (ADM –Velva start up (321 million) 1.0 million T Announced 9 companies = 1.8 billion litres 4.7 million T 2% mandate600 million L1.6 million T

Or …Based on the Mandate “Two percent renewable content in on and off-road diesel by 2012 (hopefully 2010) subject to satisfactory demonstration of performance in Canadian climactic conditions...” 600 million L = 1.6 million MT canola seed Unlikely that the Canadian petroleum industry would exceed mandate US opportunity for Canadian feedstock may ultimately be limited by increased US production

Government of Canada Incentives – Payable to biodiesel producer Applicable to all “renewable” diesels Up to $.20 per litre…declining 20% profitability triggers full clawback 150 million L company cap; 7 million L minimum Elimination of $.04/litre federal excise tax Interest free capital based on producer investment

Incentives Provinces

Next Steps Government policy Alberta Pilot (2% by 2012) New Renewables Fuel Bill ? Move 2% mandate to 2010 Push for a 5% 2015 mandate Address the patchwork of provincial mandates and incentives Stakeholder Communication Canola biodiesel is not ethanol

Environmental Benefits

How much energy does it take to make biodiesel compared to petroleum diesel? It takes 1 litre of diesel to make: 4 litres of petroleum diesel 2.5 litres of biodiesel 1.5 litres of ethanol Biodiesel is a renewable fuel Income related to biodiesel production is spread amongst many sectors No engine modification is required

Dino- Diesel Biodiesel (IPPC) Biodiesel (observed) Biodiesel (Zero Till)

The canola industry vision: Innovative. Resilient. Determined to Create Superior Value and a Healthier World.