+ RMA Rural Municipalities
of Alberta

Resolution 3-05F

Ethanol Industry Strategy

January 1, 2005
Expiry Date:
December 1, 2008
Active Status:
Industry and Resource Development
Vote Results:
Carried as Amended

WHEREAS Alberta’s Rural Development Strategy notes that ‘most rural communities rely on a strong agriculture base to support not only farmers and ranchers in the area but also other businesses and facilities in their communities’;AND WHEREAS there is little doubt that the serious challenges in today’s agricultural marketplace are having profoundly negative impact on many rural communities and the farming industry. Statistics Canada’s farm product process index illustrates a 24-month year-over-year downward trend in crop prices. Prices producers received for crops in August were 13 per cent below levels a year earlier, with grains and oilseed prices 27 and 26 per cent below levels in the same month a year earlier;AND WHEREAS development of the ethanol industry has the potential to create an improved market for wheat and other cereal crops. Ethanol is a high-octane, water-free alcohol that is produced mainly from the fermented sugars or converted starch that is found in many Alberta products, including wheat and other cereal crops;AND WHEREAS as Ethanol burns cleaner than gasoline, ethanol blended fuels can reduce motor vehicle greenhouse gas emissions by as much as 30 per cent. Common blends of ethanol can also reduce carbon monoxide exhaust emissions by up to 20 per cent, reduce carbon dioxide emissions by up to 10 per cent, and cut down smog creating compounds by up to 15 per cent;AND WHEREAS Ethanol production has the ability to assist Alberta’s agricultural industry. Farmers have and continue to endure low commodity prices and are then forced to rely on ad-hoc agricultural subsidies. Development of this industry could help create an expanded market for grain products;

Operative Clause:

THEREFORE BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties encourage the Province of Alberta to develop and implement an ethanol and bio-diesel industry strategy.The strategy should include the following essential components:1. Tax incentives to ensure ethanol production is attractive for long-term investment;2. A commitment from the province to mandate the use of ethanol blended fuels;3. A commitment to work with other governments to remove the fuel tax on ethanol; and4. A review of regulatory process that would encourage development of ethanol plants in rural communities.5. A commitment to market ethanol and bio-diesel as a stand alone fuel.

Member Background:

Alberta Agriculture, Food and Rural Development sets out a goal of achieving $10 billion in primary and $20 billion in value-added agriculture by 2010. Furthermore, the Rural Development Strategy (RDS) notes the value-added sector as a key component to sustainable agriculture industry. Therefore, rural municipalities recognize a significant value in creating a framework to stimulate development of ethanol industry. This could create a positive and long-term market for agricultural products, thus contributing to the provincial targets. The Use of ethanol can help to inject life into the agricultural community by creating jobs for rural residents and new market opportunities for grain producers. Aside from the agricultural benefits, ethanol also has a potential to reduce dependency on non-renewable fossil fuels.


The traditional oil and gas industries are not long-term solutions to energy needs, but the ethanol and biofuel industries require incentives for research, development, and capital costs. The provincial response notes that helping to create a new market would be in breach of current government policy. The province currently supports ethanol producers by exempting bio-fuels under the Fuel Tax Act. Consumers do not have to pay the nine cents per litre tax on the ethanol portion of blended fuel. In Alberta, the biofuels and ethanol industries will be enhanced through two alternative energy strategies. Federally, the National Biomass Ethanol Program (NBEP) (a $140 million fund) expired on March 31, 2006 due to lack of participation. In May 2006, the federal government announced its goal to work with provinces and territories to have five per cent of the country’s transportation fuels renewable by 2010. The federal government is currently working on their strategy to implement this plan.In the 2007 federal budget, a $2 billion, seven-year commitment to biofuel development and an increase in once-in-a-lifetime capital gains exemption for farms to $750,000 (from $500,000) was announced. The budget also indicated that the government’s promise of up to $100 million annually for the next five years in cost-of-production compensation will be paid through deposits in farmers’ accounts created under the ‘farmer savings plan’. (Source: Western Producer, March 22, 2007)In July 2007, the Government of Alberta announced the Bio-Energy Producer Credit Program to encourage further investment in the province’s emerging bio-energy industry through financial incentives for producers, while advancing new markets for agricultural and forestry products. (Source: www.energy.alberta.ca)

Provincial Ministries:
Agriculture and Rural Development,
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