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Biodiesel to get more expensive

Less incentive to use ‘greener’ fuel under province’s new regulations



The provincial government is lifting a tax exemption for biodiesel, which will drive up the price of being green.

The government announced Dec. 21 that it's enacting the Renewable and Low Carbon Fuel Requirements Regulation, which aims to lower the overall carbon intensity in B.C.'s fossil fuels. The regulation came into effect on New Year's Day.

Part of that includes removing provincial tax exemptions for biodiesel and possibly driving up prices of some biodiesel by about 20 cents a litre, thereby increasing its price beyond that of gasoline.

Biodiesel can help reduce emissions by blending diesel with a renewable fuel, whether vegetable oil, pine beetle wood or even algae. Tallow, an animal-based product that's processed from beef or mutton fat, is also used in the fuel blends.

Biodiesel is then rated based on the percentage of renewable fuel mixed with diesel. Where a renewable fuel takes up five per cent of the biodiesel, it will be classified as a B5 fuel. Where it takes up 25 per cent, it will be classified as a B25 fuel and so on.

Under the new regulation, the province has set a target for all diesel to have a three per cent renewable component starting this year, meaning everyone who uses diesel will now have to use biodiesel. In 2011 that target will rise to four per cent and in 2012 to five per cent.

Duane Searle, a territory manager for United Petroleum Products, a company that supplies biodiesel to Sabre Rentals in Whistler, said its price used to hover around 85 cents per litre without provincial taxes, giving it a price advantage over regular gasoline. That advantage could wither away with the new regulation.

"We really aren't sure at this point," he said when asked how the new regulation would impact business. "The higher the blend, the more you're going to pay. Most people, unless they're really wanting to be green, aren't going to pay more for the higher blends."

Provincial taxes will apply to biodiesel at varying rates depending on the concentration of renewable fuel. The biggest jump in price will apply to B100 fuels, which are composed entirely of renewable fuel.

Such a fuel will see an extra 3.84 cents per litre added due to B.C.'s carbon tax and 15 cents for the provincial fuel tax, adding almost 19 cents per litre to its regular price, according to Searle.

In the case of a B20 fuel or any that is mainly composed of diesel there won't be as much difference because carbon and fuel taxes already applied to the diesel but not the renewable fuel contained therein.

"The higher percentage of bio, the more you're going to pay above the diesel," Searle said.

The increased prices could impact Sea to Sky residents who fuel up their vehicles with biodiesel at Sabre Rentals in the Mons industrial area. United Petroleum supplies its fuel to Sabre and people can get fueled up there when it's open or get a key card to fill up after hours.

In Whistler, the new regulation will have a financial impact wherever diesel is used in vehicles, such as the Resort Municipality of Whistler, which has been using B5 Biodiesel in its diesel vehicle fleet since 2004.

Where once the municipality enjoyed a tax exemption for such fuel, it will now have to pay the provincial fuel tax and carbon tax for biodiesel in vehicles used for transportation, though B5 biodiesel won't have nearly the tax impact that B100 and B20 fuel does.

It will also impact Whistler Blackcomb, according to Arthur DeJong. Though he supports the province's attempts to reduce emissions, DeJong admitted it will cost the company a little more to power its diesel trucks.

"If it's going to charge us a little more, so be it," he said.

Graham Currie, a spokesman for B.C.'s Ministry of Finance, said the new regulation is about bringing "renewable and low carbon" options to transportation fuels.

"Some people are saying this is going to increase cost," he said. "Our belief is any increase to the cost of fuel will be pennies. That should disappear when more product comes on the market.

"When there's competition, that reduces the competitive edge and brings price down."



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