Developing a Canadian ethanol industry along the lines envisioned by the US would be a bad policy decision that would set back Canada’s agricultural sector by decades, according to a report by the George Morris Centre, an independent agri-food think tank in Guelph, Ontario.

“Just because the US is developing ethanol does not mean Canada should,” the report says, noting that the public policy issues in these two countries are different. Furthermore, it says, “it looks more and more like the US policy is just bad policy, so one sees little reason to emulate it”

The main selling point for the US ethanol policy is a desire to wean the country from its dependence on foreign oil. However, since Canada is a petroleum exporter, it has no need for such weaning. In fact, developing a robust ethanol industry could harm Canada’s domestic petroleum industry, the report notes.

Another US goal — achieving environmental benefits by increasing biofuel consumption — also is seen as elusive, according to the study, if one factors in the amount of water used in ethanol production and the energy used in drying distillers’ grains. This is particularly the case “when compared with policy alternatives like driving smaller cars and expanding public transportation,” the report says.

Ticking off the negatives, the report asserts that the development of a Canadian ethanol industry “will do little to assist the environment” because it produces a product “that can only be profitable with subsidies, thereby ensuring that there is no added market value for the product.” In addition, the effects of an expanded ethanol sector on the Canadian livestock and meat industry “threaten hundreds of millions of dollars of investment, and certainly discourage new investment.”

The report concludes that ethanol should be viewed as a negative for Canada because it “undercuts a clear and far-reaching strategy to convert Canadian feed grains into meat and livestock for export to an increasingly prosperous world, and could hardly be occurring at a worse time for Canada’s beleaguered beef and pork supply chains.” As it stands, “Canadian bio-fuel policy sets us back to the mid-1980’s, instead of operating from the current market reality,” the report says.