Public policies and Canadian ethanol production: history and future prospects for an emerging industry

Abstract

The Canadian ethanol industry has grown rapidly and is approaching a crossroads. Government funding has played a role in increasing domestic ethanol production, but the future of such funding is uncertain. Government renewable fuel mandates have helped create a demand for ethanol, but domestic production will soon achieve the mandates. Therefore, the Canadian ethanol industry finds itself in a situation where current policies have largely been played out, and within a global market where large established players dominate market share. Within this context, the future prospects for Canadian ethanol are highly uncertain, being dependent on public policies, the future price of oil, and technological progress that could tilt production towards second-generation feedstock, where Canada may have a comparative advantage.