CANADA: May 2, 2008


OTTAWA - Canada's plan to ensure that gasoline contains 5 percent ethanol by 2010 won support in the House of Commons on Thursday despite increasing concern about the impact of biofuels on world food supplies.


The legislation, which also calls for diesel to contain 2 percent renewable fuels by 2012, passed a critical vote in the House, where the Conservative government has a minority of seats, with the support of opposition members from the Liberal and Bloc Quebecois parties.

The bill still must go through a final vote in the House but that seems assured in light of Thursday's vote. It would then have to go through the Liberal-dominated Senate.

The mandate would create demand for an estimated 2 billion litres of ethanol and 600 million litres of biodiesel.

The Conservative government has also provided biofuel producers with subsidies of C$1.5 billion ($1.47 billion) or 20 Canadian cents per litre in an effort to ensure the mandate is filled with biofuel made from Canadian crops.

Canada has 16 ethanol plants using corn and wheat built or under construction, according to industry data, with a total capacity of 1.6 billion litres.

There are currently three biodiesel plants with a combined capacity of 97 million litres, mainly using animal fats. A plant that would produce 225 million litres of biodiesel from canola oil is under construction in Alberta.

($1=$1.02 Canadian)

(Reporting by Randall Palmer and Roberta Rampton; editing by Renato Andrade)


REUTERS NEWS SERVICE