The head of an Aldersyde-area biodiesel plant is blaming a slowdown in the biofuels sector and promised federal funding that has not come through for having to shut down production at the facility.
The Western Biodiesel plant, next to the Cargill Foods Ltd. plant on Highway 2A south of Okotoks, ceased production operations at the end of November.
CEO Dean Cockshutt said the U.S. biodiesel sector, the company’s primary customer, has slowed. As well, he said Alberta’s renewable fuel standard doesn’t come into affect until April. As a result, domestic demand is also low and he doesn’t expect the provincial renewable fuels market to develop until next year.
“The combination of those two means the demand and the pricing for biodiesel is not that attractive right now,” he said. “It’s a commodity like any other, once the demand picks up the facilities will start working again.”
Cockshutt said the company still has fuel in its storage tanks waiting to be shipped, but it is not making any more at present. He doesn’t expect the plant to restart production until March 2011.
He said most of the biodiesel plants in the U.S. have also shut down due to similar economic constraints and Western Biodiesel was one of the last ones to continue operating.
“We’re not unique in this present economic difficulty,” said Cockshutt. “We were able to hang on a little longer than the rest.”
Compounding the situation, he said, is the federal government owes the company approximately $600,000 in funding from a biofuels production incentive program. He said the funding is owed from as far back as January 2010.
The federal government announced last year it would invest up to $19.9 million in Western Biodiesel over the next seven years. The money is part of the government’s nine year, $1.5 billion ecoENERGY Biofuels program. The Natural Resources Canada program provides 20 cents for every litre of biodiesel produced and sold. This amount is to decline to four cents per litre by 2016.
Natural Resources Canada declined to comment on its status regarding Western Biodiesel the matter citing confidentiality provisions.
Cockshutt said the company has had problems paying vendors and suppliers and will clear up the accounts once the federal funding is back in place.
“It’s been very hard on our working capital,” he said.
Cockshutt said the situation has nothing to do with the Alberta Environment and Occupational Health and Safety charges currently in front of the courts stemming from two separate incidents at the facility.
“They have no impact, this is a financial issue we have with the markets and the delayed federal payments,” he said.
