Ethanol can be made from a wide variety of biological materials. Agricultural crops - particularly grains - are likely to be used because they have both high productivity and high levels of carbohydrates needed for ethanol manufacture by fermentation.

Extensive production of ethanol from grain will not detract from Canada’s ability to feed its own citizens and supply large quantities of high-quality grains to export markets.

Canada typically produces just under 50 million tonnes of grain (wheat, barley, corn, oats, rye) annually, and exports about half of this. If all Canadian gasoline consumption (presently about 33-35 billion litres annually) contained 10% ethanol, the maximum grain requirement would be 8-9 million tonnes. Canada would remain a major grain exporter.

Ethanol is best produced from lower value grains such as barley, corn and feed wheat. Higher value “bread” wheats would remain in ample supply for export sales, when Canada begins major ethanol manufacturing. Also, poor quality (weather damaged, immature) grains which are less suitable for either human or livestock use are excellent for ethanol production.

In practice, about two-thirds of each tonne of grain (i.e., the starch) is converted to ethanol. The remaining by-product is a high protein livestock feed which is particularly well suited for ruminant animals such as cattle and sheep. The protein in this material is utilized more efficiently in ruminant nutrition than are other high-protein feed ingredients such as soybean meal. This by-product of ethanol production is particularly good for Canadian dairy, beef and sheep production. It improves the competitive position globally of producers of these farm commodities. The manure from livestock can be used as a major source of fertilizer in grain crop production.

Canada is a major importer of high-protein animal feed ingredients. The value of imports is typically about $200 million annually. The by-product resulting from ethanol production from Canadian grain would serve to reduce this importation.

Fuel ethanol can also be made from cellulosic materials such as crop residues (straw, corn stover, etc.), forestry wastes (sawdust, etc.), municipal solid waste and recycled newsprint. Temeco Enterprises, a pulp and paper producer in Quebec, started in 1991 to produce ethanol from forest waste. As the technology and economics improve for ethanol production from these materials, they would be expected to become an increasingly important base for ethanol production in Canada. However, excessive amounts of crop residue should not be removed from farm land so that they can continue to build soil organic-matter levels.

Many have wondered whether ethanol makes sense, from an energy use perspective. In fact, each litre of ethanol contains at least 2-4 times as much energy as is required for inputs for crop production (fuel, machinery, fertilizers, etc.), and ethanol manufacture. Although petroleum-derived energy is used in the manufacture and transportation of inputs, this is more than offset by the solar energy captured through photosynthesis. This positive energy balance is predicted to improve, by up to 25%, as more energy efficient crop and ethanol production becomes common over the next decade.

Fuel ethanol makes sense for many reasons. Particularly its benefits for Canadian agriculture. These benefits, in turn, could serve to stabilize and improve farm income, which would increase the economic well-being of rural and other agriculture-dependent sectors of Canada.