Renewable electricity to low-carbon fuels

Canada’s largest provinces are starting to walk the walk on climate change. Leading the way on several fronts is British Columbia. The BC Government has an aggressive Climate Action Plan, one plank of which is the Greenhouse Gas Reduction (Renewable and Low Carbon Fuel Requirements Regulation) Act (RLCFRR), which came into effect on January 1, 2010. The RLCFRR is designed to reduce the carbon intensity of transportation fuels in BC through two major requirements:

1. the Renewable Fuel Requirement (5% renewable content in gasoline beginning in 2010 and 3% renewable content in diesel in 2010, 4% in 2011, and 5% for 2012 onward);


2. the Low Carbon Fuel Requirement (10% reduction in carbon intensity by 2020).

In March 2010 the Ministry of Energy, Mines and Petroleum Resources issued Information Bulletin RLCF-002, which outlines the expected average BC fuel carbon intensity for 2010. Bulletin tables provide data on the expected volume, energy density, and carbon intensity for each fuel in the BC fuel mix. The only gasoline blendstocks or substitutes listed are Canadian wheat ethanol and US corn ethanol (from natural gas and coal distillation). As for a diesel blendstock or substitute, the primary candidate is a hydrogenation-derived renewable diesel (HDRD) made in Finland—from palm oil imported from Malaysia. This is followed by US canola biodiesel (processed in the US) and Canadian canola biodiesel (again, processed in the US).


Using renewable electricity and waste carbon dioxide, in northeastern BC Blue Fuel Energy plans to produce low-carbon methanol (Blue Fuel methanol) and low-carbon DME (Blue Fuel DME)—at a cost equal to or lower than that of the above-mentioned fuels. Initially, we will focus on Blue Fuel methanol, which, according to a recently conducted GHGenius study, has a much lower carbon intensity than wheat- and corn-based ethanol and thus two immediate markets:

1. as a gasoline blendstock in BC to help fuel suppliers meet the new low carbon fuel requirements regulation;


2. as a biodiesel feedstock to help biodiesel producers in western North America further reduce the carbon intensity of their fuels.

Over time, as diesel engines gain ascendency over gasoline engines in North America (as they have in Europe because of their far superior efficiency) and diesel-engine manufacturers start commercial-scale production of engines with DME-compatible fuel supply systems, attractive markets for DME will also emerge. At that point, given that DME is a derivative of methanol, Blue Fuel Energy will add DME plants to its production facilities and produce both Blue Fuel methanol and Blue Fuel DME.