Birch Hills is hopeful that a federal budget initiative will be the final straw required to get a proposed cellulose ethanol plant built in this community of 1,000 people, just east of Prince Albert.
In Monday's budget, federal Finance Minister Jim Flaherty announced $500 million for large-scale facilities producing "next-generation renewable fuels."
Secretary of State for Small Business and Tourism Gerry Ritz said Monday the budget initiative could provide $180 million for the proposed plant at Birch Hills.
Iogen Corp. of Ottawa is proposing to build a commercial-scale cellulose plant, which would convert 700 tonnes per day of wheat straw into 75 million litres a year of ethanol.
Iogen has looked at sites in Saskatchewan, Alberta, Iowa and more recently Germany for the $300-million plant.
Unlike conventional ethanol plants that use wheat or corn as feedstock, cellulose plants convert waste from agricultural or forestry operations to make ethanol.
At a 10-per-cent blend, ethanol acts as an octane enhancer in gasoline and reduces a vehicle's greenhouse gas emissions by about 12 per cent.
"This is a great budget for cellulose ethanol,' said Iogen vice-president Jeff Passmore in a statement following the budget.
"The provisions outlined in the budget are a clear indication that the federal government is committed to the commercialization of cellulose ethanol in Canada.'
Earl Mickelson, reeve of the Rural Municipality of Birch Hills, said Iogen officials called him the day of the budget and were enthused about the incentives for cellulose ethanol.
"They're quite pleased with what they heard initially, but there's a lot of hoops to go through yet,' Mickelson said.
"This will certainly help (Iogen) choose Birch Hills as their first location, but that doesn't mean it's a done deal. They don't hand out $200 million to $300 million without some due diligence,' he said.
Mickelson said the town has been working with Iogen since 1998 to bring the plant to the area.
"We think we've been high on the list for a while now. I think we're their first choice for one (plant) in Canada.'
Birch Hills is an ideal location for a cellulose plant, he said. "We've got so many advantages here. We've got access to a good supply of water and ... we've got access to a huge supply of straw.'
Birch Hills is also close to Prince Albert, which has forestry operations that produce large amounts of cellulose "biomass' as waste product.
Mickelson said the surrounding 38 RMs also support the Birch Hills plant, which could employ about 600 people directly and indirectly. Based on a multiplier effect of 1.4 to 1.7, the plant could support another 850 to 1,000 service industry jobs in the area.
Mickelson said Birch Hills has the support of local producers and surrounding communities, the renewable fuels industry and the province. All it needs now is Ottawa's blessing.
