Table of Contents

Description of the Technology

Vegetable-based biofuels are not a new idea. Henry Ford's first vehicle was designed to run on ethanol, while Rudolf Diesel used peanut oil to fuel his 1898 compression-ignition engine. Since then, of course, petroleum-based products gradually came to dominate the scene.

As global petroleum supplies shrink, however, ethanol and biodiesel are back in the limelight. These clean-burning alternatives not only reduce greenhouse gas emissions, they also reduce air pollution.


Ethanol is a high-octane alcohol that can be created from the starches and sugars present in a variety of agricultural crops such as corn, wheat and barley. New technology is even making it possible to create ethanol from the cellulose in forestry waste and agricultural residues such as wheat straw and corn stalks.

Grain-based ethanol is made by milling the grain, mixing it with enzymes and water, and heating it to convert the starch into sugar. Yeast is then added to ferment the sugar into alcohol. Distillation concentrates the alcohol, while dehydration removes the remaining water.

Most standard vehicles can run on a blend of gasoline and up to 10 per cent ethanol (E10), while specially designed vehicles can run on blends of up to 85 per cent ethanol (E85).


Biodiesel is a renewable fuel that can be made from vegetable oils, such as soy and canola, as well as rendered animal fat. To produce it you extract oil from an oilseed crop and then heat the oil together with lye and methanol.

Biodiesel can be used in pure or blended form in diesel engines with little or no engine modification required. In some ways it is superior to traditional diesel: it ignites better and offers better lubricity, reducing engine friction and wear. The main disadvantage is that it loses viscosity at lower temperatures, so in cold Canadian winters it must be blended with petroleum-based diesel.

State of the Industry

Most of the world's biofuels are currently produced in the U.S., Europe and Brazil, but Canada is gaining ground. A number of ethanol facilities are currently operating in Ontario, with more on the horizon, and biodiesel production is in the works.

Global demand for biofuels continues to increase. One-third of the 2007 U.S. corn crop went to biofuels, while plant breeders are developing higher-yielding crop varieties to serve the energy industry.

Although fluctuating oil prices will strongly influence the market for biofuels, measures like the current provincial and federal tax exemptions and Ontario Regulation 535/05, which requires an annual average of five per cent ethanol in gasoline sold in the province, will help to sustain demand.

Are Biofuels Right for Me?

From a grower's standpoint, an increasing demand for biofuels can expand the market for crops such as corn, soy and canola. Like any commodity, the price of energy crops fluctuates, but producers have the flexibility of selling to food markets if energy prices are low.

It's also quite feasible to produce biodiesel on your farm, using anything from a homemade system to a fully automated commercial one. It's more likely to be economically viable if you both grow oil seed crops and raise livestock that can take advantage of the meal produced during oil extraction.

If you choose to make your own biodiesel, be sure to take proper precautions handling the chemicals you'll need. As well, you'll need to decide what you will do with the glycerin that is a byproduct of biodiesel production.

Ethanol production is a more challenging undertaking. The economies of scale make it less attractive than biodiesel production, and there are more regulatory hurdles to face.

From a fuel user's standpoint, whether commercially produced biofuels can reduce the cost of running your vehicle will depend on market conditions.

Basic Numbers

Small-scale turn-key biodiesel systems can cost anywhere from US$15,000 to $100,000 or more, according to A Farmer's Guide to Energy Self Reliance, published by the Institute for Energy and the Environment.

At the other end of the production scale, building an ethanol production plant costs between $0.65 and $1.00 per litre of capacity according to Fuelling a New Economy: Exploring the Opportunities of Ethanol Production. Most new plants constructed have an annual capacity of 100-150 million litres, putting the initial investment at roughly $100 million.

Benefits, Drawbacks and Possible Pitfalls

Using Biofuels


  • Substituting biofuels for petroleum-based fuels reduces greenhouse gas emissions and air pollution
  • Biofuels can be produced locally


  • Standard gasoline engines can tolerate blends of up to only 10 per cent ethanol
  • Biodiesel gels in cold weather, so it must be blended with regular diesel for winter use

Possible Pitfalls:

  • Double check that using biodiesel won't void your engine parts warranty
  • Biodiesel acts as a solvent, removing the engine deposits left by regular diesel, so be sure to change your fuel filter frequently when you first begin using biodiesel

Growing Energy Crops


  • The market for energy crops is currently growing
  • A number of energy crops including Miscanthus and switchgrass are perennial, with far lower input costs than annual crops


  • Like any commodity, prices fluctuate
  • There are risks involved in growing any unfamiliar crop

Producing Biodiesel


  • Making your own biofuel can reduce your fuel costs, if you have feedstocks readily available and the scales of economy are right


  • The methanol and lye required to produce biodiesel are both toxic, and methanol is flammable
  • You'll need to deal with the glycerin that you generate as a byproduct

Possible Pitfalls:

  • Be aware that some commercially available biodiesel production kits may not be durable enough for high-volume production
  • Producing biodiesel can be complex

Planning Issues and Regulations

If you plan to produce your own biodiesel, check with your local municipality about any zoning issues. You should also speak with your insurance broker.

Pure biodiesel (B100) should meet industry standards: ASTM D6751 or EN 14214. B1 to B5 blends used in on-road vehicles should meet specification CAN/CGSB-3.520.

Additional Resources

Publications and Websites

For an overview of biofuels, check Farm Credit Canada's Are Biofuels an Idea Whose Time Has Come?. The Integration of Renewable Energy on Farms website includes several pages on biodiesel and ethanol.

For information on using biodiesel in your operations, check the Ontario Ministry of Agriculture, Food and Rural Affairs infosheet about on-farm biodiesel use. If you plan to produce or blend your own biodiesel, consult the U.S. Department of Energy's Biodiesel Handling and Use Guidelines.

The Canadian Co-operative Association's Guide to Starting a Biofuel Co-operative outlines the steps in planning an ethanol or biodiesel production co-op.


You'll find an online video on On-Farm Biodiesel Production at AgVision TV.


Natural Resources Canada maintains a list of ethanol refueling stations, while the Canadian Renewable Fuels Association has a list of biodiesel suppliers.

Testing and Accreditation

For biodiesel testing, producers can contact the Alberta Research Council's Fuels & Lubricants Group.

The National Biodiesel Accreditation Program is a voluntary, co-operative accreditation program for biodiesel producers and marketers.

Demonstration Project

The University of Guelph's Ridgetown Campus is partnering with the Southwestern Ontario Bioproducts Innovation Network to create a farm-scale biodiesel demonstration, education and applied research facility located on the Ridgetown campus.


The Canadian International Grains Institute offers biodiesel production demonstrations and courses.


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Author: OMAFRA Staff
Creation Date: 22 April 2009
Last Reviewed: 22 January 2014