The Canadian government announced the details of a Cdn$1.5 billion biofuels initiative today, offering producers in the country incentives for gasoline and diesel alternatives.

Starting in April 2008, companies can get incentives of up to Cdn$0.10 per liter for ethanol and other renewable alternatives to gasoline, and up to Cdn$0.20 per liter for biodiesel.

The program, called ecoENERGY for Biofuels, has pegged Cdn$500 million from the overall budget for biodiesel producers.

The details of the incentives were released by federal Agriculture Minister Gerry Ritz, who also announced a new biofuels bill.

"This Government strongly supports the development of biofuels, which will lead to new markets for our farmers, help reduce greenhouse gas emissions, and create new jobs for our cities and towns," said Ritz in a statement.

Under the proposed regulations, gasoline sold in Canada would require an average of five percent renewable content by 2010, with diesel fuel and heating oil requiring an average of two percent renewable content by 2012.

Natural Resources Canada, the agency that will handle the incentive program, estimated that the country will need three billion liters of renewable fuel per year to meet new requirements.

Canadian production is currently about 800 million liters per year, according to the agency.

Details of this latest initiative follows news in September that the government would finance a Cdn$500 million biofuel fund, open to companies ready for large, demonstration scale projects of next generation biofuels in Canada (see Ottawa backs biggest biofuel fund).

The NextGen Biofuels Fund, which is separate from today's initiative, is managed by Sustainable Development Technology Canada, a not-for-profit, arm's length foundation based in Ottawa.

Canada also has a Cdn$200 million ecoAgriculture Biofuels Capital incentive that provides farmers with the opportunity to invest directly in the industry, as well as a Cdn$20 million Biofuels Opportunities for Producers initiative to assist farmers and rural communities.

Natural Resources Canada said companies that are getting cash from other government backed programs will still be eligible for the incentives announced today.

Gordon Quaiattini, president of the Canadian Renewable Fuels Association, said, "The new biofuels bill coupled with the ecoENERGY program will ensure the future growth and development of renewable fuels in Canada."

The Canadian Renewable Fuels Association said it expected 20 new biofuel facilities to be built in Canada in the coming years.

Funding for the nine-year government incentive program was announced in July, but the government didn't provide any details on the incentives until now.

The cash will be handed out from April 1, 2008 until March 31, 2017, with the price of the incentives dropping after the first three years, down to a final 4 cents per liter for gasoline alternatives in the last year of the program, and 6 cents for biofuels.

Companies will be able to receive money from the program for up to seven out of the nine years, but they shouldn't wait too long to apply, as companies can only request funding under the program for facilities constructed before March 31, 2011.

The incentive program will initially limit volume to 2 billion liters for gasoline alternatives, 500 million liters for biodiesel, with those numbers potentially increasing over time. Individual companies will have a cap of 30 percent of the total program volume.

New and existing plants will be able to apply for the incentives, but Natural Resources Canada said the program may give preference to facilities with more sustainable feedstocks, as well as better environmental performance, such as lower greenhouse gas emissions and water use.

Canada's leading ethanol producer welcomed today's news, saying the new measures will ensure the continued development of homegrown ethanol in Canada.

"With increasingly unstable oil prices, there is a pressing need for Canada to quickly develop reliable and renewable sources of energy," said Bliss Baker, VP at GreenField Ethanol.

The company produces 250 million liters of corn-based ethanol per year at its three plants in Ontario and Quebec.

But a company doesn't have to be the top producer to get the incentives. Applicants only need to have a nameplate capacity of at least 5 million liters for ethanol or other gasoline alternatives, or 3 million liters for biodiesel.