CANADA TO KEEP PUSHING GAS, METHANOL MOTOR FUELS

Canada has extended a campaign designed to expand markets for natural gas and methanol as alternative transportation fuels.

Ottawa's market development incentive payments (MDIP) programs, launched by the federal and Alberta governments in 1989, are extended for 3 years to Mar. 31, 1997.

During the extension, Natural Resources Canada (NRC), a federal agency, will administer the balance of MDIP funds totaling about $15 million on programs in support of the two fuels.

The MDIP extension covers incentives for natural gas vehicle (NGV) conversions and factory-produced NGVs. NRC said measures will be introduced to ensure that the conversions are environmentally acceptable.

MDIP programs aim to encourage expansion of the NGV fleet as well as the use of public and private refueling stations and equipment.

MDIP also will continue to support a technology development program for natural gas and methanol. That, in turn, will stimulate expanded market demonstrations of methanol vehicles in several Canadian centers, NRC said.

MDIP BACKGROUND

Today's MDIP programs trace their roots to a 1981 accord between the governments of Canada and Alberta. MDIP funds were provided by Alberta gas producers and the Alberta government to the federal government to develop new markets for Alberta gas.

Between November 1981 and April 1986, Ottawa collected $160 million in MDIP funds through Energy, Mines and Resources Canada, now NRC.

The funds were spent on a series of five natural gas distribution and promotion programs, including the NGV program and the natural gas fueling station (NGFS) program.

By the time all MDIP commitments were settled in 1989, a surplus of about $28.5 million remained in the MDIP account. Alberta gas producers, the Alberta government, and NRC agreed that all remaining MDIP money would go for promotion of NGVs in Canada, as well as promotion of methanol fuel.

ln October 1989, the federal and Alberta energy ministers unveiled a set of MDIP funded programs in support of vehicles fueled by natural gas and methanol. The initiatives included a continuation of the NGV and the NGFS programs.

The latter program was expanded to include support for private and public refueling facilities, an incentive for installation of NGV refueling appliances, a market demonstration of the potential of methanol as a vehicle fuel, and a program of research and development in support of natural gas and methanol vehicles.

NRC said it became evident by 1993 that the remaining $28.5 million in MDIP funds would not be fully spent by Mar. 31, 1994. As of yearend fiscal 1993-94, about $15 million remained in the MDIP account.

NRC said, "While much progress has been made in expanding the NGV industry during 1989-94, it is clear that further support is required to ensure NGV becomes firmly established as a viable transportation energy option for Canada.

"Furthermore, the market demonstration of methanol vehicles has progressed more slowly than was anticipated in 1989. Further cooperation will be required between the methanol industry and government to see the project to its conclusion."

A decision on the 3 year extension followed talks among NRC, the NGV, methanol, propane, and petroleum industries, gas producers, and the governments of Alberta, British Columbia, and Ontario.

EXCLUSIONS

British Columbia is not eligible for MDIP funding for NGV initiatives. That's because MDIP applies only to markets for Alberta gas, and British Columbia produces its own gas.

The NGV program, which had been offered on a cost shared basis between NRC and British Columbia gas utilities, expired last Mar. 31. NRC said talks are planned soon among it, the British Columbia government, and provincial gas utilities on future jointly funded programs.

Propane vehicle programs also are not eligible for MDIP support.

NRC acknowledged that propane is Canada's most popular alternative transportation fuel, but propane vehicles face some of the same market barriers as NGV. However, funding is available from Ottawa's Green Plan for cost-shared programs of support for propane and other alternative fuels.