Federated Co-op buying ethanol plant near Belle Plaine, Sask.

Federated Co-operative Ltd. (FCL) says an agreement to purchase an ethanol plant near Belle Plaine, Sask., will allow the company to prepare for the incoming national clean fuel standard.

FCL and Terra Grain Fuels said Wednesday they reached a mutual agreement to sell the plant to the Saskatoon-based company for an undisclosed price.

“As an active contributor to Western Canada’s energy sector, we understand that we have a role to play in reducing greenhouse gas emissions and finding ways to lower the carbon intensity of the fuel we manufacture and distribute,” Cal Fichter, FCL’s vice-president of energy, said in a statement.

“This purchase not only prepares us to meet the incoming national clean fuel standard, it also fits our commitment to being a responsible and sustainable contributor to Western Canada’s economy for decades to come.”

The Liberal government’s proposed clean fuel standard aims to “reduce greenhouse gas emissions (GHG) through lower use of carbon fuels, energy sources and technologies” with an objective of achieving a 30 megatonne annual reduction in GHG by 2030.

FCL said it will invest in the plant to make it more efficient and pursue carbon capture and storage technologies.

“Two of our our deepest connections to Western Canada are agriculture and energy,” said Pam Skotnitsky, FCL’s vice-president of strategy.

“To be able to invest in both through a local business that is already creating positive economic impacts is really an ideal situation for FCL and the Co-operative Retailing System.”

More than 400,000 metric tonnes of grain and other crops are purchased to produce 150-million litres of ethanol each year, contributing over $100-million annually in economic benefits to southern Saskatchewan, FCL said in a statement.

The plant also processes and sells up to 160,000 tonnes of dried distillers grain each year.

The sale is expected to be complete on May 31 subject to certain closing conditions, FCL said.