CORRECTED - Canadian biofuel cuts emissions sharply -report

(Corrects figure in first paragraph to 62 percent from 73 percent and the figure in the 10th paragraph to 99 percent from 27 percent)

* Ethanol emissions 62 pct lower measuring all stages

* Skeptics say biofuel uses more fuel than it produces

By Rod Nickel

WINNIPEG, Manitoba, Nov 26 (Reuters) - Canadian ethanol emits 62 percent less greenhouse gas than conventional fuel, taking into consideration all stages of the fuel's production from planting a crop to burning the fuel, a new report prepared for Canada's biofuel industry said on Friday.

The results rebut a key argument against producing biofuels, that they use more energy than they can generate, said Gordon Quaiattini, president of the Canadian Renewable Fuels Association.

"We can clearly demonstrate that we are producing a fuel that reduces greenhouse gases," he said. "The notion (of) a negative environmental result is just garbage."

Among several reports that have been skeptical about biofuel, a 2005 study by Cornell University and University of California-Berkeley found that producing biofuel from corn and other crops uses much more energy than the end product generates.

The Canadian government's mandate for use of renewable materials in gasoline takes effect in September 2010. Canada has granted annual subsidies for up to seven years to biofuel producers Husky Energy Inc (HSE.TO: 行情) and Suncor Energy Inc (SU.TO: 行情) from a C$1.5 billion ($1.4 billion) fund.

The Renewable Fuels Association plans to ask the Canadian government early next year to expand fuel-blending mandates and production incentives. [ID:nN12421213]

The report for the Renewable Fuels Association was written by consultant Cheminfo Services. It is based on the industry's reported production of 741 million litres of all biofuels between April 2008 and March 2009 and uses estimates and a model to gauge greenhouse gas emissions from production stages.

The production represented in the report reduced greenhouse gas emissions by 1.1 million tonnes, comparing the total environmental impact of producing and burning biofuel versus conventional fuel.

Canadian plants produce ethanol from corn and wheat and make biodiesel mainly from animal fat.

Biodiesel production, a much smaller part of the biofuels industry, reduces emissions 99 percent considering all stages, the report says. That's because the source of most Canadian biodiesel is animal fat and restaurant grease, a waste product not a resource extracted from the ground, Quaiattini said.

It does not include comparisons of emissions from biofuels produced in other countries.