Western Canada's first large-scale biodiesel refinery could be built near Edmonton in Sturgeon County, where an application has been filed with the province to build a plant that would process canola oil.

Doug Hooper, the CEO of Canadian Bioenergy Corporation, said it's an obvious place for the plant, and not just because so much canola is grown nearby.

"Given the high volume of use of diesel in the oil sands production and in the trucking and construction industries around Edmonton area, I think it's a good fit."

Canola producers like Clarence Assenheimer in Barrhead, Alta., are hoping the plant will drive up prices for their product.

"Any kind of increase in demand helps stabilize prices for canola so all that is good for farmers. If we have another market to sell into that just helps our profitability."

Biodiesel, which is made by chemically combining any natural oil or fat with an alcohol such as methanol or ethanol, is a cleaner-burning renewable energy, which cuts down on greenhouse gas emissions.

The proposal represents a major breakthrough for the industry in Canada.

Without government subsidies to help with startup and capital costs, it has been tough for Canadian companies to compete with those in the U.S. and some European countries, where biodiesel has been available at fuel pumps for about a decade.

But now that incentives are in place from federal and provincial governments, the industry is gathering momentum.

The Edmonton-area plant will make 114 million litres a year of fuel-grade biodiesel from canola and 10,000 tonnes of glycerine.

Hooper said it may be 18 months before the refinery becomes a reality. 

When the plant begins to produce fuel, it will first be sold to large diesel trucking fleets. Later, the company plans to blend biodiesel with traditional diesel and make their product available for retail sales.