Promise of Biofuels is Overrated, Report Says

 Despite an explosion of private investment in the U.S. liquid biofuels industry, taxpayers are contributing around seven billion dollars a year in subsidies which could be better used for other energy- and environment-saving technologies, according to a major new report released here Wednesday.

The 93-page report by the International Institute for Sustainable Development (IISD) said the industry is likely to receive even more money – from eight to 11 billion dollars annually over the next few years – from federal, state and local authorities if present policies remain in place, despite evidence that their ability to substantially reduce U.S. dependence on Middle East oil or the emission of greenhouse gases into the atmosphere is limited.

Moreover, according to “Biofuels – At What Cost?”, the unintended and potentially negative consequences of government subsidisation of the industry are not being taken sufficiently into account...

The report is the first of six country studies on biofuel subsidies commissioned by IISD’s Global Subsidies Initiative (GSI) and authored by Doug Koplow, founder and head of Earth Track, Inc., a Massachusetts-based research firm. The other country studies will include the European Union, Switzerland, Britain, Canada, and Australia.
Wednesday’s report was released in the context of the continuing impasse, largely between the wealthy industrial nations and developing countries, over agricultural subsidies in the Doha Round of international trade negotiations...

Based on current programmes, according to the report, the average annual values of governments over the next six years could rise to as much as 8.7 billion dollars for ethanol and 2.3 billion dollars for biodiesel, not counting many state programmes worth hundreds of millions of dollars more that are just beginning to take effect.

But taxpayers will get very little in terms of both reduced greenhouse gas emissions and reduced reliance on foreign oil for their money, according to the report.

The report argues that biofuels are an extremely expensive method for emissions. Under its calculations, it costs at least some 500 dollars in federal and state subsidies to reduce one metric tonne of CO2-equivalent emissions through the production and use of ethanol.

“That could purchase more than 30 metric tonnes of CO2-equivalent offsets on the European Climate Exchange, or nearly 140 metric tonnes on the Chicago Climate Exchange,” said Koplow in reference to the carbon-emissions trading markets that have been created in recent years...