Canada’s biofuel industry is lobbying the federal government to mirror U.S. biofuel policy, a move that would be an unmitigated disaster, according to one think-tank.
The International Institute for Sustainable Development is calling for a moratorium on additional U.S. biofuel subsidies with a view to phasing existing programs out altogether.
“The potential for waste on a grand scale and some spectacularly perverse environmental outcomes is large,” said Simon Upton, director of the group’s Global Subsidies Initiative.
According to the IISD, state and federal governments subsidize the industry to the tune of $5.5 to 7.3 billion US a year. Many of the subsidies are piled on top of one another without a clear plan or vision of what impact they will have on the economy and the environment.
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The institute, which bills itself as a group promoting government policies beneficial to the economy, environment and social well-being, said it costs $500 US in federal subsidies to reduce one tonne of carbon dioxide equivalent through the production and use of ethanol.
“That could purchase more than 30 metric tonnes of carbon dioxide equivalent offsets on the European Climate Exchange, or nearly 140 tonnes on the Chicago Climate Exchange,” said Doug Koplow, author of the report entitled, Biofuels – At What Cost?
Kory Teneycke, executive director of the Canadian Renewable Fuels Association, a group asking federal and provincial governments to implement subsidies and tax incentives competitive with those offered in the U.S., said the IISD report overlooks key factors.
The credit system promoted through the Kyoto Accord is flawed, said Teneycke. A chemical company can move from a Kyoto nation like Canada to a non-Kyoto nation like India, where it can operate under looser environmental standards, and on paper that move will be deemed as improving emissions.
“The problem with buying credits is you’re not necessarily making the world any cleaner,” he said.
Teneycke also took issue with the IISD focusing solely on the environmental aspect of a government policy that is also about energy security and agricultural support.
He said the $5.5 to $7.3 billion US spent annually to support the biofuel industry amounts to about two weeks of the cost of having a military presence in Iraq to stabilize an oil producing region of the world.
And he contends that if the money wasn’t spent propping up the biofuel industry, it would be going to the petroleum companies.
“The thought that oil operates in a market system is just laughably false.”
Teneycke also said that subsidizing biofuel has spin-off effects in that it boosts commodity prices and decreases the need for agricultural subsidies.
The Canadian Renewable Fuels Association said it would cost $200 million per year to give the industry what it needs to meet the government’s stated goal of implementing a five percent biofuel mandate by 2010.
That would put Canada on equal footing with the U.S., which is forecasting that biofuel will account for five percent of total transport fuel use in the U.S. by 2010.
But according to the IISD report, the annual expenditure on biofuel in the U.S. is already wasteful and is expected to escalate rapidly because the bulk of biofuel subsidies are tied to production, which is increasing at double-digit rates of growth.
“There is an urgent need to examine the claimed benefits from biofuel subsidies and to compare them with the costs of meeting the same goals in other ways,” said Upton.
