WITH THE benefit of hindsight, few would likely disagree that the promise of ethanol, as climate saviour and agricultural benefactor, was oversold in its infancy.
But as we assess government policy on biofuel development, there is a danger that it will be judged too harshly, without due credit for the groundwork it has laid.
Earlier this month, the C.D. Howe Institute, a Canadian think-tank, released a report entitled The Ethanol Trap: Why Policies to Promote Ethanol as Fuel Need Rethinking. It makes the point that science is inconclusive in its assessments of whether ethanol significantly reduces energy use or greenhouse gases.
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It further suggests public funds put toward ethanol production are more expensive than alternative policy measures and that policies to promote it may have hurt farmers more than helped them.
As well, it repeated the oft-heard accusation that ethanol production has contributed to higher food costs for consumers.
There is truth in all of that, and the institute has some data to back it up. Knowledge gained and questions raised about the benefits of policies that encourage ethanol production logically dictate a cautious approach to further action.
However, Canadian policy had little influence on much of what the institute complains about.
Several factors were behind rising food costs, including years of inadequate agricultural investment, poor global harvests, low world grain stocks, a heated agriculture commodities market and, most importantly, rising fossil fuel costs.
Diversion of grain and oilseeds to biofuel production was also a factor, but that was largely the result of American and European policies put in place long before Canada implemented its programs.
Most of the production capacity to meet Canada’s biofuel targets – five percent renewable content in gasoline by 2010 and two percent in diesel and heating oil by 2012 – is only just now coming on line and played little part in the grain price rally of the past 18 months.
Even when it reaches full capacity, Canada’s ethanol sector is expected to require only five percent of the country’s grain production.
For a relatively modest investment, Canada’s biofuel policy has helped create a biofuel industry that can participate in the global pursuit of a growing bio-industry that includes cleaner and more efficient second generation biofuels produced from non-food crops such as cellulose from switchgrass, straw, wood or algae, as well as other products, such as plastic, now produced by the fossel fuel industry.
Today’s ethanol industry is building the markets and infrastructure – plants, storage, vehicles, delivery methods – that these future products will need.
Politicians and biofuel promoters hurt the cause of biofuels by basing the sales pitch solely on the environmental benefit.
Renewable fuels will ultimately have an environmental benefit, but even then will play only one part in a broad environmental push that must also include more fuel efficient vehicles, conservation and promotion of other alternative energy sources.
Biofuel support is more than environmental policy, it is also a technology and industrial development policy that has potential to pay great dividends in an energy short world.
Bruce Dyck, Terry Fries, Barb Glen, D’Arce McMillan and Ken Zacharias collaborate in the writing of Western Producer editorials.
