Tuesday, November 6, 2007

Biofuels? Think twice (again)

Following the World Development Report 2008 referred to on this blog only a few days ago, an updated report on biofuel subusidies in the US entitled Biofuels: At what cost? from the International Institute for Sustainable Development again highlights again how ineffective bad policy decisons can be.

"Sustained high subsidy levels ... of ... biofuels are an expensive way to achieve various policy objectives, such as greater energy security and the lowering of greenhouse gas (GHG) emissions...In terms of energy security, the average subsidy costs of replacing petroleum with biofuels over the 2006–12 period are high: $ 12–17 per gigajoule (GJ) of petroleum displaced for corn ethanol and $ 16–25 per GJ for biodiesel. This translates to roughly $ 1.40 to $ 1.70 per gallon of gasoline equivalent and $ 2.00 to $ 2.35 per gallon of diesel equivalent—both a sizeable percentage of the current market value of motor fuels...The cost of displacing fossil fuels by subsidising biofuels is even more expensive than for displacing petroleum: $ 22 to $ 57 per GJ fossil fuel displaced for corn ethanol and $ 24 to $ 28 per GJ for biodiesel.

And then for the real shocker:

The minimum subsidy cost per tonne of CO2-equivalent reduced over the
2006–12 period is $ 295 for corn ethanol; $ 239 for biodiesel; and $ 109 for a hypothetical cellulosic ethanol case. This is the minimum cost, calculated by taking the lowest subsidy estimate and dividing it by the most favorable GHG displacement factor."

See http://www.globalsubsidies.org/IMG/pdf/Brochure_-_US_Update.pdf for a full report.

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