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Business, Free Enterprise and Constitutional Issues; Pro-Life and Pro Second Amendment. Susan Lynn is a member of the Tennessee General Assembly. She serves as Chairman of the Consumer and Human Resources subcommittee and on the Finance Ways and Means Committee. She holds a BS in economics and a minor in history.

Thursday, October 04, 2007

Is the Cure Worse than the Disease?

The Organization for Economic Co-operation and Development (OECD) met for it's 20th Round Table on Sustainable Development in September. They have produced a report on Biofuels called Biofuels : Is the Cure Worse Than the Disease ?

The report is a must read for policy makers, taxpayers and anyone concerned about the environment.

Among some of the findings:

The rush to energy crops threatens to cause food shortages and damage to biodiversity with limited benefits.

Second-generation technologies hold promise but depend on technological breakthroughs.

The economic outlook for biofuels seems fragile.

Government policies supporting and protecting domestic production of biofuels are inefficient…

...are not cost-effective….

More from the report:

Overall environmental impacts

105. Most biofuels have an overall environmental performance that is worse then gasoline, though their relative performance differs considerably (Fig. 8). EMPA gave maize-based ethanol in the USA a poor environmental score, whereas it determined that ethanol from sugar beets and sugarcane are only moderately better than gasoline in terms of their overall environmental impacts. Biodiesel scores negatively as well, in general. Only when waste products such as recycled cooking oils are used do their overall environmental performances fare better than that of gasoline. Biofuels made from woody biomass rated better than gasoline in all cases.


6.4 Cost-effectiveness of government support policies


114. The overall cost-effectiveness of biofuels seems to be low in almost all cases. Costs are relatively high per unit of fossil energy displaced or per unit of CO2 emissions reduced. To displace one litre equivalent of fossil fuel, for example, would cost between $0.66 and $1.40 in the United States. In the European Union these costs are even higher. And that is in addition to what customers pay for the fuel at the pump. In several cases the use of biofuels is roughly doubling the cost of transportation energy for consumers and taxpayers together. Such high rates of subsidisation might perhaps be considered reasonable if the industry was new, and ethanol and biodiesel were being made on a small-scale, experimental basis using advanced technologies, but most of the support is directed at production from mature, first-generation manufacturing plants.


115. In a similar vein, the cost of obtaining a unit of CO2-equivalent reduction through subsidies to biofuels is well over $500 per tonne of CO2-equivalent avoided for corn-based ethanol in the United States, for example, even when assuming an efficient plant uses low-carbon fuels for processing. In Switzerland and Australia the results are hardly any better, although the ranges are large depending on the feedstock. The implication of these calculations is that one could have achieved far more reductions for the same amount of money by simply purchasing CO2-equivalent offsets at the market price
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