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by afew
After the World Bank piled in on biofuels, now it's the turn of the OECD in An Economic Assessment of Biofuel Policies, a report published yesterday.
From which we see that the world's largest ethanol producers are Brazil and the US, with the EU producing about 60% of world biodiesel. There's an estimate of how much money is going, one way or another, to subsidize current and future production:
In most countries, biofuels remain highly dependent on public support policy. This report estimates support to the US, EU and Canadian biofuel supply and use in 2006 at about USD 11 billion per year, projected to rise to USD 25 billion in the medium term [ie 2013-17]. What do we get in return?
The sometimes predicted improved economic viability of biofuel production and use associated with higher crude oil prices so far has not materialised in many countries. Most production chains for biofuels have costs per unit of fuel energy significantly above those for the fossil fuels they aim to replace. Despite the rapid and substantial increase in crude oil prices and hence in the costs for gasoline and fossil diesel, the cost disadvantage of biofuels has widened in the past two years as agricultural commodity prices soared and thereby feedstock costs increased. That's an interesting last point: not only do biofuels increase the cost of foodstuffs, in doing so they also decrease their own economic viability in making their feedstocks dearer. Do we gain on GHG emissions?
Ethanol based on sugar cane - the main feedstock used in Brazil - generally reduces GHG emissions by 80% or more over the whole production and use cycle, relative to emissions from fossil fuels. Current support policies in the US, the EU and in Canada target feedstocks that tend to reduce GHG emissions by much less. Biofuels produced from wheat, sugar beet or vegetable oils rarely provide GHG emission savings of more than 30% to 60%, while corn (maize) based ethanol generally allows for savings of less than 30%. As to the increase in the cost of food, the OECD report doesn't go as far as the World Bank estimate of 75% (rise attributable to biofuels).
The medium-term impacts of current biofuel policies on agricultural commodity prices are important, but their role should not be overestimated. The price effects attributable to biofuel policies derive largely from increased demand for cereals and vegetable oils. With biofuel support policies in place in 2007, 12% of global coarse grain production and 14% of global vegetable oil production could be used for biofuels in the medium-term, up from 8% and 9% in 2007, respectively. But future policy developments matter: with full implementation of the recently enacted US Energy Independence and Security Act and the currently proposed new EU Directive for Renewable Energy, close to 20% of global vegetable oil production and more than 13% of world coarse grain output could shift to biofuels production. The OECD wouldn't be the OECD without putting in a word for reducing tariff barriers on biofuels that "increase costs". Coming after a severe dismissal of the interest of producing the stuff, that seems somewhat... bizarre. |
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Biofuels Take Another Hit | 20 comments (20 topical, 0 editorial, 0 hidden)
Biofuels Take Another Hit | 20 comments (20 topical, 0 editorial, 0 hidden)
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