Government support for ethanol and biodiesel is set to shoot up in the US by the end of decade with no clear benefits for society, according to a report by the Global Subsidies Initiative (GSI) published on 27 October.
The report, which is backed by the International Institute for Sustainable Development (IISD) in Geneva, estimates that under current policies, support for biofuels in the US will be in the range of $6.3 billion to $8.7 billion per year by 2010, up from $5.5-7.3bn currently.
It suggests that political support for biofuels has stemmed from a combination of "powerful interests," including those of "agriculture, the national security community, and a significant proportion of the environmental community".
But the money could be better spent elsewhere, according to the report's authors, who argue that the benefits of biofuels - reduced dependence on imported oil and CO2 cuts - could be attained in other ways at a cheaper price.
"Under optimistic projections, it costs some $500 in federal and state subsidies to reduce one metric tonne of CO2-equivalent through the production and use of corn-based ethanol. That same amount of money could purchase more than 30 tonnes of CO2-equivalent offsets on the European Climate Exchange, or nearly 140 metric tonnes on the Chicago Climate Exchange," says the report's author, Doug Koplow.
"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," the report further claims.
In the EU, farmers are awarded a €45 premium for each hectare of land used for biofuels production, with member states contributing up to 50% of the costs. The scheme has recently been extended to cover countries such as Poland, which joined the EU in 2004 (EurActiv 26/09/06).
