This paper by Arnold W. Reitze makes a contribution to the hotly contested debate over the benefits of biofuels (EurActiv 29/01/06).
It says that subsidies under the US Clean Air Act have made ethanol production immensely profitable in the US even though it is more costly and performs worse than gasoline. Moreover, it says subsidisation in the US has “distorted the market for renewable fuels”.
From a political perspective, the author argues that the US ethanol programme has provided the illusion that the government is responding to increased petroleum prices.
But he says that, since ethanol production requires about as much fossil-fuel energy as is found in ethanol, its use does not reduce the nation’s demand for fossil fuels. “Until the technology is available to produce a significant net energy gain from using renewable fuels, their use will not be a viable way to deal with climate change.”
In addition, Reitze says that import barriers against countries with economically favourable conditions for producing ethanol, such as Brazil, should be lowered. This would help to reduce agricultural surpluses adversely effecting the developing world, whilst also contributing to US energy security by diversifying supply.
The only justification the author sees for the program was “the need to generate political contributions or to placate Midwest members of Congress seeking welfare for their constituents.”
Reitze concludes that “a renewable fuels program should be an important part of a national energy policy, but it must be sustainable, and it should not be based on long-term government subsidies.”