Promoting Ethanol Fuel Misguided; Environmental Benefits Uncertain and Costs High: C.D. Howe Institute



    TORONTO, July 3 /CNW/ - Federal and provincial policies that promote the
production and use of ethanol fuel to reduce greenhouse gas (GHG) emissions
are misguided, according to a Commentary released today by the C.D. Howe
Institute. The strategy should be reconsidered, says the study, since the net
environmental benefits of ethanol fuel are uncertain, and the costs to
consumers and governments are high.
    In The Ethanol Trap: Why Policies to Promote Ethanol as Fuel Need
Rethinking, economist Douglas Auld of the University of Guelph notes that
Canada has become a major booster of increased ethanol production. In addition
to federal efforts, a number of provinces encourage ethanol production through
similar capital and production subsidies.

    
    Auld finds that:
    -   There is no conclusive scientific evidence that ethanol reduces GHGs
        or energy use once the entire production cycle is taken into account.
    -   Even assuming that the use of ethanol has a net positive impact on
        CO(2) emissions, public funds contribute approximately $368 for each
        tonne of CO(2) reduced, roughly seven times greater than the cost of
        alternative policy measures. Auld finds that cellulose-based ethanol
        blends and solid biofuels provide a more promising approach to
        reducing GHGs.
    -   To the extent that ethanol policy is meant to act as a rural
        development tool, ethanol mandates and production subsidies provide
        benefits to some farmers while hurting others, with perhaps more
        being hurt financially than helped.
    -   Increased domestic production of ethanol contributes to increases in
        food prices, both direct and indirectly, for Canadian and foreign
        consumers. Domestically, increased food prices cost consumers an
        estimated $400 million each year.
    

    Auld concludes that the headlong thrust into corn ethanol as a GHG
reduction policy cannot be justified once the significant price effects,
economic costs, and consequences for income distribution in Canada and,
indeed, globally are considered.
    The study is available at http://www.cdhowe.org/pdf/commentary_268.pdf.





For further information:

For further information: Douglas Auld, Adjunct Professor, Department of
Economics, University of Guelph, (705) 448-3867, (519) 836-6325; Ben Dachis,
Policy Analyst, C.D. Howe Institute, (416) 865-1904, Email: cdhowe@cdhowe.org


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890