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
- 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: firstname.lastname@example.org