OECD Report Shows Biofuel Policies in OECD Countries to be Costly and Ineffective
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16 July 2008: A new report from the Organisation for Economic Co-operation and Development (OECD), entitled “Economic Assessment of Biofuel Support Policies,” concludes that “government support of biofuel production in OECD countries is costly, has a limited impact on reducing greenhouse gases and improving energy security, and has a significant impact on world crop prices.” […]

Economic Assessment of Biofuel Support Policies 16 July 2008: A new report from the Organisation for
Economic Co-operation and Development (OECD), entitled “Economic Assessment of
Biofuel Support Policies,” concludes that “government support of biofuel
production in OECD countries is costly, has a limited impact on reducing
greenhouse gases and improving energy security, and has a significant impact on
world crop prices.”

The
study shows that biofuel production and use in OECD countries is highly
dependent on public funding and government support measures such as tax
concessions, direct financial support, minimum blending requirements and import
tariffs. Total government support in the US, Canada and the EU is estimated at
US$11 billion in 2006 and expected to reach US$25 billion in 2015,
corresponding to support of US$960 to 1700 per ton of carbon dioxide emissions
saved. The report also shows that emission savings from current biofuels are
clearly limited. Ethanol from sugarcane achieves savings of up to 80 percent,
while the savings from maize-based ethanol are less than 30 percent. Overall,
the report concludes that “the continuation of current biofuel support policies
would reduce greenhouse gas emissions from transport fuel by no more than 0.8
percent by 2015.” On the other hand, the report suggests that these policies
will lead to increases in food prices, which are estimated to amount to five
percent for wheat, seven percent for maize and 19 percent for vegetable oils.
The report recommends, among other measures, that governments focus on:
policies to encourage lower energy consumption; redirecting support towards
more efficient biofuels; and research and development for second generation
biofuels that do not require commodity feedstocks. [The report] [Press release]