Paris, France – Government support of biofuel production in the thirty member countries of the Organisation for Economic Co-Operation and Development (OECD), which includes Canada, the U.S. and several European countries, has a limited impact on reducing greenhouse gases (GHG) and improving energy security, and has a significant impact on world crop prices, according to a new study by OECD.
The study, Economic Assessment of Biofuel Support Policies, said biofuels are currently highly dependent on public funding to be viable, and that in the U.S., Canada and the European Union, government support for the supply and use of biofuels is expected to rise to around US$25 billion by 2015, from about US$11 billion in 2006. The report also estimates that biofuel support costs between US$960 to US$1,700 per tonne of GHG saved.
Support policies include budgetary measures, either as tax concessions or direct financial support, increased fuel costs to consumers due to the higher production costs of biofuels, and trade restrictions, mainly in the form of import tariffs, to protect the domestic industry but which impose a cost burden on domestic biofuel users and limit development prospects for alternative suppliers.
The report calls on governments to refocus policies to encourage lower energy consumption, particularly in the transport sector, along with a more open market in biofuels and feedstocks to improve efficiency and lower costs, and research to accelerate development of second-generation biofuels that do not require commodity feedstock.
The report said that savings of GHG are limited; while ethanol from sugar cane, the main feedstock used in Brazil, reduces GHG emissions by at least 80 per cent compared to fossil fuels, biofuels from wheat, sugar beet or vegetable oil rarely provide emissions savings of more than 30 to 60 per cent, while savings from corn-based ethanol are generally less than 30 per cent. Overall, the continuation of current biofuel support policies would reduce GHG from transport fuel by no more than 0.8 per cent by 2015.