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OECD Report Shows Biofuel Policies in OECD Countries to be Costly and Ineffective

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]