Doug Auld, an economist at The University of Guelph and former colleague (both recently and many years ago), published a scathing attack on Ethanol policies with the C.D. Howe Institute.
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 recon-sidered, 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 CO2 emissions, public funds contribute approximately $368 for each tonne of CO2 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.
Most of the points made in his study have been made before, but they need to be made again (and again) even more forcefully. And one of his points that has received less attention is that current ethanol policies, by driving up the prices of grains, have hurt many cattle operations.