OECD biofuels subsidies

The OECD nations subidise biofuels to the tune of an estimated estimate $11 billion a year or more and rising fast, according to the Global Subsidies Initiative in its report Biofuels – At What Cost? Government support for ethanol and biodiesel in selected OECD countries . The report puts the US in the lead with total support at around around $6 billion in 2006, and the EU is in second place with around $4.2 billion. Canada is also poised to become a significant producer, but, the GSI says:
” at least most of its subsidies (starting next year) will be variable — i.e., take into account the price of crude oil.”

The GSI is promising to publish details of the EUs total support for biofuels in the coming months.
This is good stuff. We need to know how much is being spent on biofuels in the developed world, not just at the pump, but in terms of taxation and other direct and indirect supports for the business. It might be less of a burden to tax payers to encourage imports of biofuels rather than to prop up relaively inefficent production, but I’ve not seen a study to back that idea up.

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One Response to OECD biofuels subsidies

  1. David B. Benson 29 September, 2007 at 6:40 pm #

    I don’t think a study is necessary. Ethanol-from-corn is expensive, while ethanol-from-sugarcane, especially if from South America or India, is not.

    This is simple economics, of the sort being advocated by Biopact. What’s to study?

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