A new report by the Global Subsidies Initiative (GSI) quantifies government support for biofuels in Canada, and analyzes whether this expenditure represents good value for Canadian taxpayers.

Biofuels – At What Cost? Government support for ethanol and biodiesel in Canada is the latest in a series of reports addressing subsidies for biofuels in Australia, Canada, China, the European Union, Indonesia, Malaysia, Switzerland and the United States.

The comprehensive study found a growing array of subsidy programs at the federal, provincial, and municipal levels that support nearly every stage of the biofuels supply chain, from research and development, business planning, construction of plants, production of biofuels, marketing and purchase of vehicles capable of using the fuels.

In the three-year period ended 2008, total transfers to biofuels approached CDN$1 billion, with an average of around $300 million per year. The subsidies accounted for 20 to 70% of the retail market prices for the biofuels.

While transfer payments are levelling off, ethanol from corn (maize), the most common product in Canada, requires subsidies of between CDN$0.50 and $0.70 a litre to replace an equivalent litre of fossil energy—enough to purchase the displaced fuels with the subsidy alone.

The report notes that Canada has done a better job than some other countries in targeting and limiting its biofuel subsidies. Nonetheless, the GSI urges the Canadian government to take a more ‘neutral’ policy approach to reducing reliance on oil.

“’Picking winners’ for the best technology to reduce GHG emissions or encourage rural development tends to reward political connections and sophistication in lobbying, rather than technical merit”, says the GSI.

The study is available from the website of the GSI at: http://www.globalsubsidies.org/en/research/biofuel-subsidies-canada

Environmental group estimates U.S. biofuel subsidies for 2008

Analysis by the U.S. non-profit Friends of the Earth estimates that U.S. government expenditure on biofuels in 2008, and cautions environmental problems associated with biofuels are exacerbated by these subsidies.

The report, authored by Doug Koplow (author of two previous studies on biofuel subsidies for the GSI), finds that the combination of tax credits and blending mandates for biofuels will cost U.S. taxpayers some US$400 billion during 2008-2022. Nearly 40% of these funds will flow to the corn industry. 

Moreover, if the Renewable Fuel Standard (RFS) is boosted from 36 billion gallons per year to 60 billion gallons per year by 2030, as President Barack Obama pledged during his campaign, the subsidy cost would top US$1 trillion by 2030.

The report briefly analyzes the environmental impacts of U.S. support to biofuels. It argues that while the U.S. is introducing policies to screen the environmental impacts of biofuels, it does not go far enough. The report notes that federal tax breaks “do not integrate environmental screens”. And while the RFS takes into account ecosystem protection and greenhouse gas reductions, it does not “address other environmental concerns such as soil degradation, water use, pesticide and fertilizer applications, or any other impacts associated with environmental or human health problems.”

A Boon to Bad Biofuels: Federal tax credits and mandates underwrite environmental damage at taxpayers’ expense is available for download at: http://www.earthtrack.net/earthtrack/library/FOE%20VEETC%20Evaluation%20FINAL.pdf

Subsidy transparency grows modestly in Argentina, but problems persist

A recently released study by the Buenos Aires-based Centro de Implementación de Políticas Públicas para la Equidad y el Crecimiento (CIPPEC) has found that transparency in Argentina’s administration of subsides improved modestly over the last year.

The study’s authors developed an Index of Subsidy Transparency, in effect measuring the degree to which entities receiving subsidies can be identified by citizens. A reference score of 100% represents complete transparency, i.e., the ability to identify the beneficiaries of subsidies and the amounts they receive.

According to the study, in the 2007-2008 budget year, 68% of subsidies in Argentina were transparent.  The figure represents a 7% increase over the previous year.

Notably, the study found that 98% of subsidies destined to private companies were fully transparent, while 31% of subsidies to non-profits were completely opaque (no beneficiaries or amounts identifiable). Social assistance programs for individuals were somewhere on the middle with 69% of subsides being fully transparent and 27% being fully opaque.

CIPPEC’s transparency department based their index on extensive analyses of government budgets and hundreds of access to information requests made to various government branches.

The study, Subsidios: entre la sospecha y la transparencia II. Índice de Transparencia 2007/8, is available from CIPPEC’s website in Spanish at: http://www.cippec.org/Main.php?do=documentsDoDownload&id=257 

Poll finds Americans critical of farm subsidies

A majority of U.S. citizens oppose providing subsidies to large commercial farms, while a high percentage support subsidies to small farms.

A poll conducted by the WorldPublicOpinion.org of the University of Maryland found that 61% of Americans oppose subsidies for large farms (on this question, there was little difference among the view of Democrats and Republicans). However, 76% of those polled support subsidies for small farms under 500 acres, with support higher among Democrats (82%) than among Republicans (73%).

There was not a large difference in the poll results between respondents in farm states and non-farm states.

The poll results, along the questionnaire and methodology are available at: http://www.worldpublicopinion.org/pipa/articles/brunitedstatescanadara/602.php?nid=&id=&pnt=602&lb=brusc