Companies & Industries

Biofuel isn’t reducing carbon emissions and costs a fortune in subsidies

Costs outweigh benefits three to one, no evidence of environmental benefit according to a new report

Combine harvesting corn from a field.

Corn once seemed a promising alternative fuel source, but results have been disappointing and expensive so far. (Roelof Bos/Getty)

Canada’s biofuel policies cost billions of dollars, but they aren’t really helping the environment, says the Macdonald-Laurier Institute.

Money to Burn suggests that federal biofuel initiatives cost $3.00–3.50 for every dollar of social and environmental benefits returned, and that’s assuming there are any benefits at all — the report claims that it is hard to know if biofuels have a positive environmental impact:

Determining whether use of biofuels reduces GHG emissions is difficult because many ethanol production processes are so energy-intensive that they actually increase overall GHG emissions compared to use of conventional gasoline. Obviously if there are no GHG reductions, the cost per tonne of reductions is effectively infinite.

The Institute estimates that  support programs for the biofuel industry have cost $2.37 billion in total, a figure that is skewed towards recent years following new federal policies introduced in 2006. By contrast, the benefits are calculated at $790 million, though the report claims that is a generous estimate at best.

Subsidies were introduced to help Canada meet its greenhouse gas emission (GHG) targets. But the expected biofuel boom never materialized, and plants across Canada have shut their doors:

The U.S. ethanol industry is so overbuilt that plants are idling today. (A few years ago, “you could have named your dog ‘Ethanol’ and taken it public,” Chandler says.) As for biodiesel, new construction is unlikely without government assistance. Not only is Alberta’s program kaput, Ottawa no longer accepts applicants to its renewable-fuels program. The Canadian Renewable Fuels Association lobbied to reopen it to feed biodiesel plant construction, but the federal government opted not to earlier this year.

Recent research has suggested that biofuel produced from corn may even be dirtier than gasoline; while it emits less CO2 when burned, the production process requires large amounts of energy. A new plant in Edmonton is planning to turn trash into biofuel, which may prove more sustainable. Or perhaps the solution is to fix the manufacturing process: Ponds Biofuels uses algae to turn carbon dioxide into fertilizer and animal feed.

Subsidies could also impact your grocery bill in the near future: the diversion of soybeans, corn and other edibles to ethanol production leaves less farmland to feed an every-growing world population. Meanwhile, clean energy sources like fusion technology that once seemed the stuff of science fiction are closer than ever.

Could this be the end of the line for biofuel subsidies? The answer may depend on the outcome of next year’s federal election. The Conservatives wrote the policies currently in place, and NDP leader Thomas Mulcair’s energy plan includes a cap-and-trade component and more tax breaks for clean energy.

As long as biofuel continues to be filed under “renewables,” expect the money to keep flowing.