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These subsidies have contributed to the rapid global<br />
expansion in biofuel production and use. By 2006<br />
government support to biofuels in the US, the EU and<br />
Canada was estimated to have reached US$ 11 billion<br />
per year (GSI 2007; OECD 2008b). While the cost of<br />
reducing a tonne of CO 2 -equivalent through biofuels<br />
has been calculated as between US$ 960-1,700<br />
(OECD 2008b), recent CO 2 prices in the European<br />
Emissions Trading scheme are in the range of<br />
US$ 30-50. However, these calculations did not<br />
consider the GHG emissions from associated land use<br />
change. While biofuels subsidies represent a<br />
significant strain on public resources, at best<br />
they do not therefore appear to be the most costeffective<br />
option for reducing GHGs and there is<br />
an urgent need to review these biofuel policies<br />
(FAO 2008), and in fact the public may actually be<br />
paying to increase GHG emissions.<br />
An important efficiency determinant is the reduction in<br />
GHG emissions of a particular biofuel over the entire<br />
production and use cycle. According to the OECD,<br />
ethanol based on sugar cane – the main feedstock<br />
used in Brazil – generally reduces GHG emissions by<br />
80% or more over the whole production and use cycle,<br />
relative to emissions from petroleum-based fuels.<br />
However, current support policies in the US, the EU<br />
and Canada target feedstocks that tend to reduce<br />
GHG emissions by much less (OECD 2008b). All these<br />
figures do not account for emissions from associated<br />
land use change. When these are factored in, they<br />
largely offset the gains from subsituting fossil fules.<br />
The environmental impact of biofuels is the subject of<br />
much debate and controversy. This has highlighted<br />
that impacts are dependent on various factors, including<br />
type of feedstock used (see above), where it<br />
is grown, cultivation method used, production and<br />
conversion technology, distribution process, impacts<br />
of direct and indirect land use change etc.<br />
REFORMING SUBSIDIES<br />
It should be emphasised that the subsidies themselves<br />
rarely distinguish between different biofuels based on<br />
the abovementioned factors or by reference to GHG<br />
emission savings achieved. As a result, not only are<br />
they poorly focused on their stated climate change<br />
objectives but they also exacerbate – by encouraging<br />
further production – the well-documented negative<br />
environmental impacts associated with the production<br />
of many (though not all) first-generation biofuels (see<br />
e.g. Koh 2007; Danielsen et al. 2008; Scharlemann<br />
and Laurance 2008).<br />
<strong>TEEB</strong> FOR NATIONAL AND INTERNATIONAL POLICY MAKERS - CHAPTER 6: PAGE 25<br />
Copyright: Norma Neuheiser / UFZ