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