Biofuels Mandate: Greenhouse Gas Abatement Costs $750 per Ton


Last year, the 11 billion gallons of biofuels (10.8 billion from corn) produced and sold in the U.S. received $6 billion in tax credits. The Congressional Budget Office released last week a new report, Using Biofuels Tax Credits to Achieve Energy and Environmental Policy Goals [pdf], which made the following devastating findings about U.S. biofuels policy:

The costs to taxpayers of using a biofuel to reduce gasoline consumption by one gallon are $1.78 for ethanol made from corn and $3.00 for cellulosic ethanol. The cost of reducing an equivalent amount of diesel fuel (that is, a quantity having the same amount of energy as a gallon of gasoline) using biodiesel is $2.55, based on the tax policy in place through last year.

Similarly, the costs to taxpayers of reducing greenhouse gas emissions through the biofuel tax credits vary by fuel: about $750 per metric ton of CO2e (that is, per metric ton of greenhouse gases measured in terms of an equivalent amount of carbon dioxide) for ethanol, about $275 per metric ton of CO2e for cellulosic ethanol, and about $300 per metric ton of CO2e for biodiesel. Those estimates do not reflect any emissions of carbon dioxide that occur when the production of biofuels causes forests or grasslands to be converted to farmland for growing the fuels' feedstocks. If those emissions were taken into account, such changes in land use would raise the cost of reducing emissions and change the relative costs of reducing emissions through the use of different biofuels—in some cases, by a substantial amount.

Translation: The biofuel mandate is a stupid, very expensive, and largely ineffective way to try to reduce greenhouse gas emissions.

Reason told you so here, here, and here.

In April, Big Ethanol rolled out a TV ad campaign defending its subsidiies. I now reprise my more accurate alternative to that campaign below:

Opposition to further federal subsidies to encourage the turning of food into fuel is growing. Now the corn ethanol industry and farmers lobby are fighting to keep every penny they drain from the taxpayers' pockets. The ethanol lobbying group, Growth Energy, is rolling out a 12-week $2.5 million national TV ad campaign that aims to persuade policymakers and the public to continue lavishing subsidies on the industry. Some pro-ethanol ad tag lines read:

 -"No beaches have been closed due to ethanol spills. America's clean fuel."

-"Ethanol has not shipped a single job overseas. America's economic fuel."

-"No soldiers have been deployed to defend our ethanol reserves. America's independent fuel."

-"No wars have ever been fought over ethanol. America's peace fuel."

-"We won't have to wait millions of years to replenish our ethanol reserves. America's renewable fuel."

-"Ethanol has contributed $0 to the governments of Iran, Saudi Arabia and Venezuela. America's sensible fuel."

May I suggest some alternative tag lines which might read:

-"No carbon dioxide emissions have been cut due to ethanol subsidies. America's greenhouse fuel."

-"Ethanol tax subsidies increase unemployment by reducing consumers' incomes. America's job killing fuel."

-"Police have been deployed to put down ethanol caused food riots. America's starvation fuel."

-"Food trade wars have broken out over ethanol caused food price spikes. America's protectionist fuel."

-"We have to wait more than 100 years to pay off ethanol's carbon debt. America's global warming fuel."

-"Ethanol has contributed $0 in taxes to the federal government. America's tax subsidized fuel."