The two-year study by the Baker Institute for Public Policy concludes that the U.S. government spent US$4 billion in subsidies for biofuels in 2008 to replace 2% of the country’s supply of gasoline. The cost of subsidies to taxpayers was US$82 per barrel, or US$1.95 for each gallon above the retail price of gasoline.
The study was funded by a research grant from Chevron Technology Ventures, an affiliate of the Chevron oil company.
“Is ethanol a green fuel or just greenwash,” asks ‘Fundamentals of a Sustainable U.S. Biofuels Policy’ policy report and research paper. The research identifies “the steps necessary to avoid unintended negative impacts on sustainable development and the environment, including deleterious impacts on domestic agriculture, surface and ground water, and overall air quality in the United States.”
The report questions whether mandated biofuel standards can be met and whether biofuels are improving the environment or energy security. It addresses the logistical and economic challenges of expanding biofuels supplies into the fuel system and examines the costs and benefits of different options.
It concludes that ethanol spilled into groundwater or the soil can prevent the breakdown of other harmful chemicals, and that production of corn ethanol is causing environmental damage to the Mississippi River and Gulf of Mexico, as well as water shortages. Ethanol fuel is not carbon neutral, it adds, and it is uncertain whether it has any improvement over gasoline.
Current technology is unlikely to result in an effective pipeline distribution system for ethanol and distribution bottlenecks will persist, the report adds, noting there is “no scientific consensus on the climate-friendly nature of US-produced corn-based ethanol, and it should not be credited with reducing GHG emissions when compared to the burning of traditional gasoline.”
The trade group, Renewable Fuel Association, said the findings are biased because the research was funded by Chevron. The Baker Institute and Rice University receive funding from a wide variety of sources, officials countered.
In 2007, the US Congress passed the Energy Independence & Security Act that mandates production targets of 9 billion gallons of biofuels a year in 2008 and 36 billion gallons by 2022. Corn ethanol is capped at 15 billion gallons a year and the Act calls for 21 billion gallons of advanced biofuels by 2022.
“We encourage Congress to revisit these mandates and revise them to be in line with realizable targets and timeframes to create an improved policy that will reduce uncertainty for refiners and allow a more orderly implementation of achievable goals and mandates” by the Environmental Protection Agency, the report concludes.