Is it too late to stop the ethanol con job?
ERIC REGULY
September 14, 2007 at 6:27 AM EDT
ROME — Not so long ago, you could feel complacent - smug even - about your little greenish exertions. You traded your SUV for a smaller set of wheels. You bought compact florescent bulbs and dragged the old push mower out of storage. You approved of ethanol and other biofuels and vowed to buy them whenever possible. Okay, there wasn't a lot of sacrifice involved. But you could feel a tad superior to your fossil-fuel-slurping neighbours.
You might feel a little less smug today. You might even feel guilty. Why? Because biofuels aren't living up to their hype. By now, it's obvious they won't cure the planet of its oil addiction or take the edge off global warming - two of the alleged advantages touted by the biofuel industry. Biofuels may even be harming the planet. The oil industry was never keen on biofuels, but you never believed the oil industry. Now no less a sober authority than the Organization for Economic Co-operation and Development says biofuels - notably ethanol, a fuel worshipped by governments, farmers and refiners in Canada, the United States and parts of Europe - might be a con job on a massive scale.
An OECD report released this week said biofuels may "offer a cure that is worse than the disease they seek to heal." It said the vast amounts of land devoted to biofuel production harms biodiversity and pollutes the environment with herbicides and pesticides. (A July report put out by the OECD and the UN's Food and Agriculture Organization said rising biofuel demand is "underpinning higher agriculture prices" and will lead to a "food-versus-fuel" debate).
The OECD recommended that governments "cease to create new mandates for biofuels and investigate ways to phase them out." It recommended oil conservation instead of "subsidizing inefficient new sources of [biofuels] supply."
None of the OECD's musings, of course, is new. A small army of scientists and environmentalists has warned for years that ethanol, especially of the corn-based variety so popular in North America, is, at best, misleading advertising, at worst, a crime against nature and taxpayers alike.
The warnings were simply buried by the endless propaganda peddled by the ethanol movement and its slick lobbyists and PR men. To be against ethanol was to be against farmers, un-green and unpatriotic. Less ethanol meant more foreign oil, and no one wanted that.
Still the OECD report is welcome. But will it tip the balance against ethanol? Forget it. Big Ethanol, like Big Oil and the big defence contractors, is so well entrenched, so well organized and financed, that it will roll over your farmland and your forests like an Abrams tank.
In the U.S., the ethanol business soaks up billions of dollars in subsidies every year. At last count, there were no fewer than 123 ethanol plants on the U.S. map, with another 75 or so in the works. The plants are getting bigger, with some capable of producing 100 million gallons a year (like the cynically named Patriot Renewable Fuels factory in Illinois' Cornhusker territory). If the subsidies weren't enough, the Americans slap an import tariff of 53 cents (U.S.) a gallon on Brazilian ethanol, which is made from sugar cane and can be produced more cheaply than American ethanol.
Canada has become subsidy-mad too. Manitoba, for example, is offering production incentives of 20 cents (Canadian) a litre for producers. Even better (for the ethanol industry) are the provincial and national ethanol content mandates. Manitoba passed a law requiring that 85 per cent of the gasoline sold within the province contain 10-per-cent ethanol. Ontario's requirement is 5 per cent, rising to 10 per cent in a few years. A national program that will require a 5-per-cent blend is to come into effect in 2010. If all this weren't enough, the feds and Ontario exempt ethanol from fuel taxes.
Europe is no ethanol slouch either, though wheat, sugar and straw are more popular raw materials than corn. Plants are being built and the European Union wants biofuels of every description to have a 5.75-per-cent share of the transportation fuel market by 2010. Canadian-style tax breaks and obligatory blending are coming into force.
Once given, incentives such has tax breaks are hard to take away. The ethanol industry would collapse overnight without them, putting farmers and refiners out of business, costing jobs and alienating voters. Sadly, the ethanol industry is here to stay, whether taxpayers on both sides of the Atlantic want it or not. This is Soviet-style central planning at its very worst. If ethanol were good for consumers and good for the planet, consumers wouldn't be forced to pay for it through their taxes and forced to buy it through legislation. If you want to impress your neighbours with your green credentials, vote for politicians - if you can find one - who vow to kill the ethanol industry.
ereguly@globeandmail.com
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