December 5, 2011 | Andrew Burger

When it comes to cost-effectiveness and reducing greenhouse gas emissions, biofuels aren’t all that they’re cracked up to be, according to a study conducted by economists at Oregon State University (OSU).

Both the US and EU, as well as other governments around the world, have established ambitious targets for increasing biofuel production and consumption. While the stated goal of these biofuel production initiatives and mandates is to curtail and help phase out fossil fuel use and reduce greenhouse gas emissions, the OSU study found that this is not always the case.

The study found that reductions in greenhouse gas emissions and dependence on fossil fuels as a result of stepped up biofuel production have been negligible. Furthermore, the authors found that increased production of biofuels has been very costly according to a news release from OSU.

Carbon Neutral?

Biofuels have been, and continue to be touted as carbon-neutral, based on the argument that the CO2 emitted when they’re burned is equivalent to that which they absorb in the growing process. That’s one of, if not the main reason put forward by governments to justify the subsidies that are being offered for their development and use.

The situation is actually more complex, according to Bill Jaeger, the lead author of the OSU study. He said that, what’s often being overlooked is the fact that fossil fuels are used extensively to produce and transport biofuels. Jaeger offered the example of nitrogen fertilizers, which are produced using natural gas, and then used to grow corn for ethanol.

Another downside to biofuel production is the negative effect of biofuel crop cultivation in terms of land use changes. Growing biofuel feedstock results in food production being pushed onto previously uncultivated land, which when cleared and tilled releases carbon into the atmosphere that has been accumulating over long periods of time.

The OSU team’s research focused on the types of biofuel that are most commonly used across the world, including corn ethanol, soybean biodiesel, cellulosic ethanol from switchgrass grown in the US, canola-based biodiesel produced in Europe, and sugar cane ethanol produced in Brazil and exported to the US or Europe.

An Analysis of Biofuel Policies

The study’s authors evaluated US biofuel policy to determine its effectiveness in reducing fossil fuel use and greenhouse gas emissions. In so doing, they compared it to two potential alternative policy ideas designed to reduce fossil fuel use and GHG emissions, namely, an increase in the gas tax, and implementation of energy efficiency improvements. In the end, their analysis showed that the current biofuel policy was much less cost-effective and environmentally beneficial than the two alternative policies.

“Each dollar spent on energy improvement programs would be 20 times more effective in reducing fossil fuel use and greenhouse gas emissions than a similar cost for the corn ethanol program,” Jaeger said. “Likewise, a gas tax increase would be 21 times more effective than promoting cellulosic ethanol.”

The OSU economists estimated that overall, production of biofuels in the US under the current mandates and initiatives would cost 20 to 31 times more than implementing energy efficiency improvements to reduce greenhouse gas emissions by 1 percent. In addition, they found that combining a gas tax increase with energy efficiency improvements could reduce US fossil fuel use by more than 15 percent, or cut petroleum use by more than 35 percent.

To learn more about the results download the full study entitled, Biofuel Economics in a Setting of Multiple Objectives and Unintended Consequences, by clicking on the following link: http://hdl.handle.net/1957/25614