Billions for Biofuels

Multinational Monitor, May/Jun 2009 by Wedekind, Jennifer

THE BIOFUELS INDUSTRY will receive at least $420 billion in subsidies in the United States between 2008 and 2022, according to an April report by Friends of the Earth. The report found that the bulk of the subsidies are going to the most environmentally harmful biofuels such as ethanol, which is receiving 40 percent of the total subsidies - and could lead to devastating ecological effects both in the United States and abroad.

"The size of these subsidies is extraordinary, particularly given how poorly we screen the environmental impacts produced by their recipients," says report author Doug Koplow of Earth Track. "The subsidies are accelerating environmental damage. There are far better ways to spend this money."

U.S. biofuels subsidies fall under two main categories, the Renewable Fuels Standard and tax credits, according to the report. The Renewable Fuels Standard will require the annual production and blending of 36 billion gallons of biofuels by the year 2022 and give more than a dollar for every gallon of biofuels, allowing fuels into the marketplace that would otherwise be too uneconomical to compete.

Tax credits to biofuels, coming from both state and federal governments, include the Volumetric Ethanol Excise Tax Credit, which gives the industry nearly 50 cents for every gallon of ethanol produced. The report cautions that the incentives for farmers to cultivate corn will grow to such an extent that the government will then have to boost subsidies for other crops to make those as profitable as the subsidized corn - sending even more money from taxpayers to the agribusiness industry.

"For this investment, we accelerate land conversion and exacerbate a wide range of environmental problems," states the report. "Already, the ecological impact of increased biofuels production is evident, both in the U.S. and abroad, including deforestation, water pollution and increased greenhouse gas emissions."

Rather than reducing greenhouse gas emissions, many biofuels actually release more greenhouse gases than gasoline or diesel, when land use changes such as deforestation are factored in.

"The overall bottom line is biofuels are not fulfilling their promise. We need to recognize that and accept that and change our policies," says Kate McMahon, biofuels campaigner at Friends of the Earth. "We don't need to be incenti vizing dirty fuels."

- Jennifer Wedekind