DETAILS ON BIOFUELS RISKS

US Ethanol Production Poses Economic, Environment Risks-Study
Isabel Ordonez, January 6, 2010 (Dow Jones Newswires via Wall Street Journal)

"The U.S. government needs to rethink promoting ethanol as a way to enhance energy security as production of the fuel is costly for taxpayers and poses economic and environmental risks...

"…[Fundamentals of a Sustainable U.S. Biofuels Industry] by the Rice University's Baker Institute for Public Policy notes that in 2008 the U.S. government spent $4 billion in biofuel subsidies to replace 2% of the U.S. gasoline supply. The average cost to the taxpayer of those substituted barrels of gasoline was roughly $82 a barrel, or $1.95 per gallon on top of the retail gasoline price, according to the study…"

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"The study…supported by a research grant from Chevron Technology Ventures, an affiliate of major oil company Chevron Corp…also questions whether mandated volumes for biofuels can be met and whether biofuels are improving the environment or energy security.

"Increases in corn-based ethanol production in the Midwest could increase environmental problems, such as damaging ecosystems and fisheries along the Mississippi River and in the Gulf of Mexico…The report also challenges the idea that [U.S.-produced corn-based ethanol] use lowers greenhouse-gas emissions…compared to the burning of traditional gasoline…"

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"Matt Hartwig, a spokesman for the Renewable Fuel Association, a trade group for the ethanol industry, questioned the study, saying it's biased in favor of the oil industry as it was funded by Chevron. Hartwing said the report fails to show that the oil industry has also benefited from tax credits for several years and it doesn't talk about the environmental risk of fossil-fuels…The Baker Institute and Rice University [say they] receive funding from a wide variety of sources and [have] a reputation for independence analysis…

"In 2007, the U.S. congress passed the Energy Independence and Security Act that mandated production targets for renewable fuels, mainly biodiesel and ethanol. In the law, corn ethanol is capped at 15 billion gallons a year, a level that, the report said, will be difficult to reach given logistical and commercial barriers. The law's goal that 21 billion gallons of advanced biofuels, produced from sources like switchgrass, corn stover and algae, to be used in the U.S. fuel supply by 2022 aren't achievable either and should be revisited, according to the report."