Commentary

October 2016
 

Peter Boag
President & CEO, Canadian Fuels Association

The time is right to rethink biofuel policies 


‘Timing’ is credited for both good and bad fortune. It can be orchestrated in strategy or realized through opportunity. The recent release of Course Correction: Rethink Canada’s Biofuels Policies by Canada’s EcoFiscal Commission pointed to timing as a key factor in its recommendation to terminate biofuel subsidies and phase-out blending mandates.  For governments, it’s an opportunity to develop cost-effective climate policies that produce intended results – lower transportation GHG emissions.

EcosFiscal’s biofuels policy examination provides important insights for governments.  Heavy public investment over two decades and mandatory blending requirements have delivered only modest decreases in GHG emissions, at high cost. With GHG abatement costs of anywhere from $180 to $437 per tonne for ethanol, and $128 to $1,701 per tonne for biodiesel, biofuels subsidies and mandates are not cost-effective.  They impose costs on Canadian consumers and our economy that dwarf the $30-$50 per tonne carbon prices already implemented or contemplated by our federal and provincial governments.  
 

"A competition of ideas" 

As current biofuel production subsidy programs come to an end in 2017, and with a growing policy focus on carbon pricing, the timing is also right for what Course Correction refers to as “a competition of ideas”. 

The path to lower transportation GHG emissions is a complex challenge.  Achieving real, cost-effective emissions reductions in the transportation sector requires an integrated approach, underpinned by uniform and predictable carbon pricing, and supported by complementary, technology-neutral policies that enable this competition of ideas to take place on a level playing field. 

Technology innovation is essential - including alternative fuels innovation. But let’s not forget that petroleum-based fuels and vehicles innovation will continue to deliver further cost-effective GHG reductions for years to come.  Fuel efficiency improvements may not sound ‘sexy’, but they are the most cost-effective pathway for emissions reductions.   
 

Science, economics and transparency

Whatever the outcome of this competition of ideas, governments must avoid costly, ineffective, overly complex, and unsustainable policy approaches epitomized by the existing fragmented maze of federal and provincial biofuel subsidies and mandates. Sound science and economics and transparency should be undisputed ‘rules of the game’.   

Do we turn our back on biofuels?  No – they’re in the mix and will continue to be for the foreseeable future, especially if real progress can be made in the cost-effective production of next generation, non-food crop biofuels.  

The EcoFiscal’s Course Correction report is a timely and thoughtful contribution to climate policy dialogue.   
When it comes to rethinking biofuel policy as a GHG mitigation strategy, the time is right.

Related Canadian Fuels Association Posts:
Balancing the costs and benefits of biofuels
Today’s cars can’t run on biofuels alone
The road to a more diverse fuel mix in Canada
How harmonized regulations would improve the biofuel blending system