New report finds the biofuel industry is heavily subsidized in Australia
GENEVA, April 14 /CNW-AsiaNet/ --
"Biofuels - At what cost? Government support for ethanol and
biodiesel in Australia" is available for download at
A new report finds that the Australian government spent A$ 95 million on supporting biofuel
production and consumption in 2006-07. That cost could grow to several hundred million dollars a
year by the end of the decade if planned new ethanol and biodiesel capacity comes on-line over the
next two years. Currently, biofuels contribute less than 0.5 per cent of Australia's transport-fuel
needs.
Biofuels - At what cost? Government support for ethanol and biodiesel in Australia, is the latest
in a series of country studies on subsidies for biofuels by the Global Subsidies Initiative (GSI), a
Geneva-based programme of the International Institute for Sustainable Development (IISD).
Without the benefit of high-levels of government assistance, many biofuel producers in Australia
would not be profitable. The effective rates of assistance (ERAs) for most biofuels were found to be
over 100 per cent, far more than any other industry in Australia. By comparison, the next-highest
ERA in Australia is for dairy cattle farming, which was 15 per cent in 2006-07, according to the
Australian Productivity Commission.
Nonetheless, total government expenditure on biofuels is lower in Australia than many other
OECD countries examined by the GSI (for example, US$ 6 billion in the United States and US$ 4.2
billion in the European Union in 2006). At around A$ 0.42 per litre, however, the assistance to
biofuels in Australia is roughly the same as that provided in the United States.
The production of biofuels is expanding rapidly around the world, as governments strive to lower
CO2 emissions and bolster their energy security. But in each OECD country examined by the GSI,
subsidies to biofuels have proved a hugely inefficient way to achieve these goals.
Under even the most optimistic scenario for Australian biofuels, the amount of funding required
to achieve a one-tonne reduction of CO2 through biofuel subsidies could have purchased between
5 and 30 tonnes of CO2-equivalent offsets on the U.S. or European carbon markets. Biofuel
subsidies are also an expensive way to reduce fossil fuel use, costing between A$ 0.50 and A$
2.00 for every litre of petroleum-equivalent displaced.
The Global Subsidies Initiative - launched in 2005 by the International Institute for Sustainable
Development - analyzes government subsidies and the ways in which they can undermine efforts to
put the world on a path toward sustainable development. GSI reports are available on-line at
SOURCE: International Institute for Sustainable Development
CONTACT: Tara Laan,
GSI Researcher,
Phone: +41 76 233-0562 or
+41 22 917-8683,
Email: tlaan@iisd.org
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