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Oregon State Questions Cost-Effectiveness of Biofuels

Oregon State Questions Cost-Effectiveness of Biofuels

Questions also raised about impact on fossil fuel use.

A new Oregon State University study questions the cost-effectiveness of biofuels and says that they would barely reduce fossil fuel use and would likely increase greenhouse gas emissions.

The idea that biofuels can reduce dependency on fossil fuels and mitigate climate change has led governments to promote them as substitutes for gasoline and petroleum-based diesel, using mandates and subsidies, notes Bill Jaeger, lead author of the study.

"Our results suggest that existing biofuel policies have been very costly, produce negligible reductions in fossil fuel use and increase rather than decrease greenhouse gas emissions," says the professor in the OSU agricultural and resource economics department.

Biofuels were initially seen as a solution to energy and environmental problems, he explains, because the carbon dioxide that's emitted when they're burned is equivalent to what they had absorbed from the atmosphere when the crops were growing.  Thus, biofuels were assumed to add little or no carbon dioxide to the atmosphere.

But the big picture is more complex, he notes, in part because biofuels are produced and transported using fossil fuels.

For example, nitrogen fertilizer, which is made using natural gas, is used to grow corn for ethanol. Additionally, growing biofuel feedstocks can push food production onto previously  unfarmed land, according to well-documented research, he says.

When this new acreage is cleared and tilled, it can release carbon that accumulated over long  periods in soil and vegetation, thus increasing greenhouse gas emissions, he charges.

The costs of these side-effects tend to be overlooked by policies that focus only on gallon-for-gallon substitutions, says Jaeger.

Researchers writing the report say that all of the biofuel mandates combined would reduce fossil fuel use by less than 2.5%, or the same amount that a gas tax increase of 25-cents per gallon could achieve, but at an estimated cost of $67 billion compared with a cost of $6 billion with a gas tax.

The study, called "Biofuel Economics in a Setting of Multiple Objectives and Unlimited Consequences," was published in Renewable and Sustainable Energy Reviews and may be downloaded at

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