Ecofiscal commission report says its time to drop costly biofuels subsidies

Policies cost consumers and government $640 million a year

OTTAWA — A blue-chip group of economists says federal and provincial government biofuel subsidies are an expensive experiment and it’s time to let them expire.

A study released Tuesday by Canada’s Ecofiscal Commission finds that ethanol and biodiesel policies cost consumers and governments about $640 million a year — while cutting Canada’s greenhouse gas emissions by about three million tonnes annually.

Put another way, the report says that every tonne of carbon dioxide reduced by using ethanol costs at least $180 while biodiesel reductions cost at least $128.

And even those high price tags, states the report, may severely under-represent the true cost per tonne of CO2 reductions when the full life-cycle emissions of biofuels are taken into account.

The biofuels industry lobby group, Renewable Industries Canada, was consulted by the commission during the report’s preparation but called the study’s conclusions “flawed and skewed.”

The report comes a day after the federal Liberal government announced it would impose on provinces and territories a mandatory carbon price of $10 a tonne starting in 2018, increasing to $50 a tonne in 2022, if those jurisdictions refuse to adopt their own carbon price or cap-and-trade plan.