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Government biofuel policies are costly and ineffective, OECD says

Government support of the production of biofuels is costly and has only a limited impact on the reduction of greenhouse gases, the Organization for Economic Cooperation and Development (OECD) said Wednesday.

The reduction of greenhouse gas emissions is a primary reason for current biofuel policies but the savings are limited, the OECD said in its Economic Assessment of Biofuel Support Policies, issued in Paris. “Ethanol from sugar cane - the main feedstock used in Brazil - reduces greenhouse gas emissions by at least 80% compared to fossil fuels. But emission reductions are much smaller from biofuels based on feedstocks used in Europe and North America,” the OECD said. In addition, biofuels are far too dependent on public funds to be viable, the organization said.

In the United States, Canada and the European Union, government support for the supply and use of biofuels is expected to rise to about $25 billion per year by 2015, from $11 billion in 2006. The OECD report estimates that biofuel support costs between $960 and $1,700 per ton of greenhouse gases saved, and calls on governments “to refocus policies to encourage lower energy consumption.” It also calls for more open markets in biofuels and feedstocks to lower costs. (m&