February 5, 2008
The winds of change are blowing. Regulators are starting to admit to overblown statements on the benefits of certain biofuels, with many European governments revising their subsidization programs. Vague government programs, created with the best intentions, have had some unintended consequences. It’s high time to pause and reflect on how effective these programs are.
The New York Times had a great “State of the Regulatory Industry” a few weeks ago that delves into the changing regulatory landscape and ever-controversial farm subsidies. Expect more stringency and less blanket funding for biofuel projects.
The impact of a litre of ethanol can vary widely depending on how it is produced. Where environmental impact is the concern, the means (of energy production) are more important than the end. Life cycle analysis is going to be considered, which will likely result in corn-based ethanol not making the new standards due to its (debatable) environmental benefits when full production costs are considered. Though don’t expect the same to happen in the US anytime soon, where the farm lobby has a much tighter grip on the levers of political power.