Researchers warn US must rethink costly and ineffective biofuels policy

The US needs to rethink its biofuel policy in the light of new evidence suggesting that current incentive schemes are hitting taxpayers' pockets hard while delivering minimal environmental benefits.

The new report from researchers at Rice University found that in 2008 the US government spent $4bn (£2.4bn) in biofuels subsidies as part of efforts that saw just two per cent of the gasoline supplies replaced by biofuels.

It calculated that the average cost to the taxpayer of each "substituted" barrel of gasoline was roughly $82 a barrel on top of the retail price.

The study also warned that subsidies designed to boost production of corn-based ethanol were having various negative environmental impacts, noting that ecosystems and fisheries along the Mississippi River and in the Gulf of Mexico have experienced water shortages in places where fuel crop irrigation has increased.

In addition, it reinforced a raft of previous studies that have warned that corn-based ethanol is likely to have a negligible impact on greenhouse gas (GHG) emissions. "There is no scientific consensus on the climate-friendly nature of US-produced corn-based ethanol, and it should not be credited with reducing GHGs when compared to the burning of traditional gasoline," the report states.

In 2007, the US Congress passed the Energy Independence and Security Act (EISA), which mandated ambitious production targets of nine billion gallons of biofuels a year in 2008, rising to 36bn gallons a year by 2022.

The EISA also called for 21bn gallons of advanced biofuels, produced from sources such as switchgrass, corn stover and algae, to be used in the nation's fuel supply by 2022.

However, the report warns that these targets will not be achieved and should be revised in order to better drive the development of biofuels that do deliver cuts in greenhouse gas emissions.

"We encourage Congress to revisit these mandates and revise them to be in line with realisable targets and time frames to create an improved policy that will reduce uncertainty for refiners and allow a more orderly implementation of achievable goals and mandates by the EPA," it says.

The study also questions the validity of arguably protectionist measures that have seen tariffs imposed on cheap ethanol imported from Latin America and the Caribbean.

"We believe on balance that the economic and geopolitical benefits to this trade with select regional suppliers would outweigh any "energy security" costs to having some larger percentage of US ethanol supplies arriving from foreign sources," it says.

The study was supported by a research grant in environmental engineering from Chevron Technology Ventures.