BIOFUELS – AT WHAT COST?

The report assesses government support for liquid biofuels in Canada, finding that total transfers between 2006 and 2008 ranged from C$860 million to C$1.02 billion. It argues that these subsidies are an expensive way to reduce greenhouse gas emissions and conserve fossil fuels, often providing poor value for money compared to purchasing carbon offsets. While Canada has implemented some effective targeting and caps to limit costs, the report highlights poor transparency, a lack of rigorous environmental evaluation, and the potential for future infrastructure costs driven by blending mandates.

• Total government support for biofuels in Canada between 2006 and 2008 was estimated to be between C$860 million and C$1.02 billion, averaging approximately C$300 million annually.
• Subsidies for biofuels are highly inefficient for GHG mitigation; for corn- and wheat-based ethanol, the cost per tonne of CO2-equivalent avoided is 6 to 100 times the market value of carbon offsets.
• Biodiesel subsidies are even less efficient for carbon reduction, with costs per tonne of CO2-equivalent avoided ranging from 6 to 137 times the market value of offsets.
• Biofuels are an expensive method for conserving fossil energy; replacing a litre of petroleum diesel with biodiesel cost between C$0.66 and C$1.28 in subsidies.
• Corn-based ethanol requires subsidies of C$0.64 to C$0.90 per litre to replace an equivalent litre of fossil energy, while wheat-based displacement is more costly at C$0.72 to C$0.97 per litre.
• Canada has improved the targeting of its subsidies by shifting from excise tax exemptions, which benefited imports, to production tax credits for domestic producers.
• The report identifies a significant lack of transparency regarding the volume of subsidized production and the specific recipients of government payments.
• Environmental impacts of biofuels are not routinely evaluated or integrated into Canadian policy, and the federal government has been accused of basing environmental claims on flawed analysis.
• Biofuel mandates may create future financial burdens for governments, particularly regarding the need for specialized transport, storage, and distribution infrastructure for ethanol.
• Some Canadian policies may be counter-productive by favoring smaller facilities and local ownership, which prevents the industry from achieving economies of scale.

APA

Laan, T., Litman, T. A., & Steenblik, R. (2009). BIOFUELS – AT WHAT COST? International Institute for Sustainable Development. https://www.iisd.org/gsi/sites/default/files/Canadian_biofuels_May_2011.pdf

Chicago

Laan, Tara, Todd Alexander Litman, and Ronald Steenblik. BIOFUELS – AT WHAT COST? International Institute for Sustainable Development, 2009. https://www.iisd.org/gsi/sites/default/files/Canadian_biofuels_May_2011.pdf.

Wikipedia

{{cite report |last1=Laan |first1=Tara |last2=Litman |first2=Todd Alexander |last3=Steenblik |first3=Ronald |title=BIOFUELS – AT WHAT COST? |publisher=International Institute for Sustainable Development |date=April 2009 |url=https://www.iisd.org/gsi/sites/default/files/Canadian_biofuels_May_2011.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{laan2009biofuels, author = {Laan, Tara and Litman, Todd Alexander and Steenblik, Ronald}, title = {{BIOFUELS – AT WHAT COST?}}, institution = {International Institute for Sustainable Development}, year = {2009}, month = apr, url = {https://www.iisd.org/gsi/sites/default/files/Canadian_biofuels_May_2011.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }