Going Green

Friday, February 1, 2008

Why Biofuel Subsidies?

The research project referenced below from Iowa State University indicates that the likely objective of the U.S. Biofuels subsidies was to transfer payment to the farming sector. With the historic pressure to remove farm subsidies which were designed to ensure a secure and cheap food supply, this strategy makes sense. However, the consequences of the strategy in its impact on the livestock feeding sector somewhat negates the gains in the farming sector.

Implied Objectives of U.S. Biofuel Subsidies

Ofir D. Rubin, Miguel Carriquiry, Dermot J. HayesFebruary 2008 [08-WP 459]

Biofuel subsidies in the United States have been justified on the following grounds: energy independence, a reduction in greenhouse gas emissions, improvements in rural development related to biofuel plants, and farm income support. The 2007 energy act emphasizes the first two objectives. In this study, we quantify the costs and benefits that different biofuels provide.

We consider...(complete article here) [Be sure to go to the .pdf of the entire article]

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