Canada’s biofuel policy report misses mark: ABC

Advanced Biofuels Canada (ABFC), and other fuels and transportation policy experts in industry and academia, have assessed the Ecofiscal report and found significant errors in research methodology and a poor understanding of transportation fuels markets. The report’s conclusions are largely inconsistent with results, analysis and recommendations from a host of global transportation and climate policy experts.

The President of ABFC, Ian Thomson, stated, “Rarely have we seen a report that falls so short on accuracy, balance, scientific rigour, and knowledge of the subject it addresses.

“The report relies too much on an economist’s perfect world, where free markets with an effective price on carbon will seek out the cheapest ways to reduce emissions, rendering regulations unnecessary.

“The reality is that market failures don’t obey economic models. The fossil fuels industry in Canada operates as a near-monopoly, which means any transition to lower carbon fuel alternatives will require both market-based tools, such as carbon pricing, and complementary regulatory tools. In today’s real world, the carbon tax and cap and trade programs in British Columbia and Quebec, respectively, have failed to price the carbon emissions of fuel alternatives. The report neglects to note the shortcomings of current carbon pricing systems, and offers no solutions for how carbon pricing can be better structured to transition markets to use lower carbon alternatives. It is clear that solutions must go beyond carbon pricing, using flexible, but stringent, low carbon fuel standards.

“While Ecofiscal calls for end to public investment and support for biofuels, it declined to address the $3.3 billion per year in subsidies for the Canadian oil and gas industry. This renders every cost effectiveness statistic in the report meaningless, as subsidy-loaded biofuels costs are compared to fossil fuel prices with no accounting for the oil and gas subsidies. And worse, following a ‘cut all subsidies’ approach to other lower carbon technologies would end public investments to deploy transit, electric vehicles, natural and biogas, etc. as well. This approach is wholly unacceptable, as it would ensure that we remain reliant on fossil gasoline and diesel fuel for decades.

“Ecofiscal’s research ignores a large body of evidence on catastrophic, expensive climate change; transportation is consistently singled out as a critical sector that requires immediate and sustained efforts to reduce and eliminate transport GHG emissions. After tallying the potential carbon reductions from all other technologies, many experts cite advanced biofuels as indispensable to meeting carbon reduction commitments through 2030 and 2050.

In speaking to the Ecofiscal report’s research and analysis, Mr. Thomson states, “There are basic methodological errors that result in significantly overstated carbon mitigation costs. The evidence to date from the relatively mature BC renewable and low carbon fuel regulations, is that mitigation costs from biofuels are ~$40/tonne of emissions, or 80% lower than the report’s estimates. Based on published fuel prices over the 2010-2014 period, this is consistent with our estimates at ~$40/tonne for biofuel in diesel fuel in BC.

“The report’s claim that ‘next generation’ biofuels development is being harmed by current mandates and policies is not supported by the companies developing ‘next generation’ biofuels in Canada.

“The report’s conclusions that biofuels have had no meaningful emissions impact is misleading. It is obvious that nominal use of biofuels (5% or 2%) will produce modest results. But, advanced biofuels used in Canada today reduce emissions by 60% to 115% below fossil gasoline and diesel. In 2014, biofuels delivered 4.4 million tonnes of GHG reductions in Canada, the equivalent of taking 1 million cars off the road while reducing carcinogenic fossil fuel tailpipe emissions.

“The report accurately notes that continued funding for research and development of low carbon biofuels is needed. Governments in Canada are developing strategies to leverage our natural resources, and capitalize on growth in the low carbon economy. Our global trading partners are aggressively investing in advanced biofuels and, if Canada is to avoid import dependence on the transportation fuels of the future, we must not cede this opportunity to foreign countries.

“We agree with the report’s commentary that flexible regulations, such as a low carbon fuels standard, can be effective, but strongly reject the notion that these regulations be phased out as carbon prices increase. To attract and sustain cleantech investments, Canada must adopt firm and competitive policy signals under a comprehensive approach such as ABFC’s proposed Clean Fuels Strategy.

“It should be of particular concern to Canadians that Canada’s petroleum industry is also advocating for an economy-wide carbon tax, but with the caveat that all fuels regulations be eliminated (e.g., biofuel mandates and low carbon fuels standards). The reasoning behind this is straight forward: the world’s largest non-state oil company has projected that an $80/tonne carbon tax would reduce its crude oil production by only 6% by 2050. Carbon taxes alone will not decarbonize transport.

“Carbon pricing can be an effective and complementary policy to regulations, but only if it is based on the full lifecycle emissions (carbon intensity) of all fuels and is transparent, predictable, and visible to consumers and fuel market suppliers. An effective carbon price design will give consumers and businesses access to lower carbon fuels of all types.

“In tackling climate change, the transportation sector has unique challenges and addressing its cannot be delayed. We look forward to working with governments, industry, and stakeholders to demonstrate how sustainable, advanced biofuels will deliver net economic and environmental benefits.

A more detailed assessment of the report is available here.