Canadian Renewable Fuels Association (CRFA)

Canadian Renewable Fuels Association (CRFA)

July 07, 2008 15:25 ET

Reality Check: CD Howe Biofuels Report Inherently Flawed & Misleading

OTTAWA, ONTARIO--(Marketwire - July 7, 2008) - On Thursday, July 3 2008 the CD Howe Institute issued a flawed and misleading report on biofuels in Canada. The CD Howe Institute claims as its mandate to be independent, reasoned and relevant, but its report on biofuels misses the mark on all three counts. Problems with CD Howe Institute report by Douglas Auld include:

Inconsistent & Biased GHG Calculations

The CD Howe Institute is inconsistent in its GHG emission reduction calculations leading to flawed results. The July 3rd report uses GHG calculations from the recognized GHGenius model for its gasoline, diesel fuel, and electric power calculations - but not for its corn ethanol calculations. The CD Howe Institute creates a separate GHG calculation model for corn ethanol (based on different and older assumptions). Why the change in the GHG calculation model? Perhaps because the very same GHGenius model it used for gasoline clearly shows a 40-60% reduction in GHGs from ethanol compared to gasoline.

Simple Calculation Errors

Since the CD Howe Institute does all of its calculations for GHG emissions on an energy basis it must also cover revenue loss calculations on the same basis - it didn't, which calls into question all of the cost estimations in the report. Ethanol blended gasoline is taxed by the federal government at 10 cents a litre, the same as a litre of unblended gasoline even though ethanol has a lower energy content. When ethanol is taxed the same volumetric rate as gasoline, then it is being taxed at 150% on an energy basis. The CD Howe report misses this critical point.

Clear Lack of Understanding of Canadian Biofuels Programs

The CD Howe assumes all gasoline in Canada will contain 5% ethanol, when in fact the new federal biofuels program is designed for 5% average renewable fuel content in gasoline. The Institute makes inaccurate assumptions on the level of support to projects under the federal ecoEnergy for Biofuels program and further ignores specific limits placed on a number of provincial biofuels programs. In doing so, the CD Howe Institute overestimates the costs associated with biofuels development in Canada and underestimates the true benefits that will be realized.

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