Common Tragedies

Thoughts on Environmental Economics

Subsidies quote of the day

Posted by Daniel Hall on November 19, 2007

If the biofuels industry expects taxpayers to make it competitive through subsidies, they will quickly break the bank. Subsidies to oil need to be eliminated as well, of course. But we doubt doing so would change the relative competitiveness of biofuels. What do subsidies to gasoline and diesel work out at on a per-litre basis? The estimates we’ve seen suggest that in the USA the value of the various tax breaks are worth around 3% of the current price of oil. That comes out to a big number in terms of total transfers. Perhaps they are as high as 10%. But that would still put them far below subsidies as a percentage of market value for biofuels, which are typically on the order of 50% of the retail price, or more.

That is Ronald Steenblik, in an interview about a report he co-authored entitled “Biofuels: Is the cure worse than the disease?”

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