The Policy Objectives of a Biofuel Industry in Canada: An Assessment

Abstract

Canada has a huge stock of biomass resources, which provides a basis (and a temptation) for development of a major bio-fuels industry. Both federal and provincial governments have engaged in a wide array of subsidies, mandates, and other measures to stimulate production and consumption of biofuels. As a result, biofuels has become a growth industry in Canada with production of ethanol almost 10 times higher than it was ten years earlier. However, this has come at considerable cost to taxpayers. Increased biofuel production has resulted in minimal reduction in greenhouse gases, short run (but not long run) increases in net farm income (that benefited grain and oilseed producers but hurt livestock producers), large increases in the prices of farm land due to the higher grain and oilseed prices, and minimal impacts on rural economic diversification.

Recent Contributions of Agricultural Economics Research in the Field of Sustainable Development

“…Policies to incentive bio-energy and biofuel crops may also have an impact on the sustainability of agricultural systems, sometimes not in the desired direction [33,34]. The case of biogas in high-intensity agricultural areas of Italy represents an emblematic example of how badly-designed policies may lead to distortive effects on the agricultural system.…”