Download: Biofuels at What Cost? Government support for ethanol and biodiesel in Switzerland: 2008 Update (PDF - 1 MB)
GENEVA, Switzerland, October 2008: In Switzerland, as elsewhere, biofuels have attracted particularly high levels of government assistance because of their perceived benefits to the environment. However, a report by the Global Subsidies Initiative—"Biofuels at what cost? Government support for ethanol and biodiesel in Switzerland: 2008 Update"—questions whether subsidies for biofuels are the best way to achieve climate change objectives.
The report—which compiles the most thorough study to date of government support for biofuels in Switzerland—finds that in 2007 the Swiss federal government spent (or exempted from taxes) around CHF 12 million supporting the production and consumption of biofuels. This number could grow tenfold, to more than one hundred million Swiss francs a year within the coming decade if currently planned expansion of the industry comes to pass.
Although biofuels can help reduce greenhouse gas emissions, subsidizing biofuels is not a cost-effective means to achieve this goal. The GSI report finds that it costs up to CHF 1500 in subsidies to reduce one tonne of carbon using rapeseed biodiesel. For the same cost, the government could purchase roughly 30 tonnes of CO2-equivalent offsets on the European Climate Exchange. Even under the “best-case scenario,” biodiesel made from recycled waste oil, the government could purchase six times more CO2-equivalent offsets on the European Climate Exchange than through subsidies. In short, if carbon emission reductions are the primary policy objective, then subsidizing biofuels is costly and inefficient.
The Swiss federal government recently put in place new legislation to ensure that its subsidies are only provided to biofuels that have net social and environmental benefits. The implementing regulations are still in draft form but the final regime is likely to be administratively complex, both for the government and subsidy applicants. While these arrangements might reduce the risk that Swiss biofuel use will have negative impacts on sustainable development, they do nothing to address the poor cost-effectiveness of Swiss biofuels as a solution to climate change.
In light of the study’s findings, the GSI recommends that the Swiss government:
• Avoid providing new specific subsidies to the industry—including blending mandates for biofuels—and develop a plan for reducing or phasing-out tax exemptions provided to biofuels.
• Continue to stress policies that are technologically neutral for reducing reliance on petroleum in the transport sector as well as for curbing of greenhouse gases emissions.
• Improve transparency on subsidies provided to the biofuels industry and the effects of such assistance.
For more information, contact:
Tara Laan
GSI Researcher
Telephone: +41 22 917 8856
Email: tlaan@iisd.org
