GLOBAL SUBSIDIES INITIATIVE
Subsidy WatchIssue 35, January 2010
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Subsidized U.S. biodiesel: the never-ending story
A Feature Commentary, by Russ Finley
In 2004 the U.S. Congress created a USD$ 1/gallon (US$ 0.264/litre) blenders' tax credit for biodiesel that was slated to expire in 2006. But in 2005 it extended the tax credit through the end of 2008 and, before that year was up, extended it again, through 2009.
Also in this issue:
Analysis
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India’s policy research shows way to energy subsidy reform, so far unheeded
The central Indian government began subsidizing petroleum derivatives as a result of the oil-price shocks of the 1970s, in order to soften the impact of oil price swings on the poor. According to several studies conducted in the last decade, it has become increasingly clear that the government's energy-subsidy programs are a costly way to achieve this goal and are not effective in meeting the needs of the less well-off.
Commentary
News
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Car-scrapping schemes boost European market in 2009, but at what cost?
The European Automobile Manufacturer's Association (ACEA) reports that passenger car sales in the first eleven months of 2009 show that car-scrapping schemes - programs in which vehicle owners are given money by the state to trade in old vehicles for new, more efficient ones - are a successful way to support car industries struggling in the recession.
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Iran parliament rejects call to withdraw subsidy reform bill
Controversy continues to surround Iran's bill on subsidy reform, with the government and parliament unable to agree on how the saved revenues should be managed. Tension has simmered since the parliament introduced an amendment to the bill in November 2009, which established that revenues would be saved in a special account for public spending. The government did not want any restrictions to be placed on usage of the funds, and on these grounds requested that the entire bill be withdrawn.
Studies
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Subsidy Scope: U.S. motorist fees contribute decreasing share of highway funding
According to an analysis conducted by the Pew Charitable Trust's Subsidy Scope project at the end of November 2009, road ‘user fees' paid in the United States - including fuel taxes, vehicle registration fees and tolls - make up a decreasing share of the cost of highway construction and maintenance.
The research, based on Federal Highway Administration statistics, concludes that the percentage of revenue coming from road users was 51% in 2007, compared with 61% in 1997 and 71% in 1967. The remaining funds are sourced from general revenues.
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ECIPE conclude EU biofuels policy is costly, protectionist and risks violating WTO obligations
The European Centre for International Political Economy (ECIPE) has released a report criticizing the European Union's biofuels policy, Green Protectionism in the European Union: How Europe's Biofuels Policy and the Renewable Energy Directive Violate WTO Commitments.
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A grain of salt needed with promises of cheap desalination
By Peter Gleick, President, and Heather Cooley, Senior Research Associate, The Pacific Institute, Oakland, California
The irony of water scarcity on a planet 70% covered by ocean does make us gaze longingly at the seas as the ultimate answer. The public, politicians and water authorities continue to hope that cost-effective and environmentally friendly desalination - the removal of salt from seawater to make it drinkable - will come to the rescue of water-scarce regions. In most places, however, desalination is a technology whose time has not yet come.
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