NAACC Opposes Ontario Ethanol increase

Posted & filed under Uncategorized.

All,

We definitely do not want this to spill over to other Provinces. Please be vigilant!

The NAACC and the SVA-O along with other groups are requesting that the Ontario Government reconsider mandating higher ethanol fuel content. It should also be noted that SEMA is on board as well. This is a major lobby and requires close attention. Please take the time to read the ‘attachment’ above so you are informed.

Thank you,

John Carlson

NAACC President & CEO

 

Ontarians will pay hundreds of millions of dollars for pointless new fuel standards

Ross McKitrick and Douglas Auld: Ontario has jettisoned any pretense of economic logic in its climate policy mix

Special to Financial Post

December 20, 2017 7:30 AM EST

Ontario has announced plans to double the required content of ethanol in our gasoline, from five per cent to 10 per cent. This regrettable decision will have harmful effects on everyone. It will worsen the mileage of gasoline, raise food and fuel costs and yield minuscule environmental gains at best.

Ratcheting up the ethanol mandate also defeats the purpose of Ontario’s new cap-and-trade system. The logic of carbon pricing through permit trading is that it leads the market to identify and implement the lowest-cost ways of reducing greenhouse gas (GHG) emissions. If ethanol blending was cost-effective then, under cap and trade, fuel producers would do it automatically. The fact that they have to be coerced means it fails a cost-benefit test, making it precisely the kind of inefficient option the trading system is supposed to guard against. Forcing firms to do it anyway means Ontario has jettisoned any pretense of economic logic in its climate policy mix.

In earlier research we found that ethanol-subsidy programs during the 2008–12 interval cost Canadians over three dollars for every one dollar in social and environmental benefits achieved. The overt subsidy programs have largely been scaled back, but the blending mandates amount to a hidden subsidy, where the costs are transferred away from taxpayers onto industry and consumers.

It is highly misleading for the province to promote its policy as being equivalent to “taking up to 130,000 cars off the road.” Such statements only remind us how clean our cars have become. The policy itself yields tiny overall emission reductions, but since modern cars are so clean and efficient that translates into a lot of vehicles as an equivalent. By way of illustration, it would translate into taking an infinite number of bicycles off the road, since they emit nothing at all, but that is an equally uninformative comparison.

This regrettable decision will have harmful effects on everyone 

The fact that modern cars are so clean actually signals how little an ethanol mandate will accomplish. It was shown over a decade ago that ethanol blending did nothing to reduce tailpipe emissions of carbon monoxide and hydrocarbons from cars built after 1988.

The only environmental benefit that proponents can point to is a potential reduction in greenhouse gas (GHG) emissions. We say “potential” because corn-growing and ethanol manufacturing both take energy, and on a life-cycle basis, ethanol GHGs can be higher than those from regular fuels, particularly in the U.S. where electricity production is still coal-intensive. Even assuming we get a net reduction in GHG emissions per litre from domestic production, the need for the mandate in the presence of carbon pricing shows that it is not enough to justify the additional manufacturing costs.

On the consumption side, ethanol producers claim that their product cuts GHG emissions by 62 per cent compared to gasoline. This is an almost impossible optimistic upper bound based on, among other things, using 100-per-cent ethanol. By contrast, Natural Resources Canada (NRCan) says a 10-per-cent corn-ethanol blend only cuts GHG emissions by three to four per cent.

Also according to NRCan, burning a litre of gasoline releases about 2.3 kilograms of carbon dioxide. A four-per-cent reduction is 0.09 kilogram per litre (0.00009 tonnes). At a value of $20 per tonne of carbon ($5.45 per tonne of carbon dioxide), the current social benefit of the emission reduction works out to five one-hundredths of a cent per litre.

$8 million is the number that needs to be compared against the costs of increased fuel and food prices

Car Enthusiasts of BC

The SVABC supports the NAACC’s opposition to Ontario’s plan or a any Federal plan to increase the ethanol rate to more then the existing 5%.

Bob Kelly

SVABC Pres

 

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