Ethanol: bureaucratic edicts, unintended consequences

Big surprise! Apparently the promoters of ethanol as a "green" fuel have not taken into account all of the problems and costs associated with ethanol use. C.D. Howe Inst. president William Robson comments on some of the problems and on the results of a study by Douglas Auld:

These problems are a classic instance of unintended consequences. Regulations made with one eye on polls and interest groups and the other on administrative convenience often pay no attention to how badly simple bureaucratic edicts fit a complex world.

Ontario has required sellers of gasoline, on average, to mix 5% ethanol in their fuel since 2007. ... Many provinces have similar or more stringent mandates, and by 2010 Ottawa will mandate 5% ethanol across the country.

... New racks have appeared at hardware stores displaying fuel additives romising to solve ethanol-related problems. There are a lot of them, because ethanol in gasoline can cause damage, especially out on the water. [...] For users of marine fuel, ethanol's key flaw is its affinity for water. Boats -- no surprise--operate in wet environments.

Ethanol is an aggressive solvent that can break down parts commonly found in marine, chain-saw and pump engines. ...

Worse than the bureaucratic clumsiness is that the premise behind forcing ethanol on consumers is misguided.

... ethanol is supposed to be greener ... But corn-based ethanol, the major focus of Canadian policies, has a large environmental footprint.

Professor Auld calculates that reducing CO2 emissions by subsidizing ethanol will cost around 10 times the current world market price for greenhouse gas abatement.

... other costs from distorted prices and decisions: Most notable is the diversion of agricultural land to ethanol production, and the resulting upward pressure on food prices.

Naturally, the ethanol lobby begged to differ and called for the study to be withdrawn. To which the C.D. Howe Institute responded:

Finn Poschmann, C.D. Howe's director of research, said there was nothing extreme about Auld's analysis and the assumptions behind it were clearly laid out.

"As far as we're concerned the study was as middle-of-the-road as it gets," said Poschmann.

He said the institute stands by the research.

"I can't imagine any circumstances under which we would withdraw a study, so that's not on."