ALTERNATIVE FUELS DON'T DELIVER
The federal government pumps millions of dollars in subsidies each year into developing cleaner-burning automotive fuels, but we might not be getting much environmental bang for the subsidized buck.
That's according to research on alternative fuels by Kevin N. Rask, associate professor of economics at Colgate University in Hamilton, NY.
Rask has completed several studies on the topic, including: Clean Air and Renewable Fuels: The Market for Fuel Ethanol in the U.S. from 1984-1993, which is scheduled for publication in the fall issue of Energy Economics. His other paper, Clean Air Policy and Alternative Fuels: Do We Get What We Pay For?, was presented at the annual meeting of the American Economic Association which took place during January 1996 in San Francisco.
"Despite $810 million dollars in federal subsidies annually, the 1.5-billion-gallon a year ethanol industry appears to be in no position to fill a broad role in our clean fuels program without significant and continued government help," notes Rask.
Rask's research explores the economic characteristics of the U.S. alternative fuels market. The results of his paper, Clean Air and Renewable Fuels, highlight the importance of the state and federal incentives, as well as mandates, in making corn-based ethanol an attractive alternative to gasoline.
"The results of that paper suggests that any major role for ethanol as a clean-air alterative fuel is precluded by its current production location and its high production costs," says Rask.
U.S. ethanol requires extremely generous subsidies to compete as a gasoline substitute, and even then it's not competitive on the East Coast.
"In an era of government downsizing it is unlikely that existing subsidy levels could be maintained, and the idea of any expansion would exacerbate an already extremely costly incentive program."
Federal regulations mandate the use of oxygenated fuels to combat carbon monoxide emissions and ground-level ozone formation. These fuels are significantly more expensive than gasoline, says Rask, but their use has been justified on the basis of their emissions-improving qualities.
"There is no real consensus, however, as to how environmentally beneficial these fuels really are. Considering the large social cost of these alternative fuels, there is an important need to quantify exactly how much benefit is derived from these fuels."
In Clean Air Policy and Alternative Fuels, Rask uses data from the California emissions testing program to investigate the environmental benefits gained by the use of oxygenated automotive fuels. The results suggest the emissions gains are probably lower than previously thought due to the differential impact of the fuel on different model years. Cars built since 1987 appear to have no emissions gains as a result of using oxyfuels.
EDITORS: Rask can be reached at 315-824-7524 (office) or 315-824- 4703 (home). Please contact Steve Infanti of Dick Jones Communications at 814-867-1963 if you would like copies of his papers. Dick Jones Communications helps Colgate University with some of its national media affairs work.
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