SIPP Public Policy Papers 48

Abstract

Ethanol has recently been heralded by governments in North America and around the world as an attractive renewable energy source that can reduce our dependence on nonrenewable fossil fuels. The Saskatchewan provincial government has suggested that increasing ethanol use will not only reduce greenhouse gas (GHG) emissions that result from transportation, but also increase farm income for primary producers and create jobs in rural areas, thus contributing to a revitalization of the rural economy. Around the world, this kind of widespread enthusiasm has led to many governments mandating the use of ethanol-blended gasoline (EBG), while at the same time providing direct subsidies to ethanol producers. In light of the public resources being committed to the development of this industry, a clear understanding of the objective merits of developing an ethanol industry under these circumstances is required.