So What About the Bio-diesel Mandate?

Since July 1^st we have had a national bio-diesel mandate. All diesel, whether for transportation, farming or home heating is to include 2% bio-diesel. This new mandate follows a Manitoba mandate already in place since 2009. One needs to wonder what problem our governments are trying to address with this mandate.

One might assume the problem is our dependence on fossil energy. If we can power our diesel engines with bio-diesel rather than fossil-diesel, that would seem to be progressive.

Wishful thinking, perhaps. We cannot reduce our dependence on fossil energy by merely tweaking with the supply. It does not make sense and it does not happen. Remember Jevon’s effect. We have written about this effect in previous columns. Technological progress that increases the efficiency with which a resource is used tends to increase (rather than decrease) the rate of consumption of that resource. Human nature is such that a more efficient light bulb has the effect of encouraging people to use it more, resulting in the end in the greater use of electricity. Adding bio-diesel to available diesel will not result in a reduced consumption of fossil diesel. The bio-diesel mandate will not reduce our consumption of fossil fuel.

It might be thought that regardless of the effect on consumption, consuming bio-diesel is simply more responsible that consuming fossil diesel. Hence the mandate.

But that raises the ethical question. In a world where people are starving, is it morally right to use land that could be used for the production of food for people for the growing of fuel to feed our voracious appetite for energy?

What seems most plausible (however unlikely) is that the government wants to give support to Canada’s canola growers. In effect, a biodiesel mandate is a subsidy to all those involved in the biodiesel industry: farmers who grow canola, suppliers and processors. The mandate will increase the demand for biodiesel, thereby increasing the canola price. The Canadian Canola Growers Association readily acknowledges that this mandate will be good for them.

This is truly unfortunate. This mandate is good neither for the environment we call our home nor the Canadian economy.

This move is bad for the Canadian economy because subsidies distort. There are a host of technologies that could potentially reduce our dependence on fossil fuel. Biodiesel is one of them. By giving this subsidy to the canola industry, government is mitigating against other technologies.

It is by no means clear that the production of diesel from plants is energy efficient. Growing fuel crops takes energy. Fossil fuel is used to power the tractors, to manufacture the necessary fertilizer and to build the necessary equipment. Transforming canola oil to diesel takes energy. Some investigators have concluded that if everything is considered, more energy is used to produce the biodiesel than there is energy in the biodiesel.

However, the biggest deficiency in this new policy mandate is that it does nothing to reduce demand for energy. If we wish to offer a livable planet to our children, we need to find a satisfying way of living that requires less energy. That will only happen if, in addition to the moral incentive, there is also an economic incentive to change our lifestyle.

A simple carbon tax would not only encourage all of us to find ways of living using less energy, it would also stimulate a search for fossil fuel saving technologies.


Eric Rempel