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CURRENT LETTER

 
The Kiplinger Washington Editors
July 25, 2008
 

Climate Change Costs
Loom over Businesses

Whether or not the government limits emissions of greenhouse gases, the tab for dealing with climate change will run into the billions -- each year. This week's Kiplinger Letter looks at the impact on companies -- and on the economy.
 
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Biofuels Doubters are Emerging

Critics are questioning the wisdom of huge government subsidies granted to some biofuels, especially corn-based ethanol.
 
 
Bart Mongoven
Stratfor
Bart Mongoven is vice president for Stratfor's Public Policy Intelligence Group, guiding the direction of long-range research and analysis as well as overseeing all public policy client projects. Mongoven has an extensive background in the study of activism in Asia, Australia, Europe and sub-Saharan Africa. His international experience covers a wide range of topics, from environmental and human rights organizations to the development of international conventions.

The headlong rush toward development of biofuels, especially ethanol made from corn, is causing critics and policy makers to raise some serious questions. Will corn-based ethanol deliver the promised benefits? Is the push toward ethanol -- fueled by huge subsidies in both United States and Europe -- creating a food vs. fuel dilemma? In an article entitled "Biofuels Backlash," Stratfor analyst Bart Mongoven says the criticism is loudest in Europe but is unlikely to have effect on policy either there or in the United States.

Skeptics are "running head-on into the powerful agricultural lobbies in the United States and Europe that so successfully championed the issue in the first place." Mongoven writes. He points out that the environmental groups in the United States that once found little environmental benefit from corn-based ethanol have been silent in recent years as Congress pressed to put greater emphasis on the fuel as a replacement for gasoline. Why? The support of farm-state lawmakers broadens an alliance behind the environmental movement's chief goal: a cap on greenhouse gas emissions.

However, the influence of agricultural interests could ultimately cause some serious setbacks to efforts to move industrialized nations away from carbon fuels -- and have economic consequences for developing countries as well. Brazil, Mongoven points out, makes ethanol from sugar cane that is far more environmentally friendly than the corn-based fuel. But the farm industries both here and in Europe have fought tooth and nail to erect barriers to the import of Brazilian ethanol.

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