Elisabeth Rosenthal, writing in The Times,reports that European policy makers are beginning to smell the coffee on biofuel subsidies:

Governments in Europe and elsewhere have begun rolling back generous, across-the-board subsidies for biofuels, acknowledging that the environmental benefits of these fuels have often been overstated.

But as they aim to be more selective, these governments are discovering how difficult it can be to figure out whether a particular fuel — much less a particular batch of corn ethanol or rapeseed biodiesel — has been produced in an environmentally friendly manner. Biofuels vary greatly in their environmental impact.“A lot of countries are interested in doing this, but it’s really hard to do right,” said Ronald Steenblik, research director of the Global Subsidies Initiative in Geneva. “You can’t look at a bottle of ethanol and tell how it’s produced, whether it’s sustainable. You have to know: Was the crop produced on farmland or on recently cleared forest? Did the manufacturer use energy from coal or nuclear?”

Several countries — including Australia, Britain, France, Germany, the Netherlands, Switzerland, as well as parts of Canada — have removed or are revising incentives for farmers, biofuel refiners and distributors.

The manufacturers and sellers will have to quantify their fuel’s net effect on the environment before being eligible for subsidies, or even to count toward national biofuel quotas. Many European countries aim to have 5.75 percent of their transportation fuel made from renewable sources by the end of the year.

There is increasing evidence that the total emissions and environmental damage from producing many “clean” biofuels often outweigh their lower emissions when compared with fossil fuels. More governments are responding to these findings.

Under a proposed Swiss directive, for example, a liter of biofuel would have to produce 40 percent less in emissions than fossil fuel to qualify for special treatment. It will be hard to make corn ethanol or even rapeseed (used to make canola oil) meet the standard, said Lukas Gutzwiller of Switzerland’s Federal Energy Office.

With a fuller picture of “the pros and cons of various biofuels, it was very obvious to us that we should not just push forward blindly,” Mr. Gutzwiller said. “We had to base the political debate on environmental analysis to make sure that biofuels were having a positive effect.”

Similarly, Germany recently canceled tax exemptions for biodiesel at the pump and is about to pass a mandate that only biofuels meeting sustainability criteria would count toward the national quota.

The biofuels craze was founded on the theory that plant-based fuels are carbon-neutral: The carbon dioxide released from burning biofuels would be canceled out by the carbon dioxide absorbed by plants as they grow. But this equation does not include emissions from processing the crops. Nor does it cover the environmental cost of fertilizers. Such factors vary significantly from biofuel to biofuel.

Elisabeth Rosenthal, “Europe, Cutting Biofuel Subsidies, Redirects Aid to Stress Greenest Options,”NYT, January 22, 2008.