Ontario is the latest province to jump on the ethanol bandwagon, with $520 million giveaway.
The Canadian Taxpayers Federation, however, predicted the cost of blended gas would go up by a cent per litre.
Spokeswoman Tasha Kheiriddin called the plan an attempt to curry favour with the agricultural sector and derided the Liberals for "giving direct subsidy to business."
"You should source that ethanol in the cheapest way possible," Kheiriddin said. "If it is cheaper to import it, then it should be imported and producers here should be more competitive to produce it at a lower cost."
McGuinty later participated in a groundbreaking ceremony in Mooretown, Ont., near Sarnia, where Suncor Energy roducts (TSX:SU) is building a new $120-million ethanol refinery that's slated for completion some time next year.
The fact that the government is subsidizing an industry is dumb in and of itself. But the real problem is that research shows that ethanol isn't even good for the environment.
Neither increases in government subsidies to corn-based ethanol fuel nor hikes in the price of petroleum can overcome what one Cornell University agricultural scientist calls a fundamental input-yield problem: It takes more energy to make ethanol from grain than the combustion of ethanol produces.
At a time when ethanol-gasoline mixtures (gasohol) are touted as the American answer to fossil fuel shortages by corn producers, food processors and some lawmakers, Cornell's David Pimentel takes a longer range view.
"Abusing our precious croplands to grow corn for an energy-inefficient process that yields low-grade automobile fuel amounts to unsustainable, subsidized food burning," says the Cornell professor in the College of Agriculture and Life Sciences.
Pimentel, who chaired a U.S. Department of Energy panel that investigated the energetics, economics and environmental aspects of ethanol production several years ago, subsequently conducted a detailed analysis of the corn-to-car fuel process.