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Biofuels

Linking Support to Performance

image of Biofuels

Biofuels received USD 15 billion in subsidies in OECD Member countries in 2007, but did they deliver benefits in terms of climate change or oil security? Present policies make no link between support for biofuels and their environmental performance, and biofuels do not all perform equally well. In fact, much of the current ethanol and biodiesel production may result in higher overall emissions of greenhouse gases than using conventional transport fuels - gasoline and diesel. The papers published in this report examine the economics of biofuels and assess the potential of conventional biofuel production in OECD countries, Brazilian ethanol exports and some second generation biofuels to supply world markets with transport fuels.

This Round Table analyses the critical issues for governments in determining support for biofuels, particularly the level of greenhouse gas emissions throughout the life-cycle of these fuels and the wider environmental impacts of farming biomass. It also reviews recent progress in developing certification systems for biofuels – an essential  tool for tying support  to achievement in reducing greenhouse gas emissions, although certification cannot be expected to prevent rainforest destruction for the  development of  biofuel crop plantations. The report concludes with a short list of recommendations for policy reform if support for biofuels is to contribute effectively to mitigating greenhouse gas emissions.

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Subsidies: the distorted economics of biofuels

International Transport Forum

Governments have influenced the development of bio-energy, particularly liquid biofuels (ethanol, biodiesel and pure plant oil used as a fuel), for several decades. This paper discusses the economics of biofuels and provides an overview of current policy measures to support their production and consumption. It discusses also how the different policies supportive of biofuels interact with broader agricultural, energy, environmental and transport policies, and the relative effectiveness of biofuels in achieving objectives in these areas. The paper concludes with several observations and recommendations.

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