Promoting biofuels: Implications for developing countries

Interest in biofuels is growing worldwide as concerns about the security of energy supply and climate change are moving into the focus of policy makers. With the exception of bioethanol from Brazil, however, production costs of biofuels are typically much higher than those of fossil fuels. As a resu...

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Bibliographic Details
Published in:Energy policy 2008-04, Vol.36 (4), p.1538-1544
Main Authors: Peters, Jörg, Thielmann, Sascha
Format: Article
Language:English
Subjects:
Applied sciences
Biodiesel fuels
Biofuels
Biomass energy
Brazil
Climate change
Cost
Developing countries
Economic data
Economic development
Economic justification
Energy
Energy economics
Energy policy
Energy resources
Environmental policy
Ethanol
Exact sciences and technology
Fuel
Fuels
General, economic and professional studies
LDCs
Natural energy
Policy making
Production costs
Renewable energy
Renewable energy sources
Studies
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Summary:Interest in biofuels is growing worldwide as concerns about the security of energy supply and climate change are moving into the focus of policy makers. With the exception of bioethanol from Brazil, however, production costs of biofuels are typically much higher than those of fossil fuels. As a result, promotion measures such as tax exemptions or blending quotas are indispensable for ascertaining substantial biofuel demand. With particular focus on developing countries, this paper discusses the economic justification of biofuel promotion instruments and investigates their implications. Based on data from India and Tanzania, we find that substantial biofuel usage induces significant financial costs. Furthermore, acreage availability is a binding natural limitation that could also lead to conflicts with food production. Yet, if carefully implemented under the appropriate conditions, biofuel programs might present opportunities for certain developing countries.
ISSN:0301-4215
1873-6777
DOI:10.1016/j.enpol.2008.01.013