Environmental, Economic and Policy Aspects of Biofuels provides a timely summary of the current issues contributing to the policy debates on this emerging and important topic. The authors make several key conclusions: - Biofuels are diverse and evolving. The next generation of biofuels has the potential to provide improved net benefits but requires significant technological breakthroughs. - Greenhouse gas (GHG) benefits vary significantly across various types of biofuels and are dependent on market conditions and policy situation. - While biofuel improves the welfare of gasoline consumers and food producers, it has a significant negative affect on food consumers, especially the poor. - A diverse set of policies, which have been introduced or proposed, impact biofuels directly including subsidies, mandates, and regulation of carbon content of fuels. However, current policies do not provide incentives that align private and social welfare. - Much of the impact assessments of biofuels thus far are ex-ante estimates based on either optimization or equilibrium models. There is a lack of ex-post econometric analysis of the marginal impact of biofuels and biofuel policies on the economy. And the structural relationships between agriculture, the energy sector, and the environment in the context of biofuels have hardly been studied. The biofuel policy debate is likely to be an ongoing one in the near future and Environmental, Economic and Policy Aspects of Biofuels should be required reading for anyone interested in understanding this diverse and growing literature.

The world is witnessing a sudden growth in production of biofuels, especially those suited for replacing oil like ethanol and biodiesel. This paper synthesizes what the environmental, economic, and policy literature predicts about the possible effects of these types of biofuels. Another motivation is to identify gaps in understanding and recommend areas for future work. The analysis finds three key conclusions. First, the current generation of biofuels, which is derived from food crops, is intensive in land, water, energy, and chemical inputs. Second, the environmental literature is dominated by a discussion of net carbon offset and net energy gain, while indicators relating to impact on human health, soil quality, biodiversity, water depletion, etc., have received much less attention. Third, there is a fast expanding economic and policy literature that analyzes the various effects of biofuels from both micro and macro perspectives, but there are several gaps. A bewildering array of policies - including energy, transportation, agricultural, trade, and environmental policies - is influencing the evolution of biofuels. But the policies and the level of subsidies do not reflect the marginal impact on welfare or the environment. In summary, all biofuels are not created equal. They exhibit considerable spatial and temporal heterogeneity in production. The impact of biofuels will also be heterogeneous, creating winners and losers. The findings of the paper suggest the importance of the role biomass plays in rural areas of developing countries. Furthermore, the use of biomass for producing fuel for cars can affect access to energy and fodder and not just access to food.

Biofuels and food are dependent on the same resources for production: land, water, and energy. The conjuncture of food, energy, and climate crises demands a new direction in how to harness agriculture to the joint tasks of energy-saving, emissions reduction, and food security. Global Economic and Environmental Aspects of Biofuels focuses on the all-important question of the efficacy of biofuels as a solution to the global energy problem. Written by a distinguished team from five countries and multiple disciplines including agronomy, petroleum engineering, ecology, and meteorology, the book addresses the use of biofuels produced from crops and various organic materials as alternatives or supplements to petroleum. Key Features Discusses biofuels within the context of the world population problem, food, malnutrition, resource depletion, and climate change Asks the critical question whether the production of ethanol from corn, sugar cane, crop residues, and other organic materials has proven too costly in both economic and environmental terms Analyzes the uses and interdependencies among land, water, and fossil energy resources in food versus biofuel production Includes case studies on the economic and environmental impacts of biofuel production and use from the United States, Europe, Brazil, and tropical environments Explores the future production of biodiesel and ethanol from salt-water algae and tropical palms, while recognizing the technological problems that must be resolved in processing these materials This book examines key environmental and economic issues associated with the production of ethanol as a fuel, from corn, sugar cane, crop residues, and other organic materials. It brings together the opinions of a number of U.S. scientists and experts from Spain, Italy, the United Kingdom, and Brazil, and highlights the remarkable agreement among the contributors on the pros and cons of biofuels as an answer to future petroleum shortages. This mix of contributors and opinions presents a well-rounded view of the subject that puts a spotlight on unresolved concerns and complexities that are often overlooked.

The world is witnessing a sudden growth in production of biofuels, especially those suited for replacing oil like ethanol and biodiesel. This paper synthesizes what the environmental, economic, and policy literature predicts about the possible effects of these types of biofuels. Another motivation is to identify gaps in understanding and recommend areas for future work. The analysis finds three key conclusions. First, the current generation of biofuels, which is derived from food crops, is intensive in land, water, energy, and chemical inputs. Second, the environmental literature is dominated by a discussion of net carbon offset and net energy gain, while indicators relating to impact on human health, soil quality, biodiversity, water depletion, etc., have received much less attention. Third, there is a fast expanding economic and policy literature that analyzes the various effects of biofuels from both micro and macro perspectives, but there are several gaps. A bewildering array of policies - including energy, transportation, agricultural, trade, and environmental policies - is influencing the evolution of biofuels. But the policies and the level of subsidies do not reflect the marginal impact on welfare or the environment. In summary, all biofuels are not created equal. They exhibit considerable spatial and temporal heterogeneity in production. The impact of biofuels will also be heterogeneous, creating winners and losers. The findings of the paper suggest the importance of the role biomass plays in rural areas of developing countries. Furthermore, the use of biomass for producing fuel for cars can affect access to energy and fodder and not just access to food.

Concerns about energy security, uncertainty about oil prices, declining oil reserves, and global climate change are fueling a shift towards bioenergy as a renewable alternative to fossil fuels. Public policies and private investments around the globe are aiming to increase local capacity to produce biofuels. A key constraint to the expansion of biofuel production is the limited amount of land available to meet the needs for fuel, feed, and food in the coming decades. Large-scale biofuel production raises concerns about food versus fuel tradeoffs, about demands for natural resources such as water, and about potential impacts on environmental quality. The book is organized into five parts. The introductory part provides a context for the emerging economic and policy challenges related to bioenergy and the motivations for biofuels as an energy source. The second part of the handbook includes chapters that examine the implications of expanded production of first generation biofuels for the allocation of land between food and fuel and for food/feed prices and trade in biofuels as well as the potential for technology improvements to mitigate the food vs. fuel competition for land. Chapters in the third part examine the infrastructural and logistical challenges posed by large scale biofuel production and the factors that will influence the location of biorefineries and the mix of feedstocks they use. The fourth part includes chapters that examine the environmental implications of biofuels, their implications for the design of policies and the unintended environmental consequences of existing biofuel policies. The final part presents economic analysis of the market, social welfare, and distributional effects of biofuel policies.

Interest in biofuels began with oil shocks in the 1970’s, but the more rapid development and consumption of biofuel industry in recent years has been primarily driven by mandates, subsidies, climate change concerns, emissions targets and energy security. From 2004 to 2006, fuel ethanol grew by 26% and biodiesel grew by 172%. As biofuel production continues to expand, investments in capacity expansion and research and development have been made. The 2008 food crisis emphasized the need to re-examine biofuel consequences. Biofuels remain an important renewable energy resource to substitute for fossil fuels, particularly in the transportation sector, yet biofuels’ success is still uncertain. The future of biofuels in the energy supply mix relies on mitigating potential and improving the environmental gains. This book brings together leading authorities on biofuel from the World Bank to examine all of the impacts of biofuel (economic, social, environmental) within a unified framework and in a global perspective, making it of interest to academics in agricultural and environmental economics as well as industry and policy-makers.