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Biofuels
Markets, Targets and Impacts
Govinda R. Timilsina
Ashish Shrestha
Development Research Group
Environment and Energy Team
July 2010
WPS5364
Produced by the Research Support Team
5364
markets and their economic, social and environmental
impacts. Several countries have introduced mandates and
targets for biofuel expansion. Production, international
trade and investment have increased sharply in the past
few years. However, several existing studies have blamed
biofuels as one of the key factors behind the 2007-2008
global food crisis, although the magnitudes of impacts in
these studies vary widely depending on the underlying
assumptions and structure of the models. Existing studies
also have huge disparities in the magnitude of long-term
impacts of biofuels on food prices and supply; studies
that model only the agricultural sector show higher
impacts, whereas studies that model the entire economy
show relatively lower impacts. In terms of climate change
mitigation impacts, there exists a consensus that current
in the department to analyze economic, social and environmental impacts of biofuels. Policy Research Working Papers
biofuels lead to greenhouse gas mitigation only when
greenhouse gas emissions related to land-use change are
not counted. If conversion of carbon rich forest land
to crop land is not avoided, the resulting greenhouse
gas release would mean that biofuels would not reduce
cumulative greenhouse gas emissions until several years
had passed. Overall, results from most of the existing
literature do not favor diversion of food for large-scale
production of biofuels, although regulated production
of biofuels in countries with surplus land and a strong
biofuel industry are not ruled out. Developments in
still compete with food supply through land use and
are currently constrained by a number of technical and
economic barriers.
Biofuels: Markets, Targets and Impacts