 Growing concerns about petroleum price fluctuations, energy independence, access to commercial energy and the climate change impacts of fossil fuel use have drawn substantial attention to biofuels – fuels derived from biomass – as an alternative to meeting the world’s growing energy demand and as tools to stimulate rural development and provide new end-markets for agricultural products.
- Henry Ford referred to ethanol as the “fuel of the future” way back in 1925.
- When Rudolf Diesel took the first diesel engine to the world fair in Paris at the beginning of the 1920s, he used peanut oil as a fuel.
- Today some analysts estimate that substituting by 2020 up to 20 per cent of mineral fuels consumed worldwide with biofuels is a feasible option.
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Demand for biofuels set to rise
As both developed and developing countries attempt to carve out a place for themselves in the emerging biofuels market, both supply and demand of these alternative fuels are expected to rise dramatically. World production of ethanol increased from less than 20 billion litres in 2000 to over 40 billion litres in 2005. This represents around 3 per cent of global petrol use. Production of biofuels is forecasted to almost double again by 2010.
Opportunities and the role of international trade
This budding market presents many opportunities for developing countries where biofuels may be produced most easily and cheaply, although different countries will enjoy different opportunities and biofuels may not be the most appropriate option for all of them. International trade in biofuels and feedstocks may provide win-win solutions:
- For several importing countries it is a necessary precondition for meeting the domestic blending targets
- For exporting countries, especially small- and medium-sized developing countries, export markets are necessary to augment local demand while initiating their industries.
Nevertheless, biofuels face significant tariff and non-tariff measures that offset lower production costs, hamper international trade and have negative repercussions on investments. The biofuels market is also distorted by subsidies, loans, direct payments and grants, tax breaks and incentives. Moreover, the biofuels market is distorted by the fact that the agricultural sector in many developed countries is the largest recipient of governments´ subsidy programmes. Sustainable development concerns
Small producers´ involvement, food security threats, land-use concern and a dearth of technological capacity are all factors that will require careful study, effective policies and strategic assistance in order to pave a sustainable path towards development goals.
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