D. Vedenov and M. Wetzstein.

Energy Economics, Vol. 30, No. 5, Sep 2073, pp. 2073-2090.

Enhanced environmental quality, fuel security, and economic development along with reduced prices of ethanol-gasoline blends are often used as justifications for the U.S. federal excise tax exemption on ethanol fuels. However, the possible effect of increased overall consumption of fuel in response to lower total price, mitigating the environmental and fuel security benefits, are generally not considered. Taking this price response into account, the optimal U.S. ethanol subsidy is derived. Estimated values of the optimal subsidy reveal that the subsidy's environmental and security benefits are questionable. However, positive environmental and security benefits from the ethanol tax-exemption subsidy may be obtained if the subsidy is combined with an increase in the excise tax on gasoline.; All rights reserved, Elsevier

Michiel A. Keyzer, Max D. Merbis and Roelf L. Voortman.

De Economist, Vol. 156, No. 4, Dec 2008, pp. 507-527.

About a decade ago, the main OECD countries decided to promote the use of biofuels so as to reduce greenhouse gases, to contribute to energy self-sufficiency and to create additional demand for agricultural commodities. The introduction of mandatory blending requirements and lavish subsidies spurred fast adoption of this technology. In the course of 2008, the already existing controversy about the effectiveness of this strategy culminated as the resulting upward shift in demand contributed to staggering rises in food prices on world markets. It is uncertain as yet whether this will tone done current ambitions among policy makers to expand biofuel production. The paper shows that high ratios of energy prices to food prices are needed to make biofuel production profitable without the mandatory blending and subsidies. Yet, even if food-based biofuels disappeared, the issue remains that rising high energy prices will promote intensified use worldwide of land for energy crops, requiring huge amounts of mineral fertilizers and putting nature under additional pressure. In policy terms, this defines three major tasks. The first is replacing the current excise taxes on energy carriers by a uniform carbon tax, so as to mitigate greenhouse gas emissions in an efficient manner, the second to prevent price fluctuations on the oil markets from destabilizing food markets, as happened in recent years. Introduction of upper limits on the use of food for biofuel could prove effective here. The third, much wider, task is to make the transition to a partly biomass based energy production possible and sustainable, that is establishing fair distribution of property and user rights over the lands, while safeguarding biodiversity and soil fertility and maintaining adequate labour standards and living conditions, also during periods that these become non-profitable following a drop in energy prices.; Reprinted by permission of Springer

A. Demirbas.

Energy Conversion & Management, Vol. 49, No. 8, Aug 2008, pp. 2106-2116.

The term biofuel is referred to liquid, gas and solid fuels predominantly produced from biomass. Biofuels include energy security reasons, environmental concerns, foreign exchange savings, and socioeconomic issues related to the rural sector. Biofuels include bioethanol, biomethanol, vegetable oils, biodiesel, bio-gas, bio-synthetic gas (bio-syngas), bio-oil, bio-char, Fischer-Tropsch liquids, and biohydrogen. Most traditional biofuels, such as ethanol from corn, wheat, or sugar beets, and biodiesel from oil seeds, are produced from classic agricultural food crops that require high-quality agricultural land for growth. Bioethanol is a petrol additive/substitute. Biomethanol can be produced from biomass using bio-syngas obtained from steam reforming process of biomass. Biomethanol is considerably easier to recover than the bioethanol from biomass. Ethanol forms an azeotrope with water so it is expensive to purify the ethanol during recovery. Methanol recycles easier because it does not form an azeotrope. Biodiesel is an environmentally friendly alternative liquid fuel that can be used in any diesel engine without modification. There has been renewed interest in the use of vegetable oils for making biodiesel due to its less polluting and renewable nature as against the conventional petroleum diesel fuel. Due to its environmental merits, the share of biofuel in the automotive fuel market will grow fast in the next decade. There are several reasons for biofuels to be considered as relevant technologies by both developing and industrialized countries. Biofuels include energy security reasons, environmental concerns, foreign exchange savings, and socioeconomic issues related to the rural sector. The biofuel economy will grow rapidly during the 21st century. Its economy development is based on agricultural production and most people live in the rural areas. In the most biomass-intensive scenario, modernized biomass energy contributes by 2050 about one half of total energy demand in developing countries.

Fred Magdoff.

Monthly Review, Vol. 60, No. 3, July-Aug 2008, pp. 34-50.

Discusses the fundamentals, energy potential, economics, politics, & ecological dimension of agrofuels, highlighting US ethanol, & concluding that, given the social & environmental problems associated with them, agrofuels should assume a very minor role in the pursuit of oil alternatives. Adapted from the source document.

Madhu Khanna, Amy W. Ando and Farzad Taheripour.

Review of Agricultural Economics, Vol. 30, No. 3, Sep 2008, pp. 411-421.