Environment and Resources

Project: Implications of Promoting Biofuels in Developing Countries

Project Duration

09/2006 - 12/2006 (finalized)

Commissioned by

Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ)

Project Team (RWI)

Prof. Dr. Jörg Peters


In recent years, biofuels enjoyed growing worldwide interest as concerns about security of energy supply and climate change are moving into the focus of policy makers. With the exception of bioethanol from Brazil, production costs of biofuels are significantly higher than those of their fossil counterparts. Therefore, promotion measures like tax exemptions or blending quotas are indispensable for triggering substantial biofuel demand. This project investigated applied promotion instruments and their justification and implications with special focus on developing countries. By examining biofuel programs in industrialised and developing countries, it was concluded that the promotion of biofuels can only be partly justified from an economic point of view. Furthermore, acreage availability is a binding natural limitation in most industrialised countries and might induce problems of food availability in developing countries. However, if carefully implemented under the appropriate conditions, biofuel programs might confer feasible opportunities for certain developing countries.