Fantu Farris Mulleta, July 2013

An increasing number of countries have been supporting the extensive production and use of biofuels hoping to reduce greenhouse gas emissions, ensure energy security and help the rural poor. While the validity of such policy goals is largely shared, many critics doubt that biofuels are the solution and rather question the environmental, social and overall developmental impacts of biofuel expansion and related government support to the sector.

This paper examines the role of each of the above three policy goals in driving the biofuel industry and analyses the developmental impact of biofuels especially on weak economies. It also critically addresses some recent developments and measures taken to ensure the social and environmental sustainability of biofuels.

The main conclusion of the paper is that under the status quo many developing countries reap limited benefits from the biofuel industry for various reasons, including their limited role confined to the first stage of the value chain in biofuel production, and the dominance of largescale plantations in biofuel feedstock cultivation. However, as production patterns and means vary, so does the impact that biofuels have on individual developing countries. Therefore, the paper concludes with a number of recommendations for measures that developing countries can take in order to maximise the benefits of biofuels.

Keywords: Biofuels, development policies, developing countries

Trade and development discussion paper no. 03/2013, July 2013

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