Article Series: Biofuel Subsidies

Biofuels - The State of Play, 2012

State of Play on Biofuel Subsidies: Are policies ready to shift? (PDF - 1.17 MB)

This paper summarizes and discusses policy literature on the state of play of the over US$ 20 billion in subsidies for biofuel production and consumption: Why are governments subsidizing biofuels? What are the actual impacts? Is there a need for change? In particular, it examines the influence of three dynamic factors on the biofuels debate: the “food versus fuel” debate, advanced biofuels developments and the austerity policies necessitated by the financial and economic crisis.

On the basis of this review, it recommends that governments should:

  1. Raise the political profile of evidence-based economic, environmental and social costs and benefits of biofuels.
  2. Report annually the value of subsidies granted to biofuel consumers and producers in a detailed and consistent manner.
  3. Abstain from introducing new forms of government support to conventional biofuels.
  4. In the short term, replace rigid biofuel production or consumption mandates and targets with more flexible arrangements.
  5. In the middle term, establish and implement a plan for removing national policies that support consumption or production of biofuels that a) compete with food uses for the same feedstock crops; and b) have negative impacts on the environment.
  6. Continue support for the development of infrastructure that allows for more flexibility in the use of biofuels.

Written in non-technical language, it is addressed to government, corporate and civil society circles and is designed to act as a reference document for those participating in discussions on biofuel subsidies around the G-20 Summit in Los Cabos (June 18–19, 2012) and the United Nations Conference on Sustainable Development “Rio+20” in Rio-de-Janeiro (June 20–22, 2012).

The paper was was launched at a special discussion on biofuel subsidies organized by Nestlé S.A. on the Business Day at the UN Conference on Sustainable Development Rio+20. A video of conference can be viewed on the GSI Subsidy Watch blog

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