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This paper reviews recent developments in biofuel markets and their economic, social and environmental impacts. Several countries have introduced mandates and targets for biofuel expansion. Production, international trade and investment have increased sharply in the past few years. However, several existing studies have blamed biofuels as one of the key factors behind the 2007-2008 global food crisis, although the magnitudes of impacts in these studies vary widely depending on the underlying assumptions and structure of the models. Existing studies also have huge disparities in the magnitude of long-term impacts of biofuels on food prices and supply; studies that model only the agricultural sector show higher impacts, whereas studies that model the entire economy show relatively lower impacts. In terms of climate change mitigation impacts, there exists a consensus that current biofuels lead to greenhouse gas mitigation only when greenhouse gas emissions related to land-use change are not counted. If conversion of carbon rich forest land to crop land is not avoided, the resulting greenhouse gas release would mean that biofuels would not reduce cumulative greenhouse gas emissions until several years had passed. Overall, results from most of the existing literature do not favor diversion of food for large-scale production of biofuels, although regulated production of biofuels in countries with surplus land and a strong biofuel industry are not ruled out. Developments in second generation biofuels offer some hope, yet they still compete with food supply through land use and are currently constrained by a number of technical and economic barriers.

Climate Change --- Climate Change Mitigation --- Climate Change Mitigation and Green House Gases --- Diesel --- Energy --- Energy Consumption --- Energy Production and Transportation --- Energy Supply --- Environment --- Environmental Economics & Policies --- Environmental Impacts --- Ethanol --- Ethanol Program --- Food & Beverage Industry --- Fossil --- Fossil Fuel --- Fossil fuel consumption --- Fossil fuels --- Gasoline --- Generation --- Greenhouse gas --- Greenhouse gas emissions --- Industry --- Oil --- Oil crisis --- Oil price --- Oil prices --- Renewable Energy

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Interests in obtaining carbon offsets in host countries for Clean Development Mechanism projects may serve as an obstacle to implementing more stringent general environmental policies in the same countries. A relatively lax environmental policy, whereby carbon emissions remain high, can be advantageous for such countries as it leaves them with a higher than otherwise scope for future emissions reductions through Clean Development Mechanism and other offset projects. In this note, the potential to affect the availability of future Clean Development Mechanism projects is shown to distort environmental and energy policies of Clean Development Mechanism host countries in two ways. Measures to reduce use of fossil energy are weakened. Because this weakens private sector incentives to switch to lower-carbon technology through Clean Development Mechanism projects, host governments then also find it attractive to subsidize this switch, in order to maximize the country's advantage from the Clean Development Mechanism.

Carbon --- Carbon capture --- Carbon content --- Carbon emissions --- Carbon emissions from fossil --- Carbon Offsets --- Climate --- Climate change --- Climate Change Economics --- Climate change mitigation --- Climate Change Mitigation and Green House Gases --- Emissions reductions --- Energy --- Energy Production and Transportation --- Environment --- Environment and Energy Efficiency --- Environmental Economics & Policies --- Fossil fuel --- Fossil fuels --- Fuel consumption --- GHGs --- Global carbon emissions --- Global emissions --- Greenhouse --- Greenhouse gas --- Greenhouse gas emissions --- Macroeconomics and Economic Growth --- Renewable energy