De Economist

, Volume 156, Issue 4, pp 507–527 | Cite as

The Biofuel Controversy

  • Michiel A. Keyzer
  • Max D. Merbis
  • Roelf L. Voortman
Notes and Communications


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.


Biofuels carbon tax fuel blending requirements greenhouse gases natural resource management 

JEL Code(s)

Q24 Q32 Q42 Q56 Q58 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Bovenberg A.L. (1995). ‘Environmental Taxation and Employment’. De Economist 143: 111–140 CrossRefGoogle Scholar
  2. CMA (2008), Phosphate: Resources and Reserves (sec. 4.11.1),, accessed 12 August 2008.
  3. Crutzen P.J., Mosier A.R., Smith K.A. and Winiwarter W. (2007). ‘N2O Release from Agro-biofuel Production Negates Global Warming Reduction by Replacing Fossil Fuels’. Atmos. Chem. Phys. Discuss 7: 11191–11205 CrossRefGoogle Scholar
  4. Dasgupta P. (2007). Poverty Traps: Exploring the Complexity of Causation. 2020 Focus Brief on the World’s Poor and Hungry People. IFPRI, Washington, DC Google Scholar
  5. DFT (2003), International Resource Costs of Biodiesel and Bioethanol. Department of Transport, London, UK.Google Scholar
  6. Dorigoni S. and Gulli F. (2002). ‘Energy Tax Harmonization in the European Union: A Proposal Based on the Internalization of Environmental External Costs’. European Environment 12: 17–34 CrossRefGoogle Scholar
  7. DPPC (2004), Ethiopia: National Information on Disaster Reduction, Report for the World Conference on Disaster Reduction, 18–22 January, 2005. Disaster Prevention and Preparedness Commission (DPPC), Ethiopia.Google Scholar
  8. EEA (2008), Transport Remains Main Source of Health-Damaging Pollutants, Press Release at the Publication of the Annual European Community LRTAP Convention Emission Inventory Report 1990–2006. Technical Report No. 7(2008), European Environment Agency, Copenhagen.Google Scholar
  9. Elsayed M.A., Matthews R. and Mortimer N.D. (2003). Carbon and Energy Balances for a Range of Biofuels Options. Sheffield Hallam University, Resources research unit Google Scholar
  10. Faaij A.P.C. (2007). Biomass and Biofuels. Background Report for the Energy Council of the Netherlands. Algemene Energieraad, Den Haag Google Scholar
  11. FAO (2008), Soaring Food Prices: Facts, Perspective, Impacts and Actions Required. High-Level Conference On World Food Security, FAO, Rome.Google Scholar
  12. Fargione J., Hill J., Tilman D., Polasky S. and Hawthorne P. (2008). ‘Land Clearing and the Biofuel Carbon Debt’. Science 319(5867): 1235–1238 CrossRefGoogle Scholar
  13. Fischer G. and Schrattenholzer R. (2001). ‘Global Bioenergy Potentials Through 2050’. Biomass and Bioenergy 20: 151–159 CrossRefGoogle Scholar
  14. Frondel M. and Peters J. (2007). ‘Biodiesel: A New Oildorado?’. Energy Policy 35: 1675–1684 CrossRefGoogle Scholar
  15. Goh G. (2004). ‘The World Trade Organization, Kyoto and Energy Tax Adjustment at the Border’. Journal of World Trade 28: 395–423 Google Scholar
  16. Heijdra B.J. and van der Ploeg F. (1995). ‘Fiscal and Environmental Policy under Monopolistic Competition’. De Economist 143: 217–248 CrossRefGoogle Scholar
  17. Heijdra B.J. and van der Horst A. (2000). ‘Taxing Energy to Improve the Environment: Efficiency and Distributional Effects’. De Economist 148: 45–69 CrossRefGoogle Scholar
  18. Holmes, P.S., J. Rollo and A.R. Young (2003), ‘Emerging Trends in WTO Dispute Settlement: Back to the GATT?’. World Bank Policy Research Working Paper, No. 3133, The World Bank, Washington, DC.Google Scholar
  19. IFPRI (2008), High Food Prices: The What, Who, and How of Proposed Policy Actions. IFPRI Policy brief, IFPRI, Washington, DC.Google Scholar
  20. Ivanic M. and Martin W. (2008). Implications of Higher Global Food Prices for Poverty in Low-Income Countries. Development Research Group, Trade Team, World Bank, Washington, DC CrossRefGoogle Scholar
  21. Jongschaap R.E.E., Corré W.J., Bindraban P.S. and Brandenburg W.A. (2007). Claims and Facts on Jatropha curcas L.: Global Jatropha curcas Evaluation Breeding And Propagation Programme. Plant Research International, Wageningen Google Scholar
  22. Keyzer M.A., Merbis M.D., Nubé M. and van Wesenbeeck C.F.A. (2008). Food, Feed and Fuel: When Competition Starts to Bite. SOW-VU brief Centre for World Food Studies, VU University, Amsterdam Google Scholar
  23. Mitchell, D. (2008), ‘A Note on Rising Food Prices’, World Bank Policy Research Paper. No. 4682, The World Bank, Washington, DC.Google Scholar
  24. Motaal A.E. (2008). ‘The Biofuels Landscape: Is There a Role for the WTO?’. Journal of World Trade 42: 61–86 Google Scholar
  25. Nevis (2008), Background on the NEVIS Engine. Available at, accessed at 25 July 2008.
  26. OECD (2008), Economic Assessment of Biofuel Support Policies. Directorate for Trade and Agriculture. OECD, Paris.Google Scholar
  27. OECD-FAO (2008), OECD-FAO Agricultural Outlook 2008–2017. OECD, Paris and FAO, Rome.Google Scholar
  28. OXFAM (2008), Another Inconvenient Truth. How Biofuel Policies are Deepening Poverty and Accelerating Climate Change, OXFAM briefing paper, June 2008.Google Scholar
  29. Nubé, M. and R.L. Voortman (2008), Human Micronutrient Deficiencies: Linkages with Micronutrient Deficiencies in Soils, Crops, and Animal Nutrition, in: Food Based Approaches for Combating Micronutrient Deficiencies, forthcoming. FAO, Rome.Google Scholar
  30. Rosegrant, M.W. (2008), Biofuels and Grain Prices: Impacts and Policy Responses. Testimony for the US Senate Committee on Homeland Security and Governmental Affairs, May 7 2008.Google Scholar
  31. Royal Society (2008), Sustainable Biofuels: Prospects and Challenges. Policy document 01/08, Royal Society, London.Google Scholar
  32. Shapouri, H., J.A. Duffield and M. Wang (2002), The Energy Balance of Corn Ethanol: An Update. Agricultural Economic Report No. 813, USDA, Washington, DC.Google Scholar
  33. Sims R.E.H., Hastings A., Schlamadinger B., Taylor G. and Smith P. (2007). Energy Crops: Current Status and Future Prospects. Global Change Biology 12: 2054–2076 CrossRefGoogle Scholar
  34. Smulders S. (1995). ‘Environmental Policy and Sustainable Economic Growth: An Endogenous Growth Perspective’. De Economist 143: 163–195 CrossRefGoogle Scholar
  35. Steen I. (1998). ‘Phosphorus Availability in the 21st Century. Management of A Non-Renewable Resource’. Phosphorus and Potassium 217: 25–31 Google Scholar
  36. Tangermann, S. (2008), What’s Causing Global Food Price Inflation? Available at, accessed 22 July 2008.
  37. UNEP (2007), Global Environment Outlook: Environment For Development (GEO-4). Earthprint Ltd., Stevenage, Hertfordshire.Google Scholar
  38. USDA/FAS (2008), EU-27 Bio-Fuels Annual 2088. USDA Foreign Agricultural Service, GAIN report E48063, USDA, Washington, DC.Google Scholar
  39. USDA/NCRS (2006), Soil Erosion. NCRS Conservation Resource Brief, no. 0602, USDA, Washington, DC.Google Scholar
  40. USGS (2008), Mineral Commodity Summaries. United States Geological Survey, Virginia, USA.Google Scholar
  41. Van Dam J., Faaij A.P.C., Lewandowski I. and Fischer G. (2007). ‘Biomass Production Potentials in Central and Eastern Europe under Different Scenarios’. Biomass and Bioenergy 31: 345–366 CrossRefGoogle Scholar
  42. Van Ewijk C. and van Wijnbergen S. (1995). ‘Can Abatement Overcome the Conflict Between Environment and Economic Growth?’. De Economist 143: 197–216 CrossRefGoogle Scholar
  43. Von Blottnitz H. and Curran M.A. (2007). ‘A Review of Assessments Conducted on Bio-Ethanol as a Transportation Fuel from a Net Energy, Greenhouse Gas and Environmental Life Cycle Perspective’. Journal of Cleaner Production 15: 607–619 CrossRefGoogle Scholar
  44. WWF (2007), Rainforest for Biodiesel ? Ecological Effects of Using Palm Oil as a Source of Energy. World Wildlife Fund, Frankfurt, Germany.Google Scholar
  45. WWI (2006), Biofuels for Transport: Global Potential and Implications for Sustainable Agriculture and Energy in the 21st Century. Worldwatch Institute, Washington, DC.Google Scholar

Copyright information

© Springer Science+Business Media, LLC. 2008

Authors and Affiliations

  • Michiel A. Keyzer
    • 1
  • Max D. Merbis
    • 1
  • Roelf L. Voortman
    • 1
  1. 1.Centre for World Food StudiesVrije Universiteit Amsterdam (SOWVU)AmsterdamThe Netherlands

Personalised recommendations