21 June 2012: The International Institute for Sustainable Development’s (IISD) Global Subsidies Initiative (GSI) has published a report, titled “State of Play on Biofuel Subsidies: Are policies ready to shift?,” which analyzes biofuels’ contribution to key policy goals, such as energy security, job creation and improved environmental performance. The publication also discusses the implications of the “food versus fuel” debate and the financial crisis for continuing the government support for biofuels.

Summarizing existing policy literature, the report formulates three important messages. First, that improving energy security via biofuels will only be possible once a suite of other associated technologies comes online, enabling highly efficient biofuels production from a range of biomass sources. Second, the GHG reduction potential varies according to the type of biofuel, but overall such reductions are costly compared to purchasing carbon credits on the international market. Third, the contribution of biofuels to rural economic development considerably differs depending on feedstocks, production systems and ownership models.

The report further examines whether biofuel subsidy policies are changing due to the “food versus fuel” debate, the development of advanced biofuels, and the recent financial and economic crises. The report notes that: precise impacts of biofuel expansion on food price rises in 2006–2008 remain uncertain, yet negative effects affect the poor more than others; advanced biofuels have not matured yet and must still prove their competitiveness; and any subsidy reforms must take account of previous investments into developing the industry. The report conludes with recommendations to governments on gradual phase-outs over of direct subsidies, consumption mandates and other national policies that support consumption or production of biofuels competing with food uses and/or having negative impacts on the environment. [Publication: State of Play on Biofuel Subsidies: Are Policies Ready to Shift?]