BIOFUELS - AT WHAT COST ?

The report analyzes the extensive subsidy framework for biofuels in the EU, estimating total transfers at approximately €3.7 billion in 2006. It identifies excise tax exemptions as the primary support mechanism and argues that current subsidies for first-generation biofuels are an expensive and inefficient way to reduce CO2 emissions compared to purchasing carbon offsets. The authors recommend eliminating ethanol tariffs, resisting new blending mandates, and shifting focus toward second-generation biofuels.

• Excise tax exemptions represent the largest share of public support for biofuels, totaling nearly €3 billion in 2006.
• The cost of reducing CO2-equivalent emissions through biofuel subsidies is very high; for ethanol from sugarbeet, the cost is between €575 and €800 per tonne, while biodiesel from rapeseed costs over €600 per tonne.
• Public support for ethanol is significantly higher than for biodiesel on a petrol-equivalent basis, with ethanol support exceeding twice the 2006 ex-tax market price for regular unleaded petrol.
• EU border protection for ethanol is high, with MFN tariffs of €19.2 per hectolitre for undenatured alcohol and €10.2 per hectolitre for denatured alcohol, which isolates EU producers from international competition, particularly from Brazil.
• The EU's 2003 Biofuels Directive set a target of 5.75% market share for biofuels by 2010, but the actual market share in 2006 was only 1.8%.
• The 2003 Common Agricultural Policy (CAP) reform provided a specific area payment of €45 per hectare for energy crops on up to 1.5 million hectares.
• Support for biofuels is likely to increase significantly as the EU moves toward a binding minimum target of 10% for biofuels by 2020.
• The report concludes that the current focus on first-generation biofuels is not a cost-effective way to reduce greenhouse gas emissions and recommends shifting support to second-generation technologies.
• Many Member States have implemented mandatory blending requirements that act as powerful government interventions, though they may transfer the financial burden of support to consumers.

APA

Kutas, G., Lindberg, C., & Steenblik, R. (2007). BIOFUELS - AT WHAT COST ? International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/biofuels_subsidies_eu.pdf

Chicago

Kutas, Géraldine, Carina Lindberg, and Ronald Steenblik. BIOFUELS - AT WHAT COST ? International Institute for Sustainable Development, 2007. https://www.iisd.org/system/files/publications/biofuels_subsidies_eu.pdf.

Wikipedia

{{cite report |last1=Kutas |first1=Géraldine |last2=Lindberg |first2=Carina |last3=Steenblik |first3=Ronald |title=BIOFUELS - AT WHAT COST ? |publisher=International Institute for Sustainable Development |date=October 2007 |url=https://www.iisd.org/system/files/publications/biofuels_subsidies_eu.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{kutas2007biofuels, author = {Kutas, Géraldine and Lindberg, Carina and Steenblik, Ronald}, title = {{BIOFUELS - AT WHAT COST ?}}, institution = {International Institute for Sustainable Development}, year = {2007}, month = oct, url = {https://www.iisd.org/system/files/publications/biofuels_subsidies_eu.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }