Governments in many OECD countries, as well as in a number of countries outside the OECD area, actively promote the production and use of alternative transport fuels made from agricultural commodities. This report, jointly produced by the OECD and the IEA and drawing on information from a number of other organisations, analyses the implications of this support from various perspectives. The report shows that the high level of policy support contributes little to reduced greenhouse-gas emissions and other policy objectives, while it adds to a range of factors that raise international prices for food commodities. It concludes that there are alternatives to current support policies for biofuels that would more effectively allow governments to achieve their objectives.

Table of contents: Executive Summary Introduction, Objectives and Scope Chapter 1. Facts and Trends -Market Developments -Policy Developments -Trends in Science and Innovation -Biofuel Performance with Respect to Environmental and Other Criteria Chapter 2. Quantitative Analysis of Biofuel Policies and Developments -Model Based Analysis of Policy Effects on Agricultural Markets, Land Use, and Related Environmental Implications -The Impact of Biofuel Support Policies -The Potential Impact of "Next Generation Biofuels" Replacing Commodity-Based Biofuels -The Impact of Alternative Crude Oil Prices -Environmental Effects of Agricultural Land Allocation betweeen Bioenergy Crops and Food Feed Crops Using SAPIM Chapter 3. Costs and Benefits of Biofuel Support Policies -The Objective of GHG Mitigation - Impacts and Cost Effectiveness -The Objective of Energy Savings - Impacts and Cost Effectiveness -The Objective of Rural Development - Impacts and Cost Effectiveness -Combined Assessment of Biofuel Support Policies in View of Underlying Objectives -The Risk of Food Inflation - Implications for Food Prices and Food Security -The Risk of Environmental Degradation - Impacts of Intensification and Land Use Changes Chapter 4. Summary, Conclusions and Policy Recommendations Annex A. Specification of Biofuel Markets in the Aglink Model Annex B. Environmental Effects Covered in the SAPIM Application Annex C. Economic and Enviornental Outcomes under Alternative Scenarios in the SAPIM Applicaiton