The Biofuel Situation and Policies in Developing Countries
Bancroft Hotel Berkeley, CA
May 7 and 8, 2009
The recent high oil prices, concerns about climate change and global warming, and the successful example of Brazil have led many governments around the world to invest in the production of biofuel and to establish policies to encourage private firms to invest in biofuel. In the US and Europe high prices and these policies led to a surge in biofuel production which led in turn to a surge in social science and environmental research on the impact of these policies in the US, Europe, and poor countries of the world and a storm of criticism when food prices went out of sight and the environmental consequences became clearer.
Most major developing countries have also established biofuel policies and some have invested public resources in biofuel production and distribution. The high price of oil, biofuels, and food induced a search by government corporations and private companies for land throughout the third world where biomass, sugarcane, and oilseeds can be grown on a commercial basis. But high food prices and politics led India, China, and South Africa to declare that they will only support the production of crops for biofuel feedstock that are not food crops. Southeast Asia has continued to focus on oilpalm, and South America on sugarcane and soybeans.
Are government investments, special tax incentives, and subsidies for biomass and biofuel production really good policies for developing countries? So far, the actual production of biofuel in LDCs other than Brazil has been limited. What are the economic, environmental and social costs and benefits of such policies? Do the prohibitions on government support for biofuel production using food crops such as maize really make economic sense?
This conference will start with presentations on the technological opportunities for investments in feedstocks and biofuel production in developing countries. Then we will turn to the present biofuel production and policies in major developing countries. On the second day we will start with the perspective of private firms on the opportunities for investments in developing countries and their perspectives on the policy incentives and constraints. Then we will have the economists perspective on the structure of the industry, the impact of the huge swings in prices and other risks, trade, and technology policy. This will be followed by some preliminary studies on the potential impacts of biofuels production in developing countries and a roundtable discussion of the implication of the conference presentations for private investments and public policy.