Prospects for EU Biofuel Production and Trade
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The paper provides background information regarding the EU policy on biofuels. The purpose is to assess whether this policy may lead to an increased use of European agricultural products to provide energy, or whether it is more likely that the EU will shift towards imports of biofuels. The paper first describes the EU support policy for energy crops, i.e. tax exemption for biofuels and mandatory incorporation taxes in some member states, the impact on demand and supply of biofuels. It then focuses on the prospects for the production and utilization of biofuels in the EU. The paper addresses the three related issues of energy efficiency, environmental benefits and cost competitiveness of EU biofuels and presents simulations regarding the competition between food and non-food uses of agricultural products.