Agricultural market impacts of future growth in the production of biofuels

Feb 2006

The main objective of this study is to determine what impact future biofuel developments can have on agricultural commodity markets through a quantitative assessment of several scenarios based on the use of an agricultural trade model.
Through comparing the model results of different scenarios with one another, the specific impacts of changes in biofuel developments can be identified. This extends and deepens an earlier analysis of biofuel developments published in OECD (2002).
Sections 2 and 3 of the Report briefly summarise the various processes used in biofuel production and provide estimates of production costs for each of these processes. Section 4 focuses on current and planned national programmes and policies to promote biofuel production and use. Section 5 summarises the baseline projections used for the quantitative analysis of the impacts of biofuel developments on agricultural commodity markets and shows to what degree biofuel developments are explicitly or implicitly taken into account in the projections. It also briefly discusses the model used for the analysis and how it was adapted for the purpose of the current exercise. Section 6 outlines the different scenarios analysed and discusses their results. After a brief and qualitative assessment of longer-term developments in modern biofuels, i.e. of biofuels that are made from feedstocks other than food and feed commodities in section 6 a final section 7 summarises the main findings of the study and provides a set of conclusions. The methods of modelling biofuel developments and crude oil prices are laid out in more detail in Annex 3, which also provides the different technical and other parameters employed in the model.
This report brings together recent information about national biofuel policies and production targets summarised in section 4 of this report as well as technical and economic data on the various biofuel production systems that are used in the quantitative analysis. Annex 4 outlines the conclusions offered in the full report.
While this study has a global focus that goes beyond the OECD countries, it remains selective in that not all countries with actual or potential biofuel markets are explicitly covered. Instead, it is focused on those countries where biofuel markets have achieved a significant size already, or where they are expected to reach significant volumes in the medium term.

By: OECD - 2005/2006 Programme of Work of the Committee for Agriculture

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