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supplies and reducing the risk of disruption. And because they can be produced in most regions of the globe, the risks inherent in transporting these fuels over long distances will be reduced as well. In the long run, this is likely to help stabilize fuel prices.

Food versus Fuel

Large-scale production of biofuels will tend to increase the price of agricultural commodities. This can benefit farmers, but may hurt those who can barely afford food. However, the situation is more nuanced than many have portrayed it to be: for example, the meat industry, one of the biggest purchasers of crops, will benefit from the increased production of high-protein feeds that are the co-products of corn ethanol, soybean biodiesel, and other biofuel production. And many of the world’s hungry are also farmers. The poorest people will benefit more from the cultivation of biofuels if they are involved in the “value-added” stages of their production, such as processing and refining. In remote areas, poor farmers could benefit by producing their own fuels.

International Biofuel Trade

Many of the countries that consume large quantities of transportation fuels have limited land available for producing biomass feedstock, which leaves them unable to produce more than a fraction of their transportation fuels from domestic biomass. This will likely encourage many industrial countries to consider importing biofuels and to push for elimination of the tariffs and other trade barriers that have so far limited biofuel trade. (See Figure 9.) Ongoing negotiations at the World Trade Organization aimed at liberalizing trade in agricultural commodities are likely to spur the move to freer trade in biofuels, offering an opportunity for countries to provide new agricultural revenues as an offset to the loss of trade-distorting agricultural subsidies.

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