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consumer spending and car ownership rise. These and other developing countries are projected to account for more than two-thirds of global energy demand by 2030.

To achieve a rapid scaling-up in biofuel production that can be sustained over the long term, governments must enact a coordinated set of policies that are consistent, long-range, and informed by broad stakeholder participation. In the future, biofuel promotion policies should be tied to criteria that ensure sustainable production methods and equitable distribution of production revenues. They should also be crafted in the context of larger transportation goals; reducing petroleum subsidies and increasing the taxes on petroleum are indirect ways to promote biofuels while also helping to lessen the use of oil. Measures to increase efficiency remain the cheapest way to alleviate the pollution and security risks associated with petroleum use.

Government Policies

Supportive government policies have been essential to the development of modern biofuels over the past two decades. Blending mandates, tax incentives, government purchasing policies, and support for biofuel-compatible infrastructure and technologies have been the most successful in fostering biofuel production. Countries seeking to develop domestic biofuel industries will be able to draw important lessons—both positive and negative—from the industry pioneers: Brazil, the United States, and the European Union.

Efforts to commercialize new energy crops will require particular attention from governments, many of which already possess national agricultural policies that have a significant impact on the choice of which crops to grow. Government policies can help assure that particular crops are grown on lands that are appropriate for them. For example, perennial grasses for biofuel production may be grown on erosion- prone land that would be inappropriate for annual row crops. The environmental benefits associated with energy crop production can be “monetized” through government programs such as payments or tradable credits for reduced runoff of soil and agro-chemicals into streams, and greenhouse gas reductions due to increased storage of carbon in soils.


The emerging biofuel industry also faces challenges in obtaining financing for the first risky, commercial-scale systems for producing biofuels from cellulosic biomass. Governments and international financial institutions can play a critical role in providing financing and taking other actions to help reduce financial risks, in order to help the industry move quickly through early commercialization barriers for these technologies.

Standards and Certification

As biofuels are increasingly traded across international boundaries, biofuel standards can help ensure that the industry develops without exploiting laborers or degrading the resource base. In addition, some form of certification—developed collaboratively by industry and government—will be needed to verify the

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