Are biofuels more costly than fossil fuels?

28 March 2012

Anna Locke

Michael Humphries -
Department of Transport
Celine Giner - OECD          
Marcos Jank - UNICA
Hans van Meijl – LEI, Wageningen University
Jeremy Woods - Imperial College London


As more significant renewable energy mandates for transport in Europe begin to loom and become more of a reality, biofuels are once again becoming the focus of attention, as they are expected to be the main source of renewable energy to meet the mandates.

Long-standing debates exist on the social and environmental costs and benefits of biofuels. However, recent discussions have focused attention on the economics of biofuels, with the concern that biofuels will be dramatically more expensive than fossil fuels in the UK/EU, increasing the pump price of fuel to consumers in the UK/EU. This assumes that that majority of biofuels and their feedstocks will be produced within the EU.

In this meeting the aim was to:

  • Review the evidence and arguments on likely developments in landed prices of biofuels in the UK/EU up to 2020; and
  • Discuss the implications of sourcing biofuels from outside the EU.

Questions Posed

This event sought to answer question 'Will biofuels be more costly than fossil fuels?' looking at the following subsets of questions:

  1. What is expected to happen to ethanol and biodiesel prices (landed in the EU) up to 2020 and why?
  2. What are the key assumptions underpinning forecast biofuels prices in the models used?
  3. Would biofuels continue to be more expensive than fossil fuels if they came principally from sources outside of the EU? Do other countries have the capacity to supply the volume of biofuels needed?
  4. Will the EU’s sustainability criteria increase the cost of imported biofuels? What are the barriers to implementing the sustainability criteria?