What are the Prospects of an Alternative Fuel in Meeting the Rising Demand of Fossil Fuel? A Case for Biofuels

Abstract

Interest in biofuels is growing worldwide as concerns about the rising demand of fossil fuels, security of energy supply and climate change are moving into the focus of policy makers. In recent times, attention has been drawn to finding alternatives to fossil fuels to cushion the rising world demand for energy. Despite strong interest in this sector, there are currently few players all over the world. With the exception of bioethanol from Brazil, however, production costs of biofuels are relatively higher than those of fossil fuels. As a result, promotion of bioenergy becomes a problem. With no particular focus on any country, this paper discusses the economic justification of biofuel promotion, and investigates the cost of production. Based on available data and information, we found that substantial biofuel usage induces significant financial costs. Yet, if carefully implemented under the appropriate conditions, biofuels might present opportunities for certain developing countries.