Abstract

Biofuel mandates and subsidies in several countries led to a 5-fold global growth in ethanol and biodiesel from edible crops in the last two and a half decades. The impacts of this growth for the economy and environment are uncertain and vary with feedstock, production practices, time horizon for impacts, policy parameters, and assumptions inherent to lifecycle assessments and economic modeling. In this context, we offer a perspective on the path forward given that many of the reasons that motivated existing biofuel policies remain relevant. Given advances in batteries and to a lesser extent in green hydrogen, biofuels appear more effective in reducing emissions in applications such as aviation and ocean freight. However, overcoming the lingering technological and economic barriers facing advanced biofuels will require better policies. Both economic intuition and empirical evidence suggest that more targeted approaches can better accelerate innovation and commercialization from waste biomass and dedicated energy crops. Lifecycle-emissions-based performance standards (such as California’s Low Carbon Fuel Standard), incentives for emissions reductions and ecosystem services from farming, and policies that minimize regulatory uncertainties (such as relaxation or waiver of annual targets) may lead to technological breakthroughs and adoption of practices that make biofuels more sustainable.