Chapter 2: The Production of Biofuels: Welfare and Environmental Consequences for Asia
Clem Tisdell 2.1 INTRODUCTION The use of biofuels has been supported by many environmentalists (for example, the German Green Party) as a way to reduce global warming. This chapter expresses doubts about their potential to do this and focuses on the production of liquid biofuels (primarily ethanol and biodiesel) taking into account the implications of the rapid expansion in the global production of these fuels for Asian nations. Further substantial increases in the production of biofuels (stimulated by government subsidies and economic incentives) are expected in coming decades as available supplies of mineral oil begin to decline and the long-term real price of mineral oil rises. Economic growth in Asia, particularly in China and India, has accelerated the demand of Asian nations for oil and this trend can be expected to continue as the number of motor vehicles in Asia escalates. Asia has insufficient oil to meet its demand and is heavily reliant on imports, and its oil deficit is expected to magnify. The oil deficit situation of Asian countries varies. Japan is completely dependent on imported oil, both China and India have a high degree of reliance on imports, and even Indonesia is now a net importer of oil. Given the pivotal role of oil in providing fuel for transport purposes in modern economies, the possibility of substituting biofuels for fuels derived from mineral oils seems on the surface to be an attractive option for Asian countries. There are several reasons why Asian nations might want to produce biofuels....
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