The Effects of BioFuels Policies on Global Commodity Trade Flows

In terms of the global situation, trade is biofuels is small relative to world-wide production; however, given ambitious consumption mandates in many developed countries as well as increasing energy consumption, this will not likely remain the case in the long-run. Although biodiesel has been classified as an industrial good, ethanol is currently marketed as an agricultural product, though not specifically for fuel use. The removal of trade barriers, particularly in the developed countries, would not only ease pressure on the traditional feedstocks and lower world ethanol prices, but allow countries with a comparative advantage to capitalize on the opportunity to produce low-cost biofuel. Whether the removal of these trade barriers on biofuels would affect their efficacy as a political tool remains to be seen.