World Energy Outlook 2006

elsewhere. Trade in biomass is more costly, because of its bulk and lower
calorific value. Nonetheless, Malaysia exports palm kernel shells to the
Netherlands, while Canada sells wood pellets to Sweden.
Biofuels produced in tropical regions from sugar cane and palm oil are already
considerably cheaper than fuels derived from agricultural crops in temperate
zones (excluding subsidies), providing strong incentives for trade. Biofuel
shipping costs are small as a proportion of the total value of the fuel itself. But
trade barriers and other forms of subsidy currently prevent large-scale
shipments to Europe or the United States. It is very uncertain to what extent
these regions and other major centres of biofuels demand will allow imports of
biofuels in the future. This is a critical factor in determining where, and with
what resources and technologies, biofuels will be produced in the coming
decades, the overall burden of subsidy on taxpayers and the cost-effectiveness
of biofuels as a means of reducing carbon-dioxide emissions and promoting
energy diversity.
Chapter 14 - The Outlook for Biofuels
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