and other grains, sugar cane, soybeans, cassava, rapeseed, and oil palm, production of bioethanol and biodiesel has been growing fast in recent years, albeit from a low base— together they contributed about 1 % of global transport fuels in 2005. Fast growth rates are mainly due to biofuel support policies that have been developed in many countries around the world in the hope of furthering rural job creation and economic development, mitigating climate change and im­proving energy security [ESAP Chapter 4; NAE Chapter 2; SSA Chapter 2].
     The most important factors determining economic com­petitiveness of first generation biofuels are (1) price of feed­stock, (2) value of byproducts, (3) conversion technology, and (4) price of competing fuels. Each of these variables varies over time and place. Currently first generation biofu­els are economically competitive with fossil fuels only in the most efficient feedstock producer markets during times of favorable market conditions, e.g., in Brazil when feedstock prices are low and fossil fuel prices high. Consistently high oil prices at levels seen in the recent past would improve eco­nomic competitiveness also in other regions. The economics of liquid biofuels may be more favorable in remote regions where energy access and agricultural exports are compli­cated by high transport costs. Land-locked developing coun­tries, islands, and remote regions within countries may fall into this category if they can make available sufficient and cheap feedstock without threatening food security [Global Chapters 3,6; NAE Chapter 4].
     In addition to these economic factors, the value of 1st generation biofuels is also affected by energy security con­cerns and environmental and social benefits and costs. From an environmental perspective, there is considerable debate over whether first generation biofuels, especially bioethanol, yield more energy than is needed for their production and their level of greenhouse gas emissions. Both issues are related and the debate is caused by differences in life cycle emissions

measurement methodologies and the strong effect of spe­cific local circumstances, such as type of feedstock, original use of agricultural land, mechanization of production and fertilizer use. Generally, assuming feedstocks are produced on agricultural land and do not induce deforestation, crops produced with few external inputs (fertilizers, pesticides, etc.), such as rain fed sugarcane in Brazil, perform signifi­cantly better than high-input crops such as maize in North America. Consequently, whether biofuels are a viable option for climate change mitigation depends on the emissions re­ductions that can realistically be achieved as well as relative costs compared to other mitigation alternatives. Apart from GHG considerations, considerable environmental costs may be associated with large increases in biofuels production. For example, it is feared that the increased demand for lim­ited agricultural production factors (e.g., land and water) will lead to a conversion of pristine biodiverse ecosystems to agricultural land (e.g., deforestation) and depletion of water resources—instances of this happening are already apparent in different regions, e.g., draining of peat land in Indonesia and clearing of the Cerrado in Brazil [Global Chapters 4, 6; NAE Chapter 4].
     The related social and economic effects are complex. Increased demand can lead to higher incomes for those en­gaged in feedstock production and ancillary industries such as biofuels conversion or processing of biofuel by-products (e.g., cakes), potentially contributing to economic develop­ment. Conversely, competition for limited land and water re­sources inevitably leads to higher food prices hurting buyers of food, including food processing and livestock industries and—very importantly with regard to hunger and social sustainability—poor people. Moreover, small-scale farm­ers may be marginalized or pushed off their lands if they are not protected and brought into production schemes. In the medium to long term the effects on food prices may decrease as economies react to higher prices (adapting pro-