The price for biofuels sustainability

The production and usage of biofuels has increased worldwide, seeking goals of energy security, lowcarbonenergy and rural development. As biofuels trade increased, the European Union introducedsustainability regulations in an attempt to reduce the risks associated with biofuels. Producers were thenconfronted with costs of sustainability certification, in order to access the EU market. Hopes were thatsustainably-produced biofuels would be rewarded with higher prices in the EU. Based on a review ofrecent literature, interviews with traders and price data from Platts, this paper explores whethersustainability premiums emerged and if so, did they represent an attracting feature in the market forsustainable biofuels. This article finds that premiums for ethanol and biodiesel evolved differentlybetween 2011 and 2012, but have been in general very small or inexistent, with certified fuels becomingthe new norm in the market. For different reasons, there has been an apparent convergence betweenbiofuel policies in the EU and the US. As market operators perceive a long-term trend for full certificationin the biofuels market, producers in developing countries are likely to face additional challenges in termsof finance and capacity to cope with the sustainability requirements.QC 20140519