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Biofuel production is booming. Worldwide, production of ethanol for fuel has almost quintupled since 2000, while that of biodiesel has risen by almost 25 times. This is, in part, a response to policies to replace fossil fuels for transport with renewable fuels — in practice, biofuels. Subsidies and tax breaks have also been offered to producers of biofuels. 

For some developing countries, especially those with relatively abundant land and water, biofuels can be produced domestically, allowing them to cut back on increasingly costly imports of petroleum products. Some may also be able to export biofuels, or feedstock, to OECD countries.

The potential to produce biofuels in developing countries is vast. Yet there are significant concerns over large-scale development of biofuels. Either current land use would need to be intensified to accommodate biofuel production, probably driving up costs of production, raising food prices, and hurting poor consumers in a world that is increasingly urban. Or else large swathes of land not being cultivated at present would have to be converted to feedstock. This would often include converting tropical forests, peat bogs and wetlands to biofuel production.

To understand more about the balance between opportunity and threat represented by biofuels, four countries in Eastern Africa — Ethiopia, Kenya, Mozambique and Tanzania — were chosen for specific study by ODI in partnership with local researchers. Three questions were addressed:

1. What has been the recent development of biofuel production? What is known about major investments announced with great publicity?
2. What is the potential to produce feedstock? How much for domestic use, how much export, and hence what trade possibilities exist?
3. What policies to foster and regulate the industry are in place? How well advanced are schemes to certify production for sustainability?