Assessing the environmental externalities from biofuels in Australia

In Australia, as in other countries, the environmental costs and benefits of biofuel production and use have been found to vary greatly according to the production method and feedstocks used. In general, the use of biodiesel produced in Australia has been found to provide greater environmental benefits than ethanol, both in terms of reduced greenhouse gas (GHG) emissions and reduced air pollutant emissions. In this paper, estimates of GHG and air pollutant emissions arising from biofuels and petroleum fuels production and use are employed to calculate the change in environmental externalities when substituting biofuels for petroleum fuels in Australia. These estimates of externalities highlight the need to better understand the environmental implications of biofuel production and use.