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2010-20 Link financial support schemes to the sustainable performance of biofuels. 2010-30 Adjust economic incentives over time, as biofuels move towards competitiveness with fossil counterparts. Overcoming economic barriers The economics of conversion processes need to be further improved for biofuels to be competitive with fossil fuels without subsidies in the longer term (given sound policy framework conditions, including CO2 emission pricing). As a first step, fossil fuel subsidies, which are still applied in many countries (IEA, 2010f), should be phased out.

2009. 30 Technology Roadmaps Biofuels for transport Economic perspectives Biofuel production costs For biofuels to be widely used, they must not only be sustainable with regard to environmental and social impacts, but also with regard to economical aspects. This means that they must eventually become competitive with gasoline and/or diesel fuel. Governments are justified in creating differential tax systems to reflect the differing external costs of different fuels, however, and some fuels successfully co-exist in markets today with fuels that are less expensive.

Biofuel production costs fall as scale and efficiency increase. The costs (retail price equivalent, untaxed) of advanced biofuels such as cellulosic-ethanol and BtL-diesel reach parity with petroleum gasoline and diesel fuel by about 2030. Sugarcane ethanol remains the lowest-cost biofuel throughout. In the high-cost scenario, oil prices have a greater impact on feedstock and production costs and most biofuels remain slightly more expensive than gasoline/diesel, with oil at USD 120/bbl in 2050.

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