Bursting the Biofuel Bubble: Comparative Dynamics of Transitions to Freedom from Oil

Abstract

The remarkable recent surge of interest in biofuels, we argue, can be traced to the publication of a World Bank report in 2005, highlighting the contribution biofuels might make to meeting needs for transportation fuels, as well as to development in countries growing feedstocks. But the resulting bubble of enthusiasm, at least with respect to agricultural biofuels, seems to have burst at the beginning of 2008. Among alternative explanations of why this happened, we favor the view that international organizations, particularly environmental and developmental NGOs, forced a fundamental reappraisal of biofuels policy, certainly in Europe. We then ask whether enthusiasm for various magic bullet or technological breakthrough solutions is a basic dynamic of energy system transformation. We are more impressed with the argument that radical transitions of the kind needed to secure freedom from oil are much longer-term processes of cumulative causation. It is an open question whether such processes can be treated as endogenous to the economic system and be left to work largely through markets or whether they should be managed and guided through more interventionist policies.