The Economics of Bio-fuels - Research Paper Example

With increasing awareness the use of bio-fuel is increasing. Environmentalists opine that use of bio-fuel sheds less effect on the climate, and decision makers reveal that use of bio-fuel can lessen the pressure on balance of payments. The primary and major emission gas for Greenhouse Gases is carbon dioxide (CO2). When the carbon dioxide goes into atmosphere and changes the weather conditions, the bio-diversity will decrease through increase in temperature. Scope of Research The research will try to analyze how the benefits will accrue to an economy using bio-fuel.

The enhanced scope has economic and environmental points of view. Research is in progress around the world so as to explore new paths to solve the environment related hazards that can harm human beings. Scientists argue that increasing usage of renewable sources of energy can stand out as a potential solution to solve environmental hazards. Sustainable development and renewable energy uses share an intimate connection. It is believed that bio-energy systems would come out as important contributors to future sustainable development in industrialized and developing countries. . The globe witnessed high energy prices in 2000.

The bio-fuel was made profitable with high energy prices coupled with low prices of food. The rise in prices of corn can lead to substantial losses for the processors of corn bio-fuels. The emerging markets of bio-fuels will provide new markets for forest resources and the net benefits will get accrued to the local economies. The industries selling forest products are also likely to get benefitted. The negative effects will vary across regions. Bio-fuels can be utilized in electricity generation in the decades to come.

The global industry of bio-power will bring enhanced prospects to the economy filled with natural resources. China, India, Latin America and Africa are the major gainers from the energy saved by improved cook stoves. China has saved 40 to 59 percent of its energy consumption by bringing 20 to 30 percent improvements in fuel efficiency. Energy is needed for poverty alleviation in the developing countries. However, with the rise in income levels, a shift in trend of preferences has been noticed.

Modernization of agriculture will provide spaces for biomass energy production (Zilberman, Rajagopal, Sexton, and Hochman). The reports of 2007 state bio-fuels replaced 1-2% of liquid fuels and reduced the prices of other fuels by 2-4%. The estimated amount that was saved by the consumers was a resultant of 60 billion dollars. The major proportion of corn productivity was used in generation of bio-fuel. The inventories declined as well. There has been accumulating impact of bio-fuels on prices of food.

The World Bank suggested that negative supply shocks and continuing shortages will lead to expectation of price rise. The carbon emissions from bio-fuels can be offset by carbon