Biofuel production has expanded in Brazil in part because of hidden subsidies. Likewise, ethanol production from
corn in the United States has expanded in part because of ethanol tariffs and ethanol processor tax credits. Without
these subsidies, ethanol production in the United States would be much smaller. Even so, subsidies from biofuels
will likely continue. Biofuel production has both negative and positive effects. The net benefits from biofuels are
positive, providing there are significant positive environmental impacts, as well as significant negative price impacts
in the overall fuels market. Biofuels produced from wood residues could have a bright future as wood residues can
be used for electric power generation.
