Second-generation biofuels are derived from feedstocks not traditionally used for human consumption, such as wood, organic waste, food crop waste and dedicated biofuel crops. As a result, their use in biofuel production has minimal to no impact on other edible crop prices, thereby also alleviating concerns that biofuel produc­tion will exacerbate famine in the developing world (IEA 2008a). Furthermore, the technologies employed in producing second-generation biofuel use the majority or even all of the biomass (Table 1). This helps with reducing the considerable waste associated with the production of first-generation biofuels (Deurwaarder 2005).

At present, it is thought that second-generation biofuels could cost as much as twice their petroleum-based equivalents (Reilly and Paltsev 2007; Carriquiry et al. 2010) and, certainly, more than first-generation equivalents. Low carbon prices, or rather the inability of the market to internalize all the negative external costs asso­ciated with petroleum-based fuels, have also had a significant impact. In effect, the current global price of fossil fuels vis-a-vis more sustainable ones such as second — generation biofuels can be regarded as something of a market failure. That said, it

Table 1 Classification of biofuels (United Nations 2008)

First-generation biofuels Second-generation biofuels

is hoped that, by 2050, 90 % of the world’s biofuel will be provided by second- generation techniques (IEA 2008b).