There is a wave of debate whether biofuels production and use effectively reduces carbon emissions. Undoubtedly, the universal answer does not exist yet. To assess environmental effects of GHG reductions one should consider the combined net effects of the energy technology associated with biofuels, carbon emissions, land conversion and agricultural production. These lead in fact to two types of effects: GHG reduction from land conversion for biofuels feedstock production (direct impact) and GHG reduction from off-site land conversion for biofuels feedstock production (indirect impact).

Accounting for these effects creates the opportunity to measure direct and indirect emission reductions. It is important for policy makers to obtain, as precisely as possible, a picture of the regulation’s potential on biofuels production. It is crucial for example, given that the majority of policy support is in the form of a subsidy, to understand all net effects from biofuels feedstock production (and consequent biofuels use) on GHGs to efficiently assess the subsidy rate. Current debate mainly focuses on the quantification of indirect effects. These results are difficult to quantify because an increased dependence on biofuels would mean increased demand for land to meet the requirements of off-site land conversion. As a consequence, significant zero (or negative) net impacts on climate change (i. e. in terms of increasing GHG emissions) would result. The risk of considerable carbon emission coupled with land use has been, until present, mostly ignored. Few studies (Hill et al., 2006; Zah et al., 2007; Searchinger et al., 2008) assessed the magnitude of increasing emissions from land-use changes, and there is still concern on the quantification issue for indirect effects. Substantial efforts are therefore needed to address the correct measurement of indirect effects on GHGs from land-use changes for biofuels feedstock production.

The conversion of land for agricultural activities (i. e. from forests to agricultural lands) causes considerable carbon emissions through time because this is released at consecutive stages during the conversion process. Positive net carbon costs would be obtained with the benefits arising from displacement effects of fossil fuels emissions gained over new land use for biofuels production. However, since time plays an important part when computing net benefits, it becomes essential for policy makers to consider a ‘justified’ period of time consisting of the lifetime of indirect effects of land-use changes. Some studies (Righelato and Spracklen, 2007) consider a 30-year time a justified period for indirect effects to occur. This is though based on the average time frame of ethanol plants and, as a consequence, the land change occurs as long as 30 years when ethanol feedstock production most probably takes place. Other studies (Renewable Fuels Agency, 2008) consider the payback period (the time that land conversion needs to give positive GHG impacts) of biofuels production arguing that most of carbon effects are intensified during the first ten years of land conversion because the release of

carbon is more sensitive. Marshall (2009) argues on two time periods for the lifetime of biofuels feedstock production: The first is a ‘project horizon’, the effective time period needed for biofuels feedstock to grow on a specific (converted) land. In essence, the time for which the converted land is planned to be used for feedstock production. This period could also be shortened or amplified according to changes occurring in biofuels technologies or at policy level (i. e. changes in the subsidy rate). The second is ‘impact horizon’ which considers the environmental aspect (carbon emissions) over the converted land for biofuels feedstock production. This would undoubtedly be not necessarily as long as the project horizon time span because its effects are generally prolonged over time. While, in fact, GHG reductions linked to biofuels production terminate as soon as the biofuels production (on that land) ceases, the consequent emission reductions would still remain in place (Marshall, 2009). Therefore, the distinction between these two time effects is important to assess effective policies for adequate land use. Knowing about the time periods for project and impact horizons would also mean recognising economically viable biofuels land-use changes and, consequently, efficient carbon emission strategies.

A similar issue to consider for measuring net indirect effects of land conversion is an ‘efficient’ discount rate for comparing the outcomes of various projects for land-use changes into biofuels activities. Some (Howarth, 2005) argue against high discount rates which reflect time uncertainty for future outcomes in investments for biofuels activities. Others (Marshall, 2009) assert that discounting functions should also be seen under a physical carbon content perspective. The aim is that comparisons across investments activities for setting up biofuels production should also be performed so that environmental considerations for payback mechanisms are consistent with sustainable practices.

Other environmental impacts of biofuels production can be found in numerous life-cycle assessments, mainly for biodiesel, in the transport sector (Booth et al, 2005; Bozbas, 2008). These studies normally conclude with recognising the positive effects in terms of GHG emission reductions. As concerning other pollutants, biodiesel and ethanol production also produce zero emissions in terms of sulphur dioxide (which, in general, is emitted during the burning of fossil fuels). Relevant reductions can also be seen in carbon monoxide and hydrocarbons (Nwafor, 2004; Schmidt, 2004). The literature seems controversial about the nitrogen oxide and dioxide emissions. Nitrogen oxide emissions in vehicles using a biodiesel engine are found at slightly higher levels than those in a conventional diesel engine. However, a modification of the engine would reduce these levels, and therefore this negative effect could be considered of no relevance (Booth et al., 2005). Nitrogen dioxide emissions would instead occur from biofuels feedstock processes which have potential effects on the ozone layer (Franke and Reinhardt, 1998).

Feedstock processes either for biodiesel or for ethanol production also present three further environmental effects such as fertility of soils, biodiversity and hydrological impacts (Kartha, 2006). Furthermore, large-scale use of monoculture

for biofuels production also has an impact on the environment through the excess use of fertilisers and pesticides. Biofuels feedstock production significantly affects the ecosystem either boosting biodiversity or threatening existing species and the natural habitat. On one hand, the use of set-aside lands for biofuels feedstock production causes, for example, water pollution (because of the use of fertilisers and pesticides) and affects local biodiversity. On the other hand, biofuels production offers a good example of biodiversity protection compared to other conventional agricultural practices. In several countries (e. g. Brazil) existing regulation requires leaving a proportion of land to natural flora and fauna to preserve biodiversity losses (Turley et al., 2002). Biofuels production poses a number of challenges to the management of soil fertility. First, recycling of small organic and plant nutrients is possible. Second, current agricultural practices (in particular in developing countries) for soil management depend on the wasted crop (though this is more relevant for biomass feedstock than biofuels). In addition, feedstock nutrients can be retrieved during land conversion processes and applied to the crop field for biofuels production rather than putting these in landfills. Finally, hydrological effects are also important. Some bioenergy crops require the same amount of water irrigation as food crops (i. e. sugar cane). However, as for food crops, it is essential for bioenergy crops to be guaranteed water infiltration from rainfall to avoid inefficiencies from water wastes.