Being from renewable sources, biofuels are more or less carbon-neutral in the sense that the carbon released during the combustion of the biofuel can be taken up by growing plants. Liquid biofuels have been reported to release less greenhouse gases (GHG) than conventional fossil fuels (Perlack et al., 1992; Huston and Marland, 2003; Kim and Dale, 2005; Worldwatch institute, 2006). Compared with the use of regular fuel, the Worldwatch Institute (2006) reported a reduction in CO2 emissions of: 20 to 40% from starches (corn, wheat); 45 to 75% from vegetable oils (rapeseed, sunflower, soybeans); 40 to 90% from sugars (sugar cane, sugar beet); and 100% from second-generation feedstock such as waste (sewage, residues) and fibers (switchgrass, poplar). These latter feedstocks potentially offer better net energy yields and more GHG emissions reduction as the carbon sequestration potential is higher and less energy inputs are usually needed to cultivate them (Cook and Beyea, 2000; Farrell et al., 2006; GEF-STAP, 2006; Worldwatch Institute, 2006).
Therefore, it is generally accepted that the production and use of liquid biofuel can contribute to GHG reduction and provide opportunities to UNFCCC Annex I countries to gain credits, and through climate change mitigation, contribute to biodiversity conservation.
Biofuel as a substitute to oil is also a practical solution as it keeps the premium value of liquid fuels for which distribution infrastructure is already available (e.g., gas station) and no significant modification of existing vehicles is needed, if oil is mixed with biofuel (Worldwatch Institute, 2006).
Finally, biofuels also have a domestic economic appeal. Since they can be produced locally, they can create jobs and keep money within the country (Brown, 2006). In this context, the increased production of raw materials for biofuels in rural areas is expected to be closely related to poverty alleviation (Coelho, 2005).