Asian Biodiesel production economics

Asian Biodiesel production economics are likely to remain tight in 2008 unless the local governments decide to start subsidising their production, according to an article by my colleague Anu Agarwal, writing in ICIS News.

(Disclosure: I work for ICIS: About ICIS)

Anu’s piece is interesting because it implies that there is so much demand for palm oil in local markets that these markets are making the alternative use for palm oil — biodisel — uneconomic

as Anu says

CPO prices have risen 52% since March this year while palm biodiesel prices rose only 28%

Which makes me wonder what effects Quotas for biofuels will have on the price of gas (raising gasoline prices may not be a bad thing if it leads to more efficient vehicles) and food, which probably would be a bad thing for urban societies.

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