An international expert group has been set up to help developing countries increase the production, use, and trade of bio-fuels resources and technology. UNCTAD will coordinate the different activities, which will be carried out jointly with other UN agencies, the private sector, non-governmental organizations and applied research centers.

Bio-fuels (bio-ethanol, bio-diesel and bio-gas), derived from agricultural crops such as sugar beet and sunflower are an ecological alternative to conventional fossil fuels, which are expected to last no more than 50 years for petroleum, 60 years for natural gas and 200 years for coal. Fossil fuels, which took millions of years to form, currently account for more than three quarters of the world's fuel consumption. Careless use and consumption has resulted in today's climate change and the high concentration of air pollutants in major cities. Excessive dependence on fossil fuels has had serious consequences on the economic and social environment, biodiversity and the climate, particularly in the poorest developing countries.

UNCTAD's Initiative is aimed mainly at those countries. The initiative will help to build capacity in the production, use and trade of bio-fuels and raise public and private sector awareness of the challenges and opportunities of increased bio-fuel use. It will also promote ways of generating new investments, such as the Clean Development Mechanism (CDM).

The BioFuels Initiative focuses on these new trade and investment opportunities for developing countries, on implications for poverty reduction, on the supply-side constraints of increasing the production, use and trade of bio-fuels. It will also provide a reality test for CDM in the area of bio-fuel production in order to increase CDM projects and transactions. Country and sectoral assessments will be prepared - initially for a small group of countries - by using a common methodology to assess the potential of bio-fuels and increase their share of domestic energy.

There are many advantages to using bio-fuels. As petrol prices continue to rise, bio-fuel production, domestic use and trade reduce oil import dependency and increase energy security. Bio-fuel production creates employment, encourages greater diversification and promotes rural development. Reducing greenhouse gas emissions is an effective way of fighting global warming and meeting the Kyoto Protocol reduction targets. Bio-fuels also offer an alternative development path: by burning less carbon, countries can reduce greenhouse gas emissions, while at the same pursuing their energy targets and taking advantage of the financial incentives of the CDM. For both developed and developing countries it may provide a pragmatic alternative for meeting their commitments to combat climate change and achieve the Millennium Development Goals (MDGs).
While many sources of renewable energy sources depend on highly sophisticated industrial processes, technology and investment, bio-fuel production is anchored in the primary sector and uses local technologies, which can easily be transferred to the poorest countries.

Last but not least, the Doha Ministerial declaration adopted by the WTO in November 2001 encourages negotiations on "the reduction or, as appropriate, elimination of tariff and non-tariff barriers to environmental goods and services". Bio-fuels derived from sustainable agricultural practices have many attributes that might qualify them as environmental goods and may provide an opportunity for developing and middle-income countries to build up their export markets.