1. APEC Biofuels Task Force Draft Terms of Reference

2. In Gyeongju (October 2005) APEC Energy Ministers… “agreed that effective responses to high and increasingly volatile oil prices require a broad range of supply and demand-side measures…including vehicle fuel efficiency and alternative transport fuels” directed the APEC Energy Working Group to “develop practical measures to enhance cooperation supporting the development of alternative transport fuels, including the establishment of a Biofuels Task Force.”

3. Biofuels Task Force should report to energy ministers in May 2007 on: Biofuel Economics (cost of ethanol vs. petrol and biodiesel vs. diesel) Biofuel Infrastructure (cost and time to build biofuel filling station network) Fuel-Flexible Vehicles (practical path of uptake into the automobile market) Biofuel Resources (current and potential availability of feedstocks) Biofuel Trade Opportunities

4. Biofuel Economics Studies show biofuels can compete at crude oil prices over $50 per barrel. Several APEC economies have set ambitious biofuel targets. TF can build consensus on cost paths of biofuels as technology improves, ability to compete with traditional fuel. Agreed results can be disseminated to leaders, policymakers and public.

5. Biofuel Infrastructure Ethanol and other biofuels require modifications to filling stations. Decisions about where and when to modify infrastructure can thus affect pace of biofuel market penetration. TF can assess costs of adapting infrastructure to biofuels, evaluate strategies for infrastructure adaptation.

6. Fuel-Flexible Vehicles Cars and trucks can be made to run on E85 (85% ethanol) at very low cost (recently estimated at US$30/vehicle). Accelerated uptake of fuel-flexible vehicles can enhance our ability to switch away from oil when prices are high and reduce oil price volatility. TF can look at policy options to accelerate uptake of FFVs and potential impacts on oil demand.

7. Biofuel Resources The potential to displace oil use with biofuels produced from agricultural and forest resources is substantial. There are resource tradeoffs between biofuels and other uses, notably food. Resource tradeoffs can be eased by new cellulosic production techniques. TF can help identify the current and potential biofuel resource base and implications for lower oil dependency.

8. Biofuel Trade Opportunities Biofuels are produced from many different crops in many different places at widely divergent costs. Cost differentials can mean big trade opportunities in the APEC region as biofuel markets grow over time. TF can examine biofuel trade patterns and assess potential benefits for growth in GDP and employment.