| Summary: | The core objective of this paper is to analyze the energy and CO<sub>2</sub> reduction potentials as well as the market prospects of biofuels in EU-15 in a dynamic framework till 2050. The most important result of this analysis is that 2nd generation biofuels might become economically competitive between 2020 and 2030, yet this can only be achieved if the following preconditions are fulfilled: (1) achievement of significant learning effects leading to considerably lower plant costs; (2) significant improvement of conversion efficiency from feedstock to fuel leading to lower feedstock costs and better ecological performance; (3) increases in conventional diesel and gasoline prices, e.g., due to CO<sub>2</sub> based taxes.
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