Abstract
This paper aims to (1)evaluate five types of biofuels policy instruments based on three evaluation criteria(cost burden, cost effectiveness, and cost efficiency), and (2)evaluate fuel tax incentives which is the most important among five policy instruments in EU and Germany. It is concluded that fuel tax incentives implement quite easily due to less administrative costs and stimulate huge biofuels production. However increasing of biofuels production causes serious tax revenue shortage. Thus the fuel tax incentives are plan to change to a quota obligation in some EU countries, like UK and Germany.
