Biofuel, a recent emerging source of fuel in the energy sector has gained much emphasis on the political economy of various countries of the world .As world fuel prices are rising, the growing demand for energy, and concerns about global warming, has caught the minds of majority. This study, through literature review and conceptualization derived from public choice and agricultural policy theme, aimed to assess the political economy of biofuel in Tanzania. The study pointed out that there is a policy dilemma regarding biofuel production and land acquisition, food security, conservation and environmental issues related to biofuel, lobbyists (private investors), local communities and government. The conclusion summarizes that absence of specific policy for the sector has a negative effect on the country at large. The study recommends that the policy that is to be formulated should adequately address the interests of different groups in the sector.
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