There are several policy drivers for biofuels on a larger scale in the EU transport sector, including increased security of energy supply, reduced emission of greenhouse gases (GHG), and new markets for the agricultural sector. The purpose of this socio-economic cost analysis is to provide an overview of the costs of meeting EU biofuels targets, taking into account several external costs and benefits. Biofuels are generally more expensive than traditional fossil fuels, but the expected increasing value of GHG emission reductions will over time reduce the cost gap. High crude oil prices significantly improve the economic benefit of biofuels, but increased demand for biomass for energy purposes is likely to increase the price of biofuels feedstock and biofuels costs. The key question is to what extent increasing oil prices will be passed on to biofuels costs. Socio-economic least costs for biofuels production require a market with a clear pricing of GHG emissions to ensure that this factor is included in the decision-making of actors in all links of the fuel chain. (C) 2009 Elsevier Ltd. All rights reserved.