Biofuels: Policies and impacts

2011

This paper provides a general overview of the social, environmental, and economical issues related to biofuels and a review of economic modeling of biofuels. The increasing importance of biofuels is driven primarily by government policies since currently available biofuels are generally not economically viable in the absence of fiscal incentives or high oil prices. Also the environmental impacts of biofuels as an alternative to fossil fuels are quite ambiguous. The literature review of the most recent economic models dealing with biofuels and their economic impacts provides a distinction between structural and reduced form models. The discussion of structural models centers primarily on computable general equilibrium models. The review of reduced models is structured toward the time series analysis approach to the dependencies between prices of biofuels, prices of agricultural commodities used for the biofuel production and prices of the fossil fuels.

2011

This paper provides an overview of the environmental, economical, and policy considerations related to biofuels. While the biofuel production and consumption exhibited significant increase over the first decade of the new millennium, this and further increases in biofuel production are driven primarily by government policies. Currently available first generation biofuels are with a few exceptions not economically viable in the absence of fiscal incentives or high oil prices. Also the environmental impacts of biofuels as an alternative to fossil fuels are quite ambiguous. The review of the most recent economic models dealing with biofuels and their economic impacts provides a distinction between structural and reduced form models. The review ofreduced models is structured toward the time series analysis approach to thedependencies between prices of feedstock, biofuels, and fossil fuels.

2015

Abstract. This paper provides an overview of the economics of biofuels. It starts by describing the remarkable growth of the biofuel industry over the last decade, with emphasis on developments in the United States, Brazil and the European Union, and it identifies the driving role played by some critical policies. After a brief discussion of the motivations that are commonly argued in favor of biofuels and biofuel poli-cies, the paper presents an assessment of the impacts of biofuels from the economics perspective. In particular, the paper explains the basic analytics of biofuel mandates, reviews several existing studies that have estimated the economic impacts of biofuels, presents some insights from a specific model, and outlines an appraisal of biofuel poli-cies and the environmental impacts of biofuels. The paper concludes with an examina-tion of several open issues and the future prospects of biofuels.

Foundations and Trends® in Microeconomics, 2007

Biofuels- ethanol and biodiesel- are gaining worldwide acceptance as one of the solution for growing problem of environmental degradation,energy security and rural development - the three drivers of biofuels development. The continuation of high world oil prices in the future together with the high degree of social and environmental penalties associated with the use of fossil fuels will provide extra incentives for biofuels programs. As more and more countries across the globe are looking at biofuels as a new energy option for the future, it becomes all the more important to assess the true economic costs and benefits of biofuels especially in developing countries where food and water security problem are becoming equally serious. This warrants investing more in biofuels research and development before devising a successful biofuels development policy strategy. While Jatropha curcas is widely recognized as one promising plant due to its many attractive features, more research is needed to explore the potentials of other promising oil bearing plants in different agro climatic regions. The paper argues that biofuels program has to be seen not in isolation but an integral part of the whole economy cum environmental management system by establishing efficient backward and forward linkages in order for such initiatives to be sustainable. The paper is divided into three parts. The first part gives brief review of the potentials of liquid biofuels dealing mainly with the global trends and experience with major biofuels program and outlines factors underlying their viability along with the methodology for economic analysis of domestic biofuels program. The second part deals with biofuel potentials in Nepal focusing on the economics of Jatropha plantation as a decentralized energy option. Finally, the paper draws conclusions and implications for initiating a national biofuels program.

Policy Research Working Papers, 2011

Applied Energy, 2014

Biomass & Bioenergy, 2010

The biofuel industry has been rapidly growing around the world in recent years. Several papers have used general equilibrium models and addressed the economy-wide and environmental consequences of producing biofuels at a large scale. They mainly argue that since biofuels are mostly produced from agricultural sources, their effects are largely felt in agricultural markets with major land use and environmental consequences. In this paper, we argue that virtually all of these studies have overstated the impact of liquid biofuels on agricultural markets due to the fact that they have ignored the role of by-products resulting from the production of biofuels.

International Review of Environmental and Resource Economics, 2008

Biofuels are increasingly regarded as energy sources with the potential to solve diverse problems related to serious concerns, including climate change, environmental degradation, energy supply, and energy security. Here we examine biofuels, primarily biofuels used for transportation (e.g., ethanol and biodiesel), through the lens of modern resource economics and address fundamental questions, such as: Why biofuels? We then review some of the relevant literature and present a framework for analysis drawn mainly from the green accounting literature. The literature reviewed indicates that the effects of policies promoting conversion from fossil fuels to biofuels do not necessarily promote welfare. Our theoretical framework provides indications of possible reasons for this. Based on findings obtained using the framework we propose policies that not only penalize emissions of CO 2 from all sources, but also stimulate biomass growth. Finally, we identify issues for further research.

2010

The promotional policies targeted at alternative fuels take different forms and are currently a very important policy issue integrating the environmental, economic, and fiscal concerns. While choosing different environmental policy mixes, almost all important world regions support production and use of biofuels. This paper introduces the first version of the computable general equilibrium (CGE) model aiming at the analysis of promotional policies focused on the first generation biofuels over the world. The model is suited for evaluation of impacts of such policies on the economy of the Czech Republic. The main features of the model, ie. multiregionality, intertemporality, and a quasi-fixed land supply (limited area of agricultural land as one of the production input of agricultural sector) deliberately adress the structure and nature of biofuel market. Countries are properly aggregated in order to underpin production and trade of biofuels over the world and also the ability of regio...