IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v123y2018icp619-641.html
   My bibliography  Save this article

Exploring policy options to spur the expansion of ethanol production and consumption in Brazil: An agent-based modeling approach

Author

Listed:
  • Moncada, J.A.
  • Verstegen, J.A.
  • Posada, J.A.
  • Junginger, M.
  • Lukszo, Z.
  • Faaij, A.
  • Weijnen, M.

Abstract

The Brazilian government aims to increase the share of biofuels in the energy mix to around 18% by 2030, which implies an increase of ethanol production from currently 27 bln liters to over 50 bln liters per year. Biofuel policies play an important role in ethanol production, consumption, and investment in processing capacity. Nevertheless, a clear understanding of how current policies affect the evolution of the market is lacking. We developed a spatially-explicit agent-based model to analyze the impact of different blend mandates and taxes levied on gasoline, hydrous, and anhydrous ethanol on investment in processing capacity and on production and consumption of ethanol. The model uses land use projections by the PCRaster Land Use Change model and incorporates the institutions governing the actors’ strategic decision making with regard to production and consumption of ethanol, and the institutions governing the interaction among actors. From the investigated mix of policy measures, we find that an increase of the gasoline tax leads to the highest increased investments in sugarcane processing capacity. We also find that a gasoline tax above 1.23 R$/l and a tax exemption for hydrous ethanol may lead to doubling the production of ethanol by 2030 (relative to 2016).

Suggested Citation

  • Moncada, J.A. & Verstegen, J.A. & Posada, J.A. & Junginger, M. & Lukszo, Z. & Faaij, A. & Weijnen, M., 2018. "Exploring policy options to spur the expansion of ethanol production and consumption in Brazil: An agent-based modeling approach," Energy Policy, Elsevier, vol. 123(C), pages 619-641.
    • Handle: RePEc:eee:enepol:v:123:y:2018:i:c:p:619-641
    DOI: 10.1016/j.enpol.2018.09.015
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421518306207
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2018.09.015?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. de Freitas, Luciano Charlita & Kaneko, Shinji, 2011. "Ethanol demand under the flex-fuel technology regime in Brazil," Energy Economics, Elsevier, vol. 33(6), pages 1146-1154.
    2. Baran, Renato & Legey, Luiz Fernando Loureiro, 2013. "The introduction of electric vehicles in Brazil: Impacts on oil and electricity consumption," Technological Forecasting and Social Change, Elsevier, vol. 80(5), pages 907-917.
    3. Stattman, Sarah L. & Hospes, Otto & Mol, Arthur P.J., 2013. "Governing biofuels in Brazil: A comparison of ethanol and biodiesel policies," Energy Policy, Elsevier, vol. 61(C), pages 22-30.
    4. de Gorter, Harry & Drabik, Dusan & Kliauga, Erika M. & Timilsina, Govinda R., 2013. "An economic model of Brazil's ethanol-sugar markets and impacts of fuel policies," Policy Research Working Paper Series 6524, The World Bank.
    5. Li, Gong & Shi, Jing, 2012. "Agent-based modeling for trading wind power with uncertainty in the day-ahead wholesale electricity markets of single-sided auctions," Applied Energy, Elsevier, vol. 99(C), pages 13-22.
    6. Robinson, Scott A. & Rai, Varun, 2015. "Determinants of spatio-temporal patterns of energy technology adoption: An agent-based modeling approach," Applied Energy, Elsevier, vol. 151(C), pages 273-284.
    7. Floor van der Hilst, 2018. "Location, location, location," Nature Energy, Nature, vol. 3(3), pages 164-165, March.
    8. Moncada, J.A. & Junginger, M. & Lukszo, Z. & Faaij, A. & Weijnen, M., 2017. "Exploring path dependence, policy interactions, and actor behavior in the German biodiesel supply chain," Applied Energy, Elsevier, vol. 195(C), pages 370-381.
    9. Archer, Marcelo & Szklo, Alexandre, 2016. "Can increasing gasoline supply in the United States affect ethanol production in Brazil?," Renewable Energy, Elsevier, vol. 95(C), pages 586-596.
    10. Connolly, D. & Lund, H. & Mathiesen, B.V. & Leahy, M., 2010. "A review of computer tools for analysing the integration of renewable energy into various energy systems," Applied Energy, Elsevier, vol. 87(4), pages 1059-1082, April.
    11. J. Doyne Farmer & Duncan Foley, 2009. "The economy needs agent-based modelling," Nature, Nature, vol. 460(7256), pages 685-686, August.
    12. Hira, Anil & de Oliveira, Luiz Guilherme, 2009. "No substitute for oil? How Brazil developed its ethanol industry," Energy Policy, Elsevier, vol. 37(6), pages 2450-2456, June.
    13. de Carvalho, Ariovaldo Lopes & Antunes, Carlos Henggeler & Freire, Fausto, 2016. "Economic-energy-environment analysis of prospective sugarcane bioethanol production in Brazil," Applied Energy, Elsevier, vol. 181(C), pages 514-526.
    14. Harry Gorter & Dusan Drabik & David R. Just, 2015. "The Economics of Biofuel Policies," Palgrave Studies in Agricultural Economics and Food Policy, Palgrave Macmillan, number 978-1-137-41485-4, June.
    15. Martin Banse & Hans van Meijl & Andrzej Tabeau & Geert Woltjer, 2008. "Will EU biofuel policies affect global agricultural markets?," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 35(2), pages 117-141, June.
    16. Mordecai Ezekiel, 1938. "The Cobweb Theorem," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 52(2), pages 255-280.
    17. Moncada, J.A. & Lukszo, Z. & Junginger, M. & Faaij, A. & Weijnen, M., 2017. "A conceptual framework for the analysis of the effect of institutions on biofuel supply chains," Applied Energy, Elsevier, vol. 185(P1), pages 895-915.
    18. Varun Rai & Adam Douglas Henry, 2016. "Agent-based modelling of consumer energy choices," Nature Climate Change, Nature, vol. 6(6), pages 556-562, June.
    19. Khanna, Madhu & Nuñez, Hector M. & Zilberman, David, 2016. "Who pays and who gains from fuel policies in Brazil?," Energy Economics, Elsevier, vol. 54(C), pages 133-143.
    20. Crago, Christine L. & Khanna, Madhu & Barton, Jason & Giuliani, Eduardo & Amaral, Weber, 2010. "Competitiveness of Brazilian sugarcane ethanol compared to US corn ethanol," Energy Policy, Elsevier, vol. 38(11), pages 7404-7415, November.
    21. Debnath, Deepayan & Whistance, Jarrett & Thompson, Wyatt & Binfield, Julian, 2017. "Complement or substitute: Ethanol’s uncertain relationship with gasoline under alternative petroleum price and policy scenarios," Applied Energy, Elsevier, vol. 191(C), pages 385-397.
    22. Deborah Bentivoglio & Adele Finco & Mirian Rumenos Piedade Bacchi, 2016. "Interdependencies between Biofuel, Fuel and Food Prices: The Case of the Brazilian Ethanol Market," Energies, MDPI, vol. 9(6), pages 1-16, June.
    23. Márcia Azanha Ferraz Dias de Moraes & David Zilberman, 2014. "Production of Ethanol from Sugarcane in Brazil," Natural Resource Management and Policy, Springer, edition 127, number 978-3-319-03140-8, December.
    24. Holland, John H & Miller, John H, 1991. "Artificial Adaptive Agents in Economic Theory," American Economic Review, American Economic Association, vol. 81(2), pages 365-371, May.
    25. Pacini, Henrique & Silveira, Semida, 2011. "Consumer choice between ethanol and gasoline: Lessons from Brazil and Sweden," Energy Policy, Elsevier, vol. 39(11), pages 6936-6942.
    26. Alonso-Pippo, Walfrido & Luengo, Carlos A. & Alonsoamador Morales Alberteris, Lidice & García del Pino, Gilberto & Duvoisin, Sergio, 2013. "Practical implementation of liquid biofuels: The transferability of the Brazilian experiences," Energy Policy, Elsevier, vol. 60(C), pages 70-80.
    27. Kuznetsova, Elizaveta & Li, Yan-Fu & Ruiz, Carlos & Zio, Enrico, 2014. "An integrated framework of agent-based modelling and robust optimization for microgrid energy management," Applied Energy, Elsevier, vol. 129(C), pages 70-88.
    28. Riccardo Boero & Marco Castellani & Flaminio Squazzoni, 2004. "Micro Behavioural Attitudes and Macro Technological Adaptation in Industrial Districts: an Agent-Based Prototype," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 7(2), pages 1-1.
    29. Sant'Anna, Ana Claudia & Bergtold, Jason & Caldas, Marcellus & Granco, Gabriel, 2016. "Analyzing sugarcane production contracts in Brazil: What do the farmers really want?," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235655, Agricultural and Applied Economics Association.
    30. Cavalcanti, Marcelo & Szklo, Alexandre & Machado, Giovani & Arouca, Maurício, 2012. "Taxation of automobile fuels in Brazil: Does ethanol need tax incentives to be competitive and if so, to what extent can they be justified by the balance of GHG emissions?," Renewable Energy, Elsevier, vol. 37(1), pages 9-18.
    31. Bale, Catherine S.E. & Varga, Liz & Foxon, Timothy J., 2015. "Energy and complexity: New ways forward," Applied Energy, Elsevier, vol. 138(C), pages 150-159.
    32. John F. Padgett & Doowan Lee & Nick Collier, 2003. "Economic production as chemistry," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 12(4), pages 843-877, August.
    33. Dusan Drabik & Harry De Gorter & David R. Just & Govinda R. Timilsina, 2015. "The Economics of Brazil’s Ethanol-Sugar Markets, Mandates, and Tax Exemptions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(5), pages 1433-1450.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sojung Kim & Yeona Choi & Sumin Kim, 2023. "Simulation Modeling in Supply Chain Management Research of Ethanol: A Review," Energies, MDPI, vol. 16(21), pages 1-13, November.
    2. van Tol, M.C.M. & Moncada, J.A. & Lukszo, Z. & Weijnen, M., 2021. "Modelling the interaction between policies and international trade flows for liquid biofuels: an agent-based modelling approach," Energy Policy, Elsevier, vol. 149(C).
    3. Lazaro, Lira Luz Benites & Giatti, Leandro Luiz & Bermann, Celio & Giarolla, Angelica & Ometto, Jean, 2021. "Policy and governance dynamics in the water-energy-food-land nexus of biofuels: Proposing a qualitative analysis model," Renewable and Sustainable Energy Reviews, Elsevier, vol. 149(C).
    4. Cutz, L. & Tomei, J. & Nogueira, L.A.H., 2020. "Understanding the failures in developing domestic ethanol markets: Unpacking the ethanol paradox in Guatemala," Energy Policy, Elsevier, vol. 145(C).
    5. González, Mario Orestes Aguirre & Santiso, Andressa Medeiros & Melo, David Cassimiro de & Vasconcelos, Rafael Monteiro de, 2020. "Regulation for offshore wind power development in Brazil," Energy Policy, Elsevier, vol. 145(C).
    6. Dumortier, Jerome & Carriquiry, Miguel & Elobeid, Amani, 2021. "Where does all the biofuel go? Fuel efficiency gains and its effects on global agricultural production," Energy Policy, Elsevier, vol. 148(PA).
    7. Katia A. Figueroa-Rodríguez & Francisco Hernández-Rosas & Benjamín Figueroa-Sandoval & Joel Velasco-Velasco & Noé Aguilar Rivera, 2019. "What Has Been the Focus of Sugarcane Research? A Bibliometric Overview," IJERPH, MDPI, vol. 16(18), pages 1-15, September.
    8. Shiyu Chen & Wei Wang & Enrico Zio, 2021. "A Simulation-Based Multi-Objective Optimization Framework for the Production Planning in Energy Supply Chains," Energies, MDPI, vol. 14(9), pages 1-27, May.
    9. Zhanwu Wang & Guangyin Xu & Zhenfeng Wang & Zhiping Zhang, 2022. "Sustainability of agricultural waste power generation industry in China: criteria relationship identification and policy design mechanism," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(3), pages 3371-3395, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Moncada, J.A. & Lukszo, Z. & Junginger, M. & Faaij, A. & Weijnen, M., 2017. "A conceptual framework for the analysis of the effect of institutions on biofuel supply chains," Applied Energy, Elsevier, vol. 185(P1), pages 895-915.
    2. Karel Janda & Ladislav Kristoufek, 2019. "The relationship between fuel and food prices: Methods, outcomes, and lessons for commodity price risk management," CAMA Working Papers 2019-20, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    3. Rafael Henrique Mainardes Ferreira & Claudia Tania Picinin, 2018. "Bibliometric analysis for characterization of oil production in Brazilian territory," Scientometrics, Springer;Akadémiai Kiadó, vol. 116(3), pages 1945-1974, September.
    4. Auke Hoekstra & Maarten Steinbuch & Geert Verbong, 2017. "Creating Agent-Based Energy Transition Management Models That Can Uncover Profitable Pathways to Climate Change Mitigation," Complexity, Hindawi, vol. 2017, pages 1-23, December.
    5. Khanna, Madhu & Nuñez, Hector M. & Zilberman, David, 2016. "Who pays and who gains from fuel policies in Brazil?," Energy Economics, Elsevier, vol. 54(C), pages 133-143.
    6. Nunez, Hector & Onal, Hayri, 2013. "An Economic Analysis of Transportation Fuel Policies in Brazil," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149973, Agricultural and Applied Economics Association.
    7. Ondřej Filip & Karel Janda & Ladislav Krištoufek, 2018. "Ceny biopaliv a souvisejících komodit: analýza s použitím metod minimální kostry grafu a hierarchických stromů [Prices of Biofuels and Related Commodities: an Analysis Using Methods of Minimum Span," Politická ekonomie, Prague University of Economics and Business, vol. 2018(2), pages 218-239.
    8. Marc Deissenroth & Martin Klein & Kristina Nienhaus & Matthias Reeg, 2017. "Assessing the Plurality of Actors and Policy Interactions: Agent-Based Modelling of Renewable Energy Market Integration," Complexity, Hindawi, vol. 2017, pages 1-24, December.
    9. Machado Neto, Pedro Augusto, 2021. "Why Brazil imports so much corn-based ethanol: The role of Brazilian and American ethanol blending mandates," Renewable and Sustainable Energy Reviews, Elsevier, vol. 152(C).
    10. Georg Holtz & Christian Schnülle & Malcolm Yadack & Jonas Friege & Thorben Jensen & Pablo Thier & Peter Viebahn & Émile J. L. Chappin, 2020. "Using Agent-Based Models to Generate Transformation Knowledge for the German Energiewende—Potentials and Challenges Derived from Four Case Studies," Energies, MDPI, vol. 13(22), pages 1-26, November.
    11. Khanna, Madhu & Hector, Nunez & David, Zilberman, 2014. "The Political-Economy of Biofuel and Cheap Oil Policies in Brazil," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 169471, Agricultural and Applied Economics Association.
    12. Karel Janda & Ladislav Krištoufek, 2019. "The Relationship Between Fuel and Food Prices: Methods and Outcomes," Annual Review of Resource Economics, Annual Reviews, vol. 11(1), pages 195-216, October.
    13. Alderete Peralta, Ali & Balta-Ozkan, Nazmiye & Longhurst, Philip, 2022. "Spatio-temporal modelling of solar photovoltaic adoption: An integrated neural networks and agent-based modelling approach," Applied Energy, Elsevier, vol. 305(C).
    14. Yazan, Devrim Murat & Fraccascia, Luca & Mes, Martijn & Zijm, Henk, 2018. "Cooperation in manure-based biogas production networks: An agent-based modeling approach," Applied Energy, Elsevier, vol. 212(C), pages 820-833.
    15. Curci, Ylenia & Mongeau Ospina, Christian A., 2016. "Investigating biofuels through network analysis," Energy Policy, Elsevier, vol. 97(C), pages 60-72.
    16. Zhao, Bo & Xue, Meidong & Zhang, Xuesong & Wang, Caisheng & Zhao, Junhui, 2015. "An MAS based energy management system for a stand-alone microgrid at high altitude," Applied Energy, Elsevier, vol. 143(C), pages 251-261.
    17. Aloisio S. Nascimento Filho & Rafael G. O. dos Santos & João Gabriel A. Calmon & Peterson A. Lobato & Marcelo A. Moret & Thiago B. Murari & Hugo Saba, 2022. "Induction of a Consumption Pattern for Ethanol and Gasoline in Brazil," Sustainability, MDPI, vol. 14(15), pages 1-11, July.
    18. Charlotte Stead & Zia Wadud & Chris Nash & Hu Li, 2019. "Introduction of Biodiesel to Rail Transport: Lessons from the Road Sector," Sustainability, MDPI, vol. 11(3), pages 1-20, February.
    19. Nicolas Legrand, 2019. "The Empirical Merit Of Structural Explanations Of Commodity Price Volatility: Review And Perspectives," Journal of Economic Surveys, Wiley Blackwell, vol. 33(2), pages 639-664, April.
    20. Nabernegg, Stefan & Bednar-Friedl, Birgit & Muñoz, Pablo & Titz, Michaela & Vogel, Johanna, 2019. "National Policies for Global Emission Reductions: Effectiveness of Carbon Emission Reductions in International Supply Chains," Ecological Economics, Elsevier, vol. 158(C), pages 146-157.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:123:y:2018:i:c:p:619-641. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.