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The effects of the EC ethanol blend mandate on the EU/Global sugar Market and its implications on sugar trade with ACP countries

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  • Sukati, Mphumuzi Angelbert

Abstract

The study aims determine the effect of the proposed (European Commission) EC transport fuel/ bioethanol blend mandate on European Union (EU27) ethanol market by use of a Partial Equilibrium Models as adapted from the FAPRI modelling framework for ethanol production. The outcomes of this study are to be used to study the potential shock this mandate will have on EU/global sugar market. It is envisaged that the proposed EC transport fuel/bioethanol blend mandate, with a tax rebates, will shock both the EU and world sugar market since the EU is a global player in sugar trade. Since bioethanol and sugar compete for the same feedstock, i.e. sugar cane or sugar beet, it is inevitable that the bioethanol blend mandate policies will have effects on the sugar market. By modelling the price of ethanol from that of transport fuel, the study has found that for the EU27 to meet the 5.75% blend mandate as proposed by the EC as a 2010 target, production of ethanol has to be increased by 185 % from 2008 levels and by 78 % from 2010 production forecast. The price of ethanol has to be increased by 226% above its average price from 1998 to 2008.

Suggested Citation

  • Sukati, Mphumuzi Angelbert, 2010. "The effects of the EC ethanol blend mandate on the EU/Global sugar Market and its implications on sugar trade with ACP countries," Conference papers 331993, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331993
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    File URL: https://ageconsearch.umn.edu/record/331993/files/4679.pdf
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    References listed on IDEAS

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    1. Kym Anderson & Will Martin & Dominique van der Mensbrugghe, 2006. "Distortions to World Trade: Impacts on Agricultural Markets and Farm Incomes," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 28(2), pages 168-194.
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