Do Biofuel Subsidies Reduce Greenhouse Gas Emissions?
Abstract
Conventional wisdom suggests that subsidising biofuel production will reduce greenhouse gas (GHG) emissions. This paper shows that in many cases, and for a wide range of parameter values, this is not true. Biofuel subsidies can generate supply-side response by fossil fuel producers that accelerates their rate of extraction, even in the case where fossil fuel extraction costs are stock dependent. Thus, policies designed to reduce GHG emissions may, perversely, hasten climate change.Download Info
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Paper provided by International and Development Economics in its series International and Development Economics Working Papers with number idec10-01.Length: 38 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:idc:wpaper:idec10-01
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Keywords:This paper has been announced in the following NEP Reports:
- NEP-AGR-2010-12-04 (Agricultural Economics)
- NEP-ALL-2010-12-04 (All new papers)
- NEP-ENE-2010-12-04 (Energy Economics)
- NEP-ENV-2010-12-04 (Environmental Economics)
- NEP-REG-2010-12-04 (Regulation)
- NEP-RES-2010-12-04 (Resource Economics)
References
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