Tax Exemption for Biofuels in Germany: Is Bio-Ethanol Really an Option for Climate Policy?

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Tax Exemption for Biofuels in Germany: Is Bio-Ethanol Really an Option for Climate Policy?

Author Info

Jan M. Henke
Gernot Klepper
Norbert Schmitz

Abstract

Last year the German Parliament exempted biofuels from the gasoline tax. The promotion of biofuels is being justified by allegedly positive effects on climate, energy, and agricultural policy goals. The paper takes a closer look at bio-ethanol as a substitute for gasoline. We analyze the basic conditions that provide the setting for the production and promotion of biofuels and show that the production of bio-ethanol in Germany is not competitive. Using energy and greenhouse gas balances we demonstrate that a possible increased use of bioethanol to reduce greenhouse gas emissions is inefficient and that there are preferred alternative strategies. In addition, scenarios on the development of the bio-ethanol market are derived from a model that allows for variations in decisive variables and reflects the production and trade chain of bio-ethanol.

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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1184.

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Length: 36 pages
Date of creation: Sep 2003
Date of revision:
Handle: RePEc:kie:kieliw:1184

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Find related papers by JEL classification:
D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

This paper has been announced in the following NEP Reports:

NEP-ALL-2004-06-02 (All new papers)
NEP-EEC-2004-06-02 (European Economics)
NEP-PBE-2004-06-02 (Public Economics)

References listed on IDEAS
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Grant Kirkpatrick & Gernot Klepper & Robert Price, 2001. "Making Growth More Environmentally Sustainable in Germany," OECD Economics Department Working Papers 276, OECD, Economics Department. [Downloadable!]

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