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The economic effects of the EU biofuel target

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  • Kretschmer, Bettina
  • Narita, Daiju
  • Peterson, Sonja

Abstract

In this paper we use the CGE model DART to assess the economic impacts and optimality of different aspects of the EU climate package. A special focus is placed on the 10% biofuel target in the EU. In particular we analyze the development in the biofuel sectors, the effects on agricultural production and prices, and finally overall welfare implications. One of the main findings is that the EU emission targets alone lead to onlyminor increases in biofuel production. Additional subsidies are necessary to reach the 10% biofuel target. This in turn increases European agricultural prices by up to 7%. Compared to a cost-effective scenario in which the EU 20% emission reduction target is reached, additional welfare losses occur due to separated carbon markets and the renewable quotas. The biofuel target has relatively small negative or even positive welfare effects in some scenarios. --

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Bibliographic Info

Paper provided by Kiel Institute for the World Economy (IfW) in its series Open Access Publications from Kiel Institute for the World Economy with number 32984.

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Date of creation: 2009
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Handle: RePEc:zbw:ifwkie:32984

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Related research

Keywords: CGE model; Climate policy; EU; Biofuels;

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References

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  1. Bettina Kretschmer & Sonja Peterson, 2008. "Integrating Bioenergy into Computable General Equilibrium Models – A Survey," Kiel Working Papers 1473, Kiel Institute for the World Economy.
  2. Klepper, Gernot & Peterson, Sonja, 2006. "Marginal abatement cost curves in general equilibrium: The influence of world energy prices," Resource and Energy Economics, Elsevier, vol. 28(1), pages 1-23, January.
  3. Bettina Kretschmer & Sonja Peterson & Adriana Ignaciuk, 2008. "Integrating Biofuels into the DART Model," Kiel Working Papers 1472, Kiel Institute for the World Economy.
  4. Beghin, John C. & Dong, Fengxia & Elobeid, Amani & Fabiosa, Jacinto F. & Fuller, Frank H. & Hart, Chad E. & Kovarik, Karen P. & Tokgoz, Simla & Yu, Tun-Hsiang & Wailes, Eric J. & Chavez, Edward & Woma, 2007. "FAPRI 2007 U.S. And World Agricultural Outlook," Staff General Research Papers 12805, Iowa State University, Department of Economics.
    • Beghin, John C. & Dong, Fengxia & Elobeid, Amani E. & Fabiosa, Jacinto F. & Fuller, Frank H. & Hart, Chad E. & Kovarik, Karen & Tokgoz, Simla & Yu, Tun-Hsiang (Edward) & Wailes, Eric J. & Chavez, Eddi, 2007. "FAPRI 2007 U.S. and World Agricultural Outlook," Staff Reports 7296, Food and Agricultural Policy Research Institute (FAPRI).
  5. Martin Banse & Hans van Meijl & Andrzej Tabeau & Geert Woltjer, 2008. "Will EU biofuel policies affect global agricultural markets?," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 35(2), pages 117-141, June.
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Cited by:
  1. Thepkhun, Panida & Limmeechokchai, Bundit & Fujimori, Shinichiro & Masui, Toshihiko & Shrestha, Ram M., 2013. "Thailand's Low-Carbon Scenario 2050: The AIM/CGE analyses of CO2 mitigation measures," Energy Policy, Elsevier, vol. 62(C), pages 561-572.
  2. Daniel J.A. Johansson & Paul L. Lucas & Matthias Weitzel & Erik O. Ahlgren & A.B. Bazaz & Wenying Chen & Michel G.J. den Elzen & Joydeep Ghosh & Qiao-Mei Liang & Sonja Peterson & Basanta K. Pradhan & , 2012. "Multi-model analyses of the economic and energy implications for China and India in a post-Kyoto climate regime," Kiel Working Papers 1808, Kiel Institute for the World Economy.
  3. Vincent Martinet, 2012. "Effect of soil heterogeneity on the welfare economics of biofuel policies," EconomiX Working Papers 2012-13, University of Paris West - Nanterre la Défense, EconomiX.
  4. Junko Mochizuki & John F. Yanagida & Makena Coffman, 2013. "Market, Welfare and Land-Use Implications of Lignocellulosic Bioethanol in HawaiÔi," Working Papers 2013-10, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.
  5. Condon, Nicole & Klemick, Heather & Wolverton, Ann, 2013. "Impacts of Ethanol Policy on Corn Prices: A Review and Meta-Analysis of Recent Evidence," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149940, Agricultural and Applied Economics Association.

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