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US biofuels subsidies and CO2 emissions: An empirical test for a weak and a strong green paradox


  • Grafton, R. Quentin
  • Kompas, Tom
  • Long, Ngo Van
  • To, Hang


Using energy data over the period 1981–2011 we find that US biofuels subsidies and production have provided a perverse incentive for US fossil fuel producers to increase their rate of extraction that has generated a weak green paradox. Further, in the short-run if the reduction in the CO2 emissions from a one-to-one substitution between biofuels and fossil fuels is less than 26 percent, or less than 57 percent if long run effect is taken into account, then US biofuels production is likely to have resulted in a strong green paradox. These results indicate that subsidies for first generation biofuels, which yield a low level of per unit CO2 emission reduction compared to fossil fuels, might have contributed to additional net CO2 emissions over the study period.

Suggested Citation

  • Grafton, R. Quentin & Kompas, Tom & Long, Ngo Van & To, Hang, 2014. "US biofuels subsidies and CO2 emissions: An empirical test for a weak and a strong green paradox," Energy Policy, Elsevier, vol. 68(C), pages 550-555.
  • Handle: RePEc:eee:enepol:v:68:y:2014:i:c:p:550-555
    DOI: 10.1016/j.enpol.2013.11.006

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    References listed on IDEAS

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    Cited by:

    1. Oliveira, Gustavo de L.T. & McKay, Ben & Plank, Christina, 2017. "How biofuel policies backfire: Misguided goals, inefficient mechanisms, and political-ecological blind spots," Energy Policy, Elsevier, vol. 108(C), pages 765-775.
    2. Caurla, Sylvain & Bertrand, Vincent & Delacote, Philippe & Le Cadre, Elodie, 2018. "Heat or power: How to increase the use of energy wood at the lowest cost?," Energy Economics, Elsevier, vol. 75(C), pages 85-103.
    3. Ngo Long & Frank Stähler, 2018. "General Equilibrium Effects of Green Technological Progress," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 69(1), pages 159-166, January.
    4. Moiseyev, Alexander & Solberg, Birger & Kallio, A. Maarit I., 2014. "The impact of subsidies and carbon pricing on the wood biomass use for energy in the EU," Energy, Elsevier, vol. 76(C), pages 161-167.
    5. Wang, Xin & Lim, Michael K. & Ouyang, Yanfeng, 2017. "Food-energy-environment trilemma: Policy impacts on farmland use and biofuel industry development," Energy Economics, Elsevier, vol. 67(C), pages 35-48.
    6. Zhang, Kun & Zhang, Zong-Yong & Liang, Qiao-Mei, 2017. "An empirical analysis of the green paradox in China: From the perspective of fiscal decentralization," Energy Policy, Elsevier, vol. 103(C), pages 203-211.
    7. Najm, Sarah, 2019. "The green paradox and budgetary institutions," Energy Policy, Elsevier, vol. 133(C).
    8. Hadi Sasana & Achma Hendra Setiawan & Fitri Ariyanti & Imam Ghozali, 2017. "The Effect of Energy Subsidy on the Environmental Quality in Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 7(5), pages 245-249.
    9. Hill, Jason & Tajibaeva, Liaila & Polasky, Stephen, 2016. "Climate consequences of low-carbon fuels: The United States Renewable Fuel Standard," Energy Policy, Elsevier, vol. 97(C), pages 351-353.
    10. Shao, Shuai & Yang, Lili & Gan, Chunhui & Cao, Jianhua & Geng, Yong & Guan, Dabo, 2016. "Using an extended LMDI model to explore techno-economic drivers of energy-related industrial CO2 emission changes: A case study for Shanghai (China)," Renewable and Sustainable Energy Reviews, Elsevier, vol. 55(C), pages 516-536.
    11. Bilgili, Faik & Koçak, Emrah & Bulut, Ümit & Kuşkaya, Sevda, 2017. "Can biomass energy be an efficient policy tool for sustainable development?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 71(C), pages 830-845.
    12. Dragomir, George & Șerban, Alexandru & Năstase, Gabriel & Brezeanu, Alin Ionuț, 2016. "Wind energy in Romania: A review from 2009 to 2016," Renewable and Sustainable Energy Reviews, Elsevier, vol. 64(C), pages 129-143.
    13. Wang, Min & Zhao, Jinhua, 2018. "Are renewable energy policies climate friendly? The role of capacity constraints and market power," Journal of Environmental Economics and Management, Elsevier, vol. 90(C), pages 41-60.
    14. Ko, Chun-Han & Chaiprapat, Sumate & Kim, Lee-Hyung & Hadi, Pejman & Hsu, Shu-Chien & Leu, Shao-Yuan, 2017. "Carbon sequestration potential via energy harvesting from agricultural biomass residues in Mekong River basin, Southeast Asia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 68(P2), pages 1051-1062.
    15. Gallagher, Paul W. & Sleper, Daniel, 2016. "The market and consumer welfare effects of mid-level ethanol blends in the US fuel market," Energy Policy, Elsevier, vol. 98(C), pages 149-159.

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    Biofuels; Fossil fuels; CO2 emissions;

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