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The Implications of Alternative U.S. Domestic and Trade Policies for Biofuels

Author

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  • Yano, Yuki
  • Blandford, David
  • Surry, Yves R.

Abstract

The U.S. Renewable Fuel Standard program (RFS), which involves mandates for various biofuels, is complex and has been often misinterpreted or oversimplified in previous studies. In this paper we analyze the implications of the RFS for the U.S. domestic and international ethanol markets. We demonstrate the vital role of the advanced biofuel mandate within the RFS. Impacts of changes in tariffs on imported fuel ethanol and subsidies for U.S. domestic ethanol production are examined. One of our important findings is that the RFS could result in serious misallocation of resources in both a national and international context. There is a possibility that the United States could be required to import sugarcane-based ethanol to meet the advanced biofuel mandate, simultaneously exporting corn-based ethanol, while satisfying the national overall mandate. Since the provision of subsidies for domestic ethanol production can stimulate exports of corn-based ethanol, they are equivalent to export subsidies in this situation. The removal of tariffs can reduce the burden imposed on consumers in the United States from the operation of the RFS. Our analysis shows that it is extremely important to understand the potential impact of the RFS on agricultural and energy markets.

Suggested Citation

  • Yano, Yuki & Blandford, David & Surry, Yves R., 2010. "The Implications of Alternative U.S. Domestic and Trade Policies for Biofuels," 84th Annual Conference, March 29-31, 2010, Edinburgh, Scotland 91832, Agricultural Economics Society.
  • Handle: RePEc:ags:aesc10:91832
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    File URL: http://purl.umn.edu/91832
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    References listed on IDEAS

    as
    1. Harry de Gorter & David R. Just, 2008. "The Economics of a Blend Mandate for Biofuels," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(3), pages 738-750.
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    More about this item

    Keywords

    Ethanol; trade liberalization; Renewable Fuel Standard; mandate; subsidies; Industrial Organization; F13; Q18; Q42; Q48;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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