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Renewable energy - new forces in global ethanol trade?

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  • Salamon, Petra
  • Ledebur, Oliver von
  • Elmahdi, Kamal
  • Klepper, Rainer

Abstract

The paper presents an extended gravity equation application for the global trade with ethanol. The background and different attempts for a theoretical foundation of the standard approach are discussed. The econometric work takes regional integration schemes into account, as well as the influence of the production factor agricultural land and the level of oil prices on the world market. Results indicate that global bilateral trade flows of ethanol can be explained by a set of comprehensive explanatory variables, including regional agreements and the price level of oil. From a global perspective the EU effect on trade flows is trade diverting as the regional agreement reduces the linkage to world markets and increases the intra-regional level of trade with ethanol. The analysis over time however indicates that the decoupling of the EU ethanol market from the world market is decreasing, potentially reflecting demand increases within the EU.

Suggested Citation

  • Salamon, Petra & Ledebur, Oliver von & Elmahdi, Kamal & Klepper, Rainer, 2006. "Renewable energy - new forces in global ethanol trade?," 98th Seminar, June 29-July 2, 2006, Chania, Crete, Greece 10045, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaae98:10045
    DOI: 10.22004/ag.econ.10045
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    References listed on IDEAS

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