Economic and environmental implications of a target for bioplastics consumption: A CGE analysis

Bioplastic production is a small but fast growing sector in the Bioeconomy despite the so far limited policy support. We simulate the expansion of bioplastic supply towards a 5% target relative to current total plastic consumption in leading producing regions. We introduce fossil-based plastics and bioplastics in the GTAP 9 database, coupled to greenhouse gas (GHG) indicators; then simulate two policy scenarios, where scenario 1 subsidizes bioplastics consumption, while scenario 2 increases taxes on fossil plastics. Both alternatives promote bioplastic production, with subsequent price effects due to the increase in demand for starch- and sugar-based feedstocks at global scale. The tax in scenario 2 makes plastics as an aggregate more expensive, leading to a contraction of all sectors that employ plastics either directly or indirectly. Global real GDP stays almost constant in scenario 1, but drops by 0.07% in scenario 2, implying greater distortions by differentiated taxation of a larger sector. Our study is the first to quantify emissions from indirect Land Use Change (iLUC) due to growing bioplastics demand. Given the current production technologies relying on food crops, the target triggers cropland expansion and increased GHG emissions globally. The latter increase by +1.44% in scenario 1 and by +2.07% in scenario 2, where a greater loss of carbon stocks from managed forest areas is observed, due to the lower wood demand for energy and material uses in other sectors. The cost-effectiveness of the bioplastic target is calculated at -14.53 and -61.59 US$ per t CO2-eq. for scenarios 1 and 2, respectively. We show that CGE models are useful to analyze economic and environmental impacts of Bioeconomy transformations and more generally the food-fuel-fiber debate. Future bioplastic strategies should focus on biodegradability rather than on the biological origin of the feedstock, in order to drive the transition to resource-efficient and low-carbon economies.