The economic and environmental effects of a biofuel mandate policy: the case of France[Les effets économiques et environnementaux d’une politique d’incorporation obligatoire de biocarburants : le cas de la France]

This study evaluates for France the impacts of three energy policy alternatives on biofuel use, on GHG emissions and on welfare. A biofuel mandate is compared with a tax policy on conventional fuel and a benchmark case of a laissez-faire solution (the absence of biofuel as an energy source). This study also evaluates the interaction effects of a biofuel mandate when it is used simultaneously with a tax on conventional fuel. The evaluation of the relative efficiency of second-best energy policy alternatives, inspired from the French case, is based on a general equilibrium model taking into account the externalities due to greenhouse gas (GHG) emissions. The emissions come from conventional fuel refining and consumption as well as from biofuel use and the associated land-use changes. Using French biodiesel data involving rapeseed for 2010, our numerical results show, on the one hand, that the tax policy on conventional fuel appears to be the best policy option in terms of welfare because it leads to significant reductions in GHG emissions. On the other hand, our numerical results show that the biofuel mandate is the worst policy option in terms of welfare. However, if the price of rapeseed in 2010 were low enough, then a combination of the tax on gasoline with a biofuel mandate would have been preferable to the tax on gasoline.