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On blending mandates, border tax adjustment and import standards for biofuels

Author

Listed:
  • Eggert, Håkan

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Greaker, Mads

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

Abstract

The transport sector is a major contributor to green house gas (GHG) emissions and its share is increasing. Biofuels may provide an option to replace fossil fuels and generate an increasing worldwide interest. Rich countries like the US and the European Union ha idies for domestic producers, while applying tariffs for some of the foreign producers. Mid income and poor countries do not have binding restrictions on carbon emissions in the Kyoto treaty, but may have great potential for producing biofuels both for domestic and foreign use. In this paper we study trade policies for biofuels. We find that only by combining an import standard with border tax adjustment the government can ensure cost efficient production of biofuels from a global point of view. We also consider a blending mandate. This fundamentally alters the way the market works. For instance, if domestic biofuels production is subsidized, the optimal BTA may be negative.

Suggested Citation

  • Eggert, Håkan & Greaker, Mads, 2009. "On blending mandates, border tax adjustment and import standards for biofuels," Working Papers in Economics 422, University of Gothenburg, Department of Economics.
  • Handle: RePEc:hhs:gunwpe:0422
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    File URL: http://hdl.handle.net/2077/21539
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    References listed on IDEAS

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    1. Searchinger, Timothy & Heimlich, Ralph & Houghton, R. A. & Dong, Fengxia & Elobeid, Amani & Fabiosa, Jacinto F. & Tokgoz, Simla & Hayes, Dermot J. & Yu, Hun-Hsiang, 2008. "Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land-Use Change," Staff General Research Papers Archive 12881, Iowa State University, Department of Economics.
    2. Ottar Mæstad, 2001. "Efficient Climate Policy with Internationally Mobile Firms," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, pages 267-284.
    3. Finn Roar Aune & Solveig Glomsrød & Lars Lindholt & Knut Einar Rosendahl, 2005. "Are high oil prices profitable for OPEC in the long run?," Discussion Papers 416, Statistics Norway, Research Department.
    4. Hamelinck, Carlo N & Faaij, Andre P.C., 2006. "Outlook for advanced biofuels," Energy Policy, Elsevier, vol. 34(17), pages 3268-3283, November.
    5. Rajagopal, Deepak & Zilberman, David, 2007. "Review of environmental, economic and policy aspects of biofuels," Policy Research Working Paper Series 4341, The World Bank.
    6. Ottar MÆstad, 1998. "On the Efficiency of Green Trade Policy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, pages 1-18.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Biofuels; Border tax adjustment; Carbon Leakage; Trade policy;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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