Promoting Second Generation Biofuels: Does the First Generation Pave the Road?
The transport sector contributes almost a fifth of the current global emissions of greenhouse gases (GHG), and its share is likely to increase in the future. The US, Brazil, and a number of European and other countries worldwide have introduced various support schemes for biofuels. The advantage of biofuels is that they are easily integrated with the current fossil fuel–based transport sector. However, recent studies question whether the supply of feedstock is sufficient, and to what extent biofuels lead to GHG emission reductions. In addition, studies find that some first generation (1G) biofuels have had a significant impact on food commodity prices. 1G biofuels’ problems can be overcome by a transition to second generation (2G) biofuels. So far, 2G biofuels are much more costly to produce. We therefore ask to what extent targeted support to 2G biofuels is likely to bring costs down. Are current support schemes for biofuels well designed in order to promote the development of 2G biofuels? We find that ethanol made from cellulose using the biochemical conversion process is far from a ripe technology, with several cost-reducing opportunities yet to be developed. Hence, targeted support to cellulosic ethanol might induce a switch from 1G to 2G biofuels. However, we find little evidence that production and use of 1G biofuels will bridge the conversion to 2G biofuels. The production processes are so different that more use of 1G biofuels will have little impact on technological development in 2G biofuels. Hence, to the extent that private investment in the development of 2G biofuels is too low,current support schemes for 1G fuels may block 2G biofuels instead of promoting them. Classification-JEL: separated by commas
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bushnell, James & Peterman, Carla & Wolfram, Catherine, 2008.
"Local Solutions to Global Problems: Climate Change Policies and Regulatory Jurisdiction,"
Staff General Research Papers
13125, Iowa State University, Department of Economics.
- James Bushnell & Carla Peterman & Catherine Wolfram, 2008. "Local Solutions to Global Problems: Climate Change Policies and Regulatory Jurisdiction," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 2(2), pages 175-193, Summer.
- Rajcaniova, Miroslava & Drabik, Dusan & Ciaian, Pavel, 2013. "How policies affect international biofuel price linkages," Energy Policy, Elsevier, vol. 59(C), pages 857-865.
- Carriquiry, Miguel A. & Du, Xiaodong & Timilsina, Govinda R, 2010.
"Second-generation biofuels : economics and policies,"
Policy Research Working Paper Series
5406, The World Bank.
- Carriquiry, Miguel A. & Du, Xiaodong & Timilsina, Govinda R., 2011. "Second generation biofuels: Economics and policies," Energy Policy, Elsevier, vol. 39(7), pages 4222-4234, July.
- Dasgupta, Partha & Stiglitz, Joseph E, 1985.
"Learning-by-doing, Market Structure and Industrial and Trade Policies,"
CEPR Discussion Papers
80, C.E.P.R. Discussion Papers.
- Dasgupta, Partha & Stiglitz, Joseph E, 1988. "Learning-by-Doing, Market Structure and Industrial and Trade Policies," Oxford Economic Papers, Oxford University Press, vol. 40(2), pages 246-68, June.
- Rajagopal, Deepak & Zilberman, David, 2007. "Review of environmental, economic and policy aspects of biofuels," Policy Research Working Paper Series 4341, The World Bank.
- Drew Fudenberg & Jean Tirole, 1983. "Learning-by-Doing and Market Performance," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 522-530, Autumn.
- Rajagopal, Deepak & Zilberman, David, 2008. "Environmental, Economic and Policy Aspects of Biofuels," Foundations and Trends(R) in Microeconomics, now publishers, vol. 4(5), pages 353-468, October.
- Hall, Bronwyn, 2002.
"The Financing of Research and Development,"
Department of Economics, Working Paper Series
qt5rf0x9gz, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Bronwyn H. Hall, 2002. "The Financing of Research and Development," Oxford Review of Economic Policy, Oxford University Press, vol. 18(1), pages 35-51, Spring.
- Bronwyn Hall, 2004. "The financing of research and development," Chapters, in: Financial Systems, Corporate Investment in Innovation, and Venture Capital, chapter 2 Edward Elgar.
- Bronwyn H. Hall, 2003. "The Financing of Research and Development," Finance 0303003, EconWPA.
- Bronwyn H. Hall, 2002. "The Financing of Research and Development," NBER Working Papers 8773, National Bureau of Economic Research, Inc.
- Hall, Bronwyn H., 2002. "The Financing of Research and Development," Department of Economics, Working Paper Series qt34c1c643, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Moreira, Jose R. & Pacca, Sergio A. & Parente, Virginia, 2014. "The future of oil and bioethanol in Brazil," Energy Policy, Elsevier, vol. 65(C), pages 7-15.
- Fischer, Carolyn & Newell, Richard G., 2008.
"Environmental and technology policies for climate mitigation,"
Journal of Environmental Economics and Management,
Elsevier, vol. 55(2), pages 142-162, March.
- Fischer, Carolyn & Newell, Richard, 2004. "Environmental and Technology Policies for Climate Mitigation," Discussion Papers dp-04-05, Resources For the Future.
- Drabik, Dusan, 2011. "The Theory of Biofuel Policy and Food Grain Prices," Working Papers 126615, Cornell University, Department of Applied Economics and Management.
- Deepak Rajagopal & Steve Sexton & Gal Hochman & David Zilberman, 2009. "Recent Developments in Renewable Technologies: R&D Investment in Advanced Biofuels," Annual Review of Resource Economics, Annual Reviews, vol. 1(1), pages 621-644, 09.
- Horn, Henrik & Mavroidis, Petros C., 2009. "Burden of Proof in Environmental Disputes in the WTO: Legal Aspects," Working Paper Series 793, Research Institute of Industrial Economics.
- Hochman Gal & Sexton Steven E & Zilberman David D, 2008. "The Economics of Biofuel Policy and Biotechnology," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 6(2), pages 1-24, December.
- A. M. Spence, 1981. "The Learning Curve and Competition," Bell Journal of Economics, The RAND Corporation, vol. 12(1), pages 49-70, Spring.
- 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 12881, Iowa State University, Department of Economics.
- Coyle, William T., 2010. "Next-Generation Biofuels: Near-Term Challenges and Implications for Agriculture," Amber Waves, United States Department of Agriculture, Economic Research Service, June.
- Harry de Gorter & David R. Just, 2010. "The Social Costs and Benefits of Biofuels: The Intersection of Environmental, Energy and Agricultural Policy," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 32(1), pages 4-32.
When requesting a correction, please mention this item's handle: RePEc:rff:dpaper:dp-13-18-efd. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Webmaster)
If references are entirely missing, you can add them using this form.