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Biodiesel: A New Oildorado?

  • Manuel Frondel


  • Jörg Peters


Guaranteeing tax reductions and exemptions, the European governments intend to increase the share of biofuels in total EU fuel consumption to 5.75% by 2010. The financial support of this EU objective is frequently justified by expected positive environmental impacts, most notably the mitigation of climate change, and by favorable employment effects in the agricultural sector. This paper investigates the environmental and economic implications of the support of rapeseed-based biodiesel as a substitute for fossil diesel.Based on a survey of recent empirical studies, we find that the energy and greenhouse gas balances of this environmental strategy are clearly positive.Yet, its overall environmental balance is currently far from being unequivocally positive. Most importantly, biodiesel is not a cost-efficient emission abatement strategy.Thus, for the abatement of greenhouse gases,we recommend more efficient alternatives based on both renewable and conventional technologies.

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Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung in its series RWI Discussion Papers with number 0036.

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Length: 24 pages
Date of creation: Dec 2005
Date of revision:
Handle: RePEc:rwi:dpaper:0036
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  1. Faaij, Andre P.C., 2006. "Bio-energy in Europe: changing technology choices," Energy Policy, Elsevier, vol. 34(3), pages 322-342, February.
  2. Gernot Klepper & Sonja Peterson, 2004. "The EU Emissions Trading Scheme. Allowance Prices, Trade Flows, Competitiveness Effects," Working Papers 2004.49, Fondazione Eni Enrico Mattei.
  3. Henke, J.M. & Klepper, G. & Schmitz, N., 2005. "Tax exemption for biofuels in Germany: Is bio-ethanol really an option for climate policy?," Energy, Elsevier, vol. 30(14), pages 2617-2635.
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