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Biodiesel: A New Oildorado?

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  • Frondel, Manuel
  • Peters, Jörg

Abstract

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.

Suggested Citation

  • Frondel, Manuel & Peters, Jörg, 2005. "Biodiesel: A New Oildorado?," RWI Discussion Papers 36, RWI - Leibniz-Institut für Wirtschaftsforschung.
    • Handle: RePEc:zbw:rwidps:36
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    References listed on IDEAS

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    1. Torre Ugarte, Daniel de la & Walsh, Marie E. & Shapouri, Hosein & Slinsky, Stephen P., 2003. "The Economic Impacts of Bioenergy Crop Production on U.S. Crop Production," Agricultural Economic Reports 33997, United States Department of Agriculture, Economic Research Service.
    2. 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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    4. Gernot Klepper & Sonja Peterson, 2004. "The EU Emissions Trading Scheme. Allowance Prices, Trade Flows, Competitiveness Effects," Working Papers 2004.49, Fondazione Eni Enrico Mattei.
    5. Faaij, Andre P.C., 2006. "Bio-energy in Europe: changing technology choices," Energy Policy, Elsevier, vol. 34(3), pages 322-342, February.
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    More about this item

    Keywords

    Renewable Energy; Environmental Policy; Greenhouse Gas Emissions;
    All these keywords.

    JEL classification:

    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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