Global land use change and greenhouse gas emissions due to recent European biofuel policies

The European Union (EU) has emerged as a major producer and consumer of biodiesel, due to policy initiatives. Recent policies seek to curb imports from USA, Argentina and Indonesia by imposing antidumping duties. Further, there has been a proposal to set a cap on First Generation Biofuels (FGBs) to reduce greenhouse gas (GHG) emissions from Land Use Change (LUC). In this paper, we employ the widely used GTAP-BIO model to examine these recent EU policies. Increased biodiesel consumption arising from the cap on FGBs and increased import prices arising from anti-dumping measures are both modeled as exogenous policy shocks. We find that the biodiesel imports increase despite these antidumping measures, because of the enormous expansion of domestic demand, mainly for palm biodiesel. Biodiesel producers in the EU benefit from these policies as well, especially those producing rapeseed and non-food-based biodiesel, but also palm biodiesel due to imports of vegetable oils. LUC is expected to occur at a global scale as a consequence of biodiesel trade and interactions in the food and feed markets. Besides the EU, other countries such as the US, Brazil or South-Saharan Africa can be affected.