Modeling the Environmental and Socio-Economic Impacts of Biofuels

This paper provides a general overview of the social, environmental, and economical issues related to biofuels and a review of economic modeling of biofuels. The increasing importance of biofuels is driven primarily by government policies since currently available biofuels are generally not economically viable in the absence of fiscal incentives or high oil prices. Also the environmental impacts of biofuels as an alternative to fossil fuels are quite ambiguous. The literature review of the most recent economic models dealing with biofuels and their economic impacts provides a distinction between structural and reduced form models. The discussion of structural models centers primarily on computable general equilibrium models. The review of reduced models is structured toward the time series analysis approach to the dependencies between prices of biofuels, prices of agricultural commodities used for the biofuel production and prices of the fossil fuels.Biofuels; Ethanol; Biodiesel; Prices; Time-series

Impact of EU Biofuel Policies on World Agricultural and Food Markets

This paper assesses the global and sectoral implications of the EU biofuels directive in a multi-region computable general equilibrium framework. Our results show that without mandatory blending or subsidies to stimulate the use of biofuel crops in the petroleum sector the targets of the EU Biofuel directive will not the reached in 2010. With mandatory blending the enhanced demand for biofuel crops has a strong impact on agriculture at the global and European level. The additional demand from the energy sector might slow down or reverse the long term process of declining agricultural prices.Biofuels, EU biofuel directive, agricultural markets, Computable General Equilibrium modeling, Agribusiness, International Relations/Trade, Research and Development/Tech Change/Emerging Technologies, Resource /Energy Economics and Policy,

The MAGNET model framework for assessing policy coherence and SDGs: Application to the bioeconomy

This report presents a description of the economic modelling tool MAGNET employed by the Joint Research Centre (JRC) to perform assessments of, among others, the bioeconomy. Additional sector splits of the bio-based sectors as well as the launch of the MAGNET Sustainable Development Goal Insights Module, has further consolidated MAGNET as an attractive option for policy coherence assessments of different scenarios through the evaluation of synergies or trade-offs. To illustrate the flexibility of the model, a detailed medium-term baseline to 2030 is described, replete with numerous economic-, demographic-, biophysical- and policy-drivers.JRC.D.4-Economics of Agricultur

The role of energy policy in agricultural biogas energy production in Visegrad countries

Energy production by agricultural biogas plants has recently recorded considerable growth in Visegrad countries. The development was enhanced by European Union's efforts to increase the proportion of energy produced from renewable sources. The paper aims to assess the role of energy policy in the development of agricultural biogas energy production in Visegrad region. Conducted studies have shown that among various forms of support for energy production from renewable energy sources, the price system prevails, including the support by feed in tariffs and bonuses. Feed in tariffs were adopted in Czech Republic, Hungary and Slovakia. Another kind of support system - a quota system - was adopted in Poland, what includes tendering and certificate systems. The results confirm the adoption of legal framework was necessary step to enable agricultural biogas energy production in Visegrad countries, but itself it was not enough to stimulate development of agricultural biogas energy production significantly. Rapid development in each country was recorded only after the certain financial support systems took effect, what made production of agricultural biogas energy economically efficient for investors. The production of energy from agricultural biogas grew the most in the Czech Republic and Slovakia, where the financial support was the highest. Nevertheless, the protracted process of changes in legal framework and transformation of energy policy, certain measures including state-controlled price-making systems, risk regarding with auction system might hamper agricultural biogas energy production further development

Bio-energy production in the sugar industry: an integrated modeling approach

Recent reforms in the Common Agricultural Policy and the sugar regime caused serious concerns for the future of the European sugar industry. At the same time, the European Commission considers transportation bio-fuels as a key factor for reducing reliance on imported fuels, emission levels of greenhouse gases and to meet rural development goals. Matching the sugar sector with bio-ethanol production may create opportunities for sustainable management of the existing sugar industry infrastructure and also serve bio-fuel policy targets. A partial equilibrium economic model is used in order to evaluate the shift from sugar to bio-ethanol production in Thessaly, Greece. In the agricultural feedstock supply and industrial processing sub-models are articulated indicating optimal crop mix for farmers and the best technology configurations for industry. The joint ethanol-biogas option appears to be preferable using sugar beet and wheat, whereas capacity selected amounts at 120 kt of ethanol.Sugar beet, grain, ethanol, mathematical programming, Greece, Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety,

The Impact of Domestic and Global Biofuel Mandates on the German Agricultural Sector

The aim of this work is to evaluate the impact of domestic and global biofuel policies on Germany's agricultural sector. The central part of our study is divided into four sections. Section 2 presents in detail the issues that make biofuels a debated topic in today's economic policies. Fundamental aspects of our energy consumption patterns and the geographic location of our natural resources are highlighted together with a quantitative analysis of the recent surge in biofuels output capacity and estimates of their near-future deployment. An introduction to current and future biofuels production technologies is coupled with an overview of recent studies that assess their net contribution to harmful gaseous emissions and energy efficiency. The concerns associated with rising food prices and their likely causes are then briefly examined. Section 3 provides a thorough description of the subsidy, taxation and protection measures granted to biofuels across the world. Current governmental policies in the EU and its member states are given special attention. Section 4 presents the current literature on economic modelling and focuses on partial equilibrium (AGLINK-COSIMO, Impact, Esim, etc.) and general equilibrium frameworks (EPPA, GTAP, etc.). Section 5 simulates the impact of domestic and global biofuel policies in Germany within a Computable General Equilibrium framework. The LEITAP model is introduced. A description of the analysed scenarios is given on the basis of the envisaged biofuel blending mandates described in section 3. The simulation results are then evaluated with respect to production, prices, international trade and land use of the relevant commodities. The outcome clearly indicates that current biofuels policies significantly affect food markets as well as land allocation. The conclusion summarizes the main findings of our study and draws a comparison with results of other publications.

The GAINS Model for Greenhouse Gases - Version 1.0: Carbon Dioxide (CO2)

Many of the traditional air pollutants and greenhouse gases have common sources, offering a cost-effective potential for simultaneous improvements of traditional air pollution problems and climate change. A methodology has been developed to extend the RAINS integrated assessment model to explore synergies and trade-offs between the control of greenhouse gases and air pollution. With this extension, the GAINS (GHG-Air pollution INteraction and Synergies) model will allow the assessment of emission control costs for the six greenhouse gases covered under the Kyoto Protocol (CO2, CH4, N2O and the three F-gases) together with the emissions of air pollutants SO2, NOx, VOC, NH3 and PM. This report describes the first implementation (Version 1.0) of the model extension model to incorporate CO2 emissions. GAINS Version 1.0 assesses 230 options for reducing CO2 emissions from the various source categories, both through structural changes in the energy system (fuel substitution, energy efficiency improvements) and through end-of-pipe measures (e.g., carbon capture). GAINS quantifies for 43 countries/regions in Europe country-specific application potentials of the various options in the different sectors of the economy, and estimates the societal resource costs of these measures. Mitigation potentials are estimated in relation to an exogenous baseline projection that is considered to reflect current planning, and are derived from a comparison of scenario results for a range of carbon prices obtained from energy models. A critical element of the GAINS assessment refers to the assumptions on CO2 mitigation measures for which negative life cycle costs are calculated. There are a number of options for which the accumulated (and discounted over time) cost savings from reduced energy consumption outweigh their investments, even if private interest rates are used. If the construction of the baseline projection assumes a cost-effectiveness rationale, such measures would be autonomously adopted by the economic actors, even in the absence of any CO2 mitigation interest. In practice, however, it can be observed that various market imperfections impede the autonomous penetration. Due to the substantial CO2 mitigation potential that is associated with such negative cost options, projections of future CO2 emissions and even more of the available CO2 mitigation potentials are highly sensitive towards assumptions on their autonomous penetration rates occurring in the baseline projection. Assuming that all negative cost measures would form an integral part of the Energy Outlook developed in 2003 by the Directorate General for Energy and Transport of the European Commission that has been developed with a cost-minimizing energy model, CO2 emissions in Europe would approach 1990 levels in 2020, even in absence of any specific climate policy. Beyond that, GAINS estimates for 2020 an additional reduction potential of 20 percent. With full application of all mitigation measures contained in the GAINS database, the power sector could reduce its CO2 emissions by 550 Mt, the transport sector by 400 Mt, industry by 190 Mt, and the residential and commercial sector by 50 Mt below the baseline projection. Total costs of all these measures would amount to approximately 90 billion Euro/year