IDEAS home Printed from https://ideas.repec.org/a/eee/appene/v195y2017icp370-381.html
   My bibliography  Save this article

Exploring path dependence, policy interactions, and actor behavior in the German biodiesel supply chain

Author

Listed:
  • Moncada, J.A.
  • Junginger, M.
  • Lukszo, Z.
  • Faaij, A.
  • Weijnen, M.

Abstract

Biofuel production is not cost competitive and thus requires governmental intervention. The effect of the institutional framework on the development of the biofuel sector is not yet well understood. This paper aims to analyze how biofuel production and production capacity could have evolved in Germany in the period 1992–2014. The effects of an agricultural policy intervention (liberalization of the agricultural market) and a bioenergy policy intervention (a tax on biodiesel after an initial exemption) are explored. Elements of the Modeling Agent systems based on Institutional Analysis (MAIA) framework, complex adaptive systems (CAS) theory, and Neo Institutional Economics (NIE) theory were used to conceptualize and formalize the system in an agent-based model. It was found that an early liberalization of the agricultural market led to an under-production of biodiesel; a late liberalization led to the collapse of biodiesel production. An early introduction of the biodiesel tax led to stagnation in biodiesel production and production capacity; a late introduction led to an increase in sunk costs provided that the biofuel quota is binding. Also, a lack of agents’ adaptation mechanism to forecast prices led to a decrease in patterns of biodiesel production when an external shock was introduced in the system. In sum, we argue that system behavior is influenced by individual behavior which is shaped by institutions.

Suggested Citation

  • Moncada, J.A. & Junginger, M. & Lukszo, Z. & Faaij, A. & Weijnen, M., 2017. "Exploring path dependence, policy interactions, and actor behavior in the German biodiesel supply chain," Applied Energy, Elsevier, vol. 195(C), pages 370-381.
    • Handle: RePEc:eee:appene:v:195:y:2017:i:c:p:370-381
    DOI: 10.1016/j.apenergy.2017.03.047
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0306261917302763
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.apenergy.2017.03.047?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kaup, Felix & Selbmann, Kirsten, 2013. "The seesaw of Germany's biofuel policy – Tracing the evolvement to its current state," Energy Policy, Elsevier, vol. 62(C), pages 513-521.
    2. Arthur, W Brian, 1989. "Competing Technologies, Increasing Returns, and Lock-In by Historical Events," Economic Journal, Royal Economic Society, vol. 99(394), pages 116-131, March.
    3. Leonhard Dobusch & Elke Schüßler, 2013. "Theorizing path dependence: a review of positive feedback mechanisms in technology markets, regional clusters, and organizations," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(3), pages 617-647, June.
    4. Lim, Steven & Lee, Keat Teong, 2013. "Process intensification for biodiesel production from Jatropha curcas L. seeds: Supercritical reactive extraction process parameters study," Applied Energy, Elsevier, vol. 103(C), pages 712-720.
    5. De Laporte, Aaron V. & Weersink, Alfons J. & McKenney, Daniel W., 2016. "Effects of supply chain structure and biomass prices on bioenergy feedstock supply," Applied Energy, Elsevier, vol. 183(C), pages 1053-1064.
    6. Christoph Zott, 2003. "Dynamic capabilities and the emergence of intraindustry differential firm performance: insights from a simulation study," Strategic Management Journal, Wiley Blackwell, vol. 24(2), pages 97-125, February.
    7. Ziolkowska, Jadwiga R., 2014. "Optimizing biofuels production in an uncertain decision environment: Conventional vs. advanced technologies," Applied Energy, Elsevier, vol. 114(C), pages 366-376.
    8. Severin Borenstein, 2012. "The Private and Public Economics of Renewable Electricity Generation," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 67-92, Winter.
    9. Sorda, Giovanni & Banse, Martin & Kemfert, Claudia, 2010. "An overview of biofuel policies across the world," Energy Policy, Elsevier, vol. 38(11), pages 6977-6988, November.
    10. Chinese, D. & Patrizio, P. & Nardin, G., 2014. "Effects of changes in Italian bioenergy promotion schemes for agricultural biogas projects: Insights from a regional optimization model," Energy Policy, Elsevier, vol. 75(C), pages 189-205.
    11. Kylili, Angeliki & Fokaides, Paris A., 2015. "Competitive auction mechanisms for the promotion renewable energy technologies: The case of the 50MW photovoltaics projects in Cyprus," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 226-233.
    12. Pahle, Michael & Pachauri, Shonali & Steinbacher, Karoline, 2016. "Can the Green Economy deliver it all? Experiences of renewable energy policies with socio-economic objectives," Applied Energy, Elsevier, vol. 179(C), pages 1331-1341.
    13. Batidzirai, B. & Mignot, A.P.R. & Schakel, W.B. & Junginger, H.M. & Faaij, A.P.C., 2013. "Biomass torrefaction technology: Techno-economic status and future prospects," Energy, Elsevier, vol. 62(C), pages 196-214.
    14. Balmann, Alfons, 1997. "Farm-Based Modelling of Regional Structural Change: A Cellular Automata Approach," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 24(1), pages 85-108.
    15. Kleinhanß, Werner & Offermann, Frank & Butault, Jean-Pierre & Surry, Yves, 2011. "Cost of production estimates for wheat, milk and pigs in selected EU member states," Arbeitsberichte aus der vTI-Agrarökonomie 07/2011, Johann Heinrich von Thünen Institute, Federal Research Institute for Rural Areas, Forestry and Fisheries.
    16. Liebowitz, S J & Margolis, Stephen E, 1995. "Path Dependence, Lock-in, and History," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 11(1), pages 205-226, April.
    17. Bomb, Christian & McCormick, Kes & Deurwaarder, Ewout & Kaberger, Tomas, 2007. "Biofuels for transport in Europe: Lessons from Germany and the UK," Energy Policy, Elsevier, vol. 35(4), pages 2256-2267, April.
    18. 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.
    19. Simon, Herbert A, 1979. "Rational Decision Making in Business Organizations," American Economic Review, American Economic Association, vol. 69(4), pages 493-513, September.
    20. Jean‐Philippe Vergne & Rodolphe Durand, 2010. "The Missing Link Between the Theory and Empirics of Path Dependence: Conceptual Clarification, Testability Issue, and Methodological Implications," Journal of Management Studies, Wiley Blackwell, vol. 47(4), pages 736-759, June.
    21. Rahdar, Mohammad & Wang, Lizhi & Hu, Guiping, 2014. "Potential competition for biomass between biopower and biofuel under RPS and RFS2," Applied Energy, Elsevier, vol. 119(C), pages 10-20.
    22. Christensen, Adam & Hobbs, Benjamin, 2016. "A model of state and federal biofuel policy: Feasibility assessment of the California Low Carbon Fuel Standard," Applied Energy, Elsevier, vol. 169(C), pages 799-812.
    23. Lin, Jiefeng & Gaustad, Gabrielle & Trabold, Thomas A., 2013. "Profit and policy implications of producing biodiesel–ethanol–diesel fuel blends to specification," Applied Energy, Elsevier, vol. 104(C), pages 936-944.
    24. Crawford, Sue E. S. & Ostrom, Elinor, 1995. "A Grammar of Institutions," American Political Science Review, Cambridge University Press, vol. 89(3), pages 582-600, September.
    25. Amineh Ghorbani & Pieter Bots & Virginia Dignum & Gerard Dijkema, 2013. "MAIA: a Framework for Developing Agent-Based Social Simulations," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 16(2), pages 1-9.
    26. Moncada, J.A. & Lukszo, Z. & Junginger, M. & Faaij, A. & Weijnen, M., 2017. "A conceptual framework for the analysis of the effect of institutions on biofuel supply chains," Applied Energy, Elsevier, vol. 185(P1), pages 895-915.
    27. Bai, Yun & Ouyang, Yanfeng & Pang, Jong-Shi, 2012. "Biofuel supply chain design under competitive agricultural land use and feedstock market equilibrium," Energy Economics, Elsevier, vol. 34(5), pages 1623-1633.
    28. Luo, Yi & Miller, Shelie, 2013. "A game theory analysis of market incentives for US switchgrass ethanol," Ecological Economics, Elsevier, vol. 93(C), pages 42-56.
    29. Felten, Daniel & Fröba, Norbert & Fries, Jérôme & Emmerling, Christoph, 2013. "Energy balances and greenhouse gas-mitigation potentials of bioenergy cropping systems (Miscanthus, rapeseed, and maize) based on farming conditions in Western Germany," Renewable Energy, Elsevier, vol. 55(C), pages 160-174.
    30. Samsatli, Sheila & Samsatli, Nouri J. & Shah, Nilay, 2015. "BVCM: A comprehensive and flexible toolkit for whole system biomass value chain analysis and optimisation – Mathematical formulation," Applied Energy, Elsevier, vol. 147(C), pages 131-160.
    31. Oliver E. Williamson, 1999. "Strategy research: governance and competence perspectives," Strategic Management Journal, Wiley Blackwell, vol. 20(12), pages 1087-1108, December.
    32. Kleinhanss, Werner & Offermann, Frank & Butault, Jean-Pierre & Surry, Yves R., 2011. "Cost of production estimates for wheat, milk and pigs in selected EU member states," Thünen Working Paper 118867, Johann Heinrich von Thünen-Institut (vTI), Federal Research Institute for Rural Areas, Forestry and Fisheries.
    33. Maarten Ottens & Maarten Franssen & Peter Kroes & Ibo Van De Poel, 2006. "Modelling infrastructures as socio-technical systems," International Journal of Critical Infrastructures, Inderscience Enterprises Ltd, vol. 2(2/3), pages 133-145.
    34. Bale, Catherine S.E. & Varga, Liz & Foxon, Timothy J., 2015. "Energy and complexity: New ways forward," Applied Energy, Elsevier, vol. 138(C), pages 150-159.
    35. Arthur, W. Brian, 2006. "Out-of-Equilibrium Economics and Agent-Based Modeling," Handbook of Computational Economics, in: Leigh Tesfatsion & Kenneth L. Judd (ed.), Handbook of Computational Economics, edition 1, volume 2, chapter 32, pages 1551-1564, Elsevier.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hu, Kejia & Chen, Yuche, 2019. "Equilibrium fuel supply and carbon credit pricing under market competition and environmental regulations: A California case study," Applied Energy, Elsevier, vol. 236(C), pages 815-824.
    2. Moncada, J.A. & Verstegen, J.A. & Posada, J.A. & Junginger, M. & Lukszo, Z. & Faaij, A. & Weijnen, M., 2018. "Exploring policy options to spur the expansion of ethanol production and consumption in Brazil: An agent-based modeling approach," Energy Policy, Elsevier, vol. 123(C), pages 619-641.
    3. Mohd Alsaleh & A. S. Abdul-Rahim, 2022. "An evaluation of bioenergy industry sustainability impacts on forest degradation: evidence from European Union economies," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(2), pages 1738-1760, February.
    4. van Tol, M.C.M. & Moncada, J.A. & Lukszo, Z. & Weijnen, M., 2021. "Modelling the interaction between policies and international trade flows for liquid biofuels: an agent-based modelling approach," Energy Policy, Elsevier, vol. 149(C).
    5. Mohd Alsaleh & A. S. Abdul-Rahim & A. O. Zubair, 2021. "Impacts of bioenergy sustainable growth on food security in EU28 region: an empirical analysis," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(12), pages 17423-17442, December.
    6. Brinkman, Marnix L.J. & Wicke, Birka & Faaij, André P.C. & van der Hilst, Floor, 2019. "Projecting socio-economic impacts of bioenergy: Current status and limitations of ex-ante quantification methods," Renewable and Sustainable Energy Reviews, Elsevier, vol. 115(C).
    7. Guo, Miao & van Dam, Koen H. & Touhami, Noura Ouazzani & Nguyen, Remy & Delval, Florent & Jamieson, Craig & Shah, Nilay, 2020. "Multi-level system modelling of the resource-food-bioenergy nexus in the global south," Energy, Elsevier, vol. 197(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Moncada, J.A. & Lukszo, Z. & Junginger, M. & Faaij, A. & Weijnen, M., 2017. "A conceptual framework for the analysis of the effect of institutions on biofuel supply chains," Applied Energy, Elsevier, vol. 185(P1), pages 895-915.
    2. Schmidt, Tobias S. & Battke, Benedikt & Grosspietsch, David & Hoffmann, Volker H., 2016. "Do deployment policies pick technologies by (not) picking applications?—A simulation of investment decisions in technologies with multiple applications," Research Policy, Elsevier, vol. 45(10), pages 1965-1983.
    3. Jean‐Philippe Vergne & Rodolphe Durand, 2010. "The Missing Link Between the Theory and Empirics of Path Dependence: Conceptual Clarification, Testability Issue, and Methodological Implications," Journal of Management Studies, Wiley Blackwell, vol. 47(4), pages 736-759, June.
    4. Neil M., Kay, 2013. "Lock-in, path dependence, and the Internationalization of QWERTY," SIRE Discussion Papers 2013-41, Scottish Institute for Research in Economics (SIRE).
    5. Madlener, Reinhard & Stagl, Sigrid, 2005. "Sustainability-guided promotion of renewable electricity generation," Ecological Economics, Elsevier, vol. 53(2), pages 147-167, April.
    6. Schillo, R. Sandra & Isabelle, Diane A. & Shakiba, Abtin, 2017. "Linking advanced biofuels policies with stakeholder interests: A method building on Quality Function Deployment," Energy Policy, Elsevier, vol. 100(C), pages 126-137.
    7. Magali Malherbe & Fanny Simon-Lee, 2015. "Learning and knowledge accumulation as sources of influence for actors during path constitution: the example of the emergence of NFC technology," Post-Print hal-01597620, HAL.
    8. Law, Florence, 2018. "Breaking the outsourcing path: Backsourcing process and outsourcing lock-in," European Management Journal, Elsevier, vol. 36(3), pages 341-352.
    9. James Lee Caton, 2019. "Creativity in a theory of entrepreneurship," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing Limited, vol. 8(4), pages 442-469, September.
    10. Neil Kay, 2013. "Lock-in, path dependence, and the internationalization of QWERTY," Working Papers 1310, University of Strathclyde Business School, Department of Economics.
    11. Sydow, Jörg & Schreyögg, Georg & Koch, Jochen, 2020. "Current interest in the theory of organizational path dependence: A short update on the occasion of the 2019 AMR Decade Award," Discussion Papers 2020/12, Free University Berlin, School of Business & Economics.
    12. Johann Fortwengel & Arne Keller, 2020. "Agency in the face of path dependence: how organizations can regain scope for maneuver," Business Research, Springer;German Academic Association for Business Research, vol. 13(3), pages 1169-1201, November.
    13. Bohnsack, René & Kurtz, Hannes & Hanelt, André, 2021. "Re-examining path dependence in the digital age: The evolution of connected car business models," Research Policy, Elsevier, vol. 50(9).
    14. van Tol, M.C.M. & Moncada, J.A. & Lukszo, Z. & Weijnen, M., 2021. "Modelling the interaction between policies and international trade flows for liquid biofuels: an agent-based modelling approach," Energy Policy, Elsevier, vol. 149(C).
    15. Wu, Yongjiao & Dong, Suocheng & Huang, Haosheng & Zhai, Jun & Li, Yu & Huang, Dingxuan, 2018. "Quantifying urban land expansion dynamics through improved land management institution model: Application in Ningxia-Inner Mongolia, China," Land Use Policy, Elsevier, vol. 78(C), pages 386-396.
    16. da Rocha, Angela & Kury, Beatriz & Tomassini, Rodrigo & Velloso, Luciana, 2017. "Strategic Responses to Environmental Turbulence: A Study of Four Brazilian Exporting Clusters," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 39, pages 155-174.
    17. Zimmer, Tobias & Rudi, Andreas & Müller, Ann-Kathrin & Fröhling, Magnus & Schultmann, Frank, 2017. "Modeling the impact of competing utilization paths on biomass-to-liquid (BtL) supply chains," Applied Energy, Elsevier, vol. 208(C), pages 954-971.
    18. Haji Esmaeili, Seyed Ali & Szmerekovsky, Joseph & Sobhani, Ahmad & Dybing, Alan & Peterson, Tim O., 2020. "Sustainable biomass supply chain network design with biomass switching incentives for first-generation bioethanol producers," Energy Policy, Elsevier, vol. 138(C).
    19. Vialle, Pierre & Song, Junjie & Zhang, Jian, 2012. "Competing with dominant global standards in a catching-up context. The case of mobile standards in China," Telecommunications Policy, Elsevier, vol. 36(10), pages 832-846.
    20. Kargbo, Hannah & Harris, Jonathan Stuart & Phan, Anh N., 2021. "“Drop-in” fuel production from biomass: Critical review on techno-economic feasibility and sustainability," Renewable and Sustainable Energy Reviews, Elsevier, vol. 135(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:appene:v:195:y:2017:i:c:p:370-381. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/405891/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.