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On the EU–U.S. Biodiesel ‘Splash & Dash' Controversy: Causes, Consequences and Policy Recommendations

Author

Listed:
  • de Gorter, Harry
  • Drabik, Dusan
  • Just, David R.

Abstract

This paper shows that the effects of the U.S. blender’s tax credit of $1/gallon and ‘splash & dash’ had minimal impacts on the EU biodiesel market. Reduced world oil prices and EU tax exemptions, increased rapeseed oil prices and market uncertainty are shown empirically to be the major contributors to reduced profitability of EU biodiesel production. Nevertheless, the EU imposed tariffs sometimes exceeding the tax credit in retaliation for the U.S. ‘splash & dash’ program. Instead, EU imports from the United States can be beneficial for EU taxpayers, fuel consumers as well as U.S. biodiesel producers.

Suggested Citation

  • de Gorter, Harry & Drabik, Dusan & Just, David R., 2010. "On the EU–U.S. Biodiesel ‘Splash & Dash' Controversy: Causes, Consequences and Policy Recommendations," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61425, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea10:61425
    DOI: 10.22004/ag.econ.61425
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    File URL: https://ageconsearch.umn.edu/record/61425/files/AAEA10348_deGorter_Drabik_Just.pdf
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    References listed on IDEAS

    as
    1. Doug Auld, 2008. "The Ethanol Trap: Why Policies to Promote Ethanol as Fuel Need Rethinking," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 268, July.
    2. Virginie Doumax, 2010. "The French Biodiesel Production: An Assessment of the Impacts and Interaction Effects of Policy Instruments," CAE Working Papers 87, Aix-Marseille Université, CERGAM.
    3. Harry de Gorter & David R. Just, 2007. "The Welfare Economics of a Biofuel Tax Credit and the Interaction Effects with Price Contingent Farm Subsidies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(2), pages 477-488.
    4. Doumax, Virginie, 2010. "The French Biodiesel Production: An Assessment of the Impacts and Interaction Effects of Policy Instruments," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61698, Agricultural and Applied Economics Association.
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    Cited by:

    1. Mallory, Mindy L. & Irwin, Scott H. & Hayes, Dermot J., 2012. "How market efficiency and the theory of storage link corn and ethanol markets," Energy Economics, Elsevier, vol. 34(6), pages 2157-2166.

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