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Analysis of the Impacts of EU Biofuels Programs using a GTAP model

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  • Padella, Monica
  • Finco, Adele
  • Tyner, Wallace E.

Abstract

Biofuels have the potential of playing an important role in the renewable energy sources panorama, ensuring the achievement of multiple goals such as security of supply, reduction of greenhouse gas (GHG) emissions and development of business opportunities in the agricultural and rural sectors. Subsidies to the sector were rationalized on this basis. However, three potential impacts could offset any benefits biofuels may bring, and careful assessment and analysis of biofuels’ impacts are necessary. These possible consequences involve food prices and food security; economic distortions of subsidies; and environmental and ecological impacts on land-use and global GHG emissions. The present paper applies a general equilibrium model, an extended version of the GTAP model developed by Hertel, Tyner and Birur in 2010, to analyze the combined impacts of the US (US Energy Independence and Security Act of 2007) and EU (Renewable Energy Directive 2009/28/EC) biofuels programs with a particular emphasis on the effects in the European Union in 2015. An alternative GTAP model closure has been used: unemployment in US and EU27 is introduced making endogenous the unskilled labor supply in both regions and fixing real wages. The results of the paper are presented in terms of socio-economic (prices, welfare and employment), and environmental (land use change and Co2 emissions) impacts.

Suggested Citation

  • Padella, Monica & Finco, Adele & Tyner, Wallace E., 2011. "Analysis of the Impacts of EU Biofuels Programs using a GTAP model," Conference papers 332124, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332124
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    References listed on IDEAS

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    3. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, December.
    4. Paul V. Preckel & Eric DeVuyst, 1992. "Efficient Handling of Probability Information for Decision Analysis under Risk," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(3), pages 655-662.
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