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Effects of Increased Biofuels on the U.S. Economy in 2022

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  • Gehlhar, Mark J.
  • Somwaru, Agapi

Abstract

Achieving greater energy security by reducing dependence on foreign petroleum is a goal of U.S. energy policy. The Energy Independence and Security Act of 2007 (EISA) calls for a Renewable Fuel Standard (RFS-2), which mandates that the United States increase the volume of biofuel that is blended into transportation fuel from 9 billion gallons in 2008 to 36 billion gallons by 2022. Long-term technological advances are needed to meet this mandate. This report examines how meeting the RFS-2 would affect various key components of the U.S. economy. If biofuel production advances with cost-reducing technology and petroleum prices continue to rise as projected, the RFS-2 could provide economywide benefits. However, the actual level of benefits (or costs) to the U.S. economy depends importantly on future oil prices and whether tax credits are retained in 2022. If oil prices stabilize or decline from current levels and tax credits are retained, then benefits to the economy would diminish.

Suggested Citation

  • Gehlhar, Mark J. & Somwaru, Agapi, 2010. "Effects of Increased Biofuels on the U.S. Economy in 2022," Economic Research Report 96758, United States Department of Agriculture, Economic Research Service.
    • Handle: RePEc:ags:uersrr:96758
    DOI: 10.22004/ag.econ.96758
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    References listed on IDEAS

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    1. Peter B. Dixon & Stefan Osborne & Maureen T. Rimmer, 2007. "The Economy-Wide Effects in the United States of Replacing Crude Petroleum with Biomass," Energy & Environment, , vol. 18(6), pages 709-722, November.
    2. Torre Ugarte, Daniel de la & Walsh, Marie E. & Shapouri, Hosein & Slinsky, Stephen P., 2003. "The Economic Impacts of Bioenergy Crop Production on U.S. Crop Production," Agricultural Economic Reports 33997, United States Department of Agriculture, Economic Research Service.
    3. Ian Sheldon & Matthew Roberts, 2008. "U.S. Comparative Advantage in Bioenergy: A Heckscher-Ohlin-Ricardian Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(5), pages 1233-1238.
    4. Harry de Gorter & David R. Just, 2010. "The Social Costs and Benefits of Biofuels: The Intersection of Environmental, Energy and Agricultural Policy," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 32(1), pages 4-32.
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    Cited by:

    1. Condon, Nicole & Klemick, Heather & Wolverton, Ann, 2015. "Impacts of ethanol policy on corn prices: A review and meta-analysis of recent evidence," Food Policy, Elsevier, vol. 51(C), pages 63-73.
    2. Suttles, Shellye A. & Tyner, Wallace E. & Shively, Gerald & Sands, Ronald D. & Sohngen, Brent, 2014. "Economic effects of bioenergy policy in the United States and Europe: A general equilibrium approach focusing on forest biomass," Renewable Energy, Elsevier, vol. 69(C), pages 428-436.
    3. Mitchell, Paul D., 2011. "Economic Assessment of the Benefits of Chloro-s-triazine Herbicides to U.S. Corn, Sorghum, and Sugarcane Producers," Staff Paper Series 564, University of Wisconsin, Agricultural and Applied Economics.

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