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Tax exemption for biofuels in Germany: Is bio-ethanol really an option for climate policy?

Author

Listed:
  • Henke, Jan Michael
  • Klepper, Gernot
  • Schmitz, Norbert

Abstract

Last year the German Parliament exempted biofuels from the gasoline tax. The promotion of biofuels is being justified by allegedly positive effects on climate, energy, and agricultural policy goals. The paper takes a closer look at bio-ethanol as a substitute for gasoline. We analyze the basic conditions that provide the setting for the production and promotion of biofuels and show that the production of bio-ethanol in Germany is not competitive. Using energy and greenhouse gas balances we demonstrate that a possible increased use of bioethanol to reduce greenhouse gas emissions is inefficient and that there are preferred alternative strategies. In addition, scenarios on the development of the bio-ethanol market are derived from a model that allows for variations in decisive variables and reflects the production and trade chain of bio-ethanol.

Suggested Citation

  • Henke, Jan Michael & Klepper, Gernot & Schmitz, Norbert, 2003. "Tax exemption for biofuels in Germany: Is bio-ethanol really an option for climate policy?," Kiel Working Papers 1184, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1184
    as

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    File URL: https://www.econstor.eu/bitstream/10419/3057/1/kap1184.pdf
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    References listed on IDEAS

    as
    1. Grant Kirkpatrick & Gernot Klepper & Robert Price, 2001. "Making Growth More Environmentally Sustainable in Germany," OECD Economics Department Working Papers 276, OECD Publishing.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Annalisa Zezza, 2007. "The economic and environmental sustainability of biofuel production," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 4, November.
    2. Ryan, Lisa & Convery, Frank & Ferreira, Susana, 2006. "Stimulating the use of biofuels in the European Union: Implications for climate change policy," Energy Policy, Elsevier, vol. 34(17), pages 3184-3194, November.
    3. Ledebur, Oliver von & Salamon, Petra & Zimmermann, Andrei & van Leeuwen, Myrna & Tabeau, Andrzej A. & Chantreuil, Frederic, 2008. "Modelling Impacts Of Some European Biofuel Measures," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6649, European Association of Agricultural Economists.
    4. Malça, João & Freire, Fausto, 2006. "Renewability and life-cycle energy efficiency of bioethanol and bio-ethyl tertiary butyl ether (bioETBE): Assessing the implications of allocation," Energy, Elsevier, vol. 31(15), pages 3362-3380.

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    1. Frondel, Manuel & Horbach, Jens & Rennings, Klaus & Requate, Till, 2004. "Environmental Policy Tools and Firm-Level Management Practices: Empirical Evidence for Germany," Economics Working Papers 2004-02, Christian-Albrechts-University of Kiel, Department of Economics.

    More about this item

    Keywords

    biofuels; ethanol; climate policy; agricultural policy; gasoline tax; energy balances; GHG balances;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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