The Impact of Domestic and Global Biofuel Mandates on the German Agricultural Sector

100 Pages Posted: 6 Nov 2009

See all articles by Giovanni Sorda

Giovanni Sorda

RWTH Aachen University - Institute for Future Energy Consumer Needs and Behavior (FCN)

Martin Banse

Institute for Market Analysis and Agricultural Trade Policies

Claudia Kemfert

DIW Deutsches Institut für Wirtschaftsforschung

Date Written: October 2009

Abstract

The aim of this work is to evaluate the impact of domestic and global biofuel policies on Germany's agricultural sector. The central part of our study is divided into four sections. Section 2 presents in detail the issues that make biofuels a debated topic in today's economic policies. Fundamental aspects of our energy consumption patterns and the geographic location of our natural resources are highlighted together with a quantitative analysis of the recent surge in biofuels output capacity and estimates of their near-future deployment. An introduction to current and future biofuels production technologies is coupled with an overview of recent studies that assess their net contribution to harmful gaseous emissions and energy efficiency. The concerns associated with rising food prices and their likely causes are then briefly examined. Section 3 provides a thorough description of the subsidy, taxation and protection measures granted to biofuels across the world. Current governmental policies in the EU and its member states are given special attention. Section 4 presents the current literature on economic modelling and focuses on partial equilibrium (AGLINK-COSIMO, Impact, Esim, etc.) and general equilibrium frameworks (EPPA, GTAP, etc.). Section 5 simulates the impact of domestic and global biofuel policies in Germany within a Computable General Equilibrium framework. The LEITAP model is introduced. A description of the analysed scenarios is given on the basis of the envisaged biofuel blending mandates described in section 3. The simulation results are then evaluated with respect to production, prices, international trade and land use of the relevant commodities. The outcome clearly indicates that current biofuels policies significantly affect food markets as well as land allocation. The conclusion summarizes the main findings of our study and draws a comparison with results of other publications.

Keywords: Agriculture, biofuels, Germany

JEL Classification: Q1, Q42

Suggested Citation

Sorda, Giovanni and Banse, Martin and Kemfert, Claudia, The Impact of Domestic and Global Biofuel Mandates on the German Agricultural Sector (October 2009). DIW Berlin Discussion Paper No. 939, Available at SSRN: https://ssrn.com/abstract=1499624 or http://dx.doi.org/10.2139/ssrn.1499624

Giovanni Sorda (Contact Author)

RWTH Aachen University - Institute for Future Energy Consumer Needs and Behavior (FCN) ( email )

Mathieustrasse 10
Aachen, 52074
Germany

Martin Banse

Institute for Market Analysis and Agricultural Trade Policies ( email )

Bundesallee 50
Braunschweig 38116
Germany

Claudia Kemfert

DIW Deutsches Institut für Wirtschaftsforschung ( email )

Mohrenstraße 58
Berlin, 10117
Germany

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