Biodiesel: A New Oildorado?

24 Pages Posted: 2 May 2006

See all articles by Manuel Frondel

Manuel Frondel

RWI Leibniz Institute for Economic Research ; Ruhr University Bochum (RUB)

Jörg Peters

RWI - Leibniz Institute for Economic Research; University of Passau - Business Administration and Economics

Date Written: December 2005

Abstract

Guaranteeing tax reductions and exemptions, the European governments intend to increase the share of biofuels in total EU fuel consumption to 5.75% by 2010. The financial support of this EU objective is frequently justified by expected positive environmental impacts, most notably the mitigation of climate change, and by favorable employment effects in the agricultural sector. This paper investigates the environmental and economic implications of the support of rapeseed-based biodiesel as a substitute for fossil diesel.Based on a survey of recent empirical studies, we find that the energy and greenhouse gas balances of this environmental strategy are clearly positive.Yet, its overall environmental balance is currently far from being unequivocally positive. Most importantly, biodiesel is not a cost-efficient emission abatement strategy. Thus, for the abatement of greenhouse gases,we recommend more efficient alternatives based on both renewable and conventional technologies.

Keywords: Renewable Energy, Environmental Policy, Greenhouse Gas Emissions

JEL Classification: Q28, Q42, Q58

Suggested Citation

Frondel, Manuel and Peters, Jörg, Biodiesel: A New Oildorado? (December 2005). RWI Discussion Paper No. 36. Available at SSRN: https://ssrn.com/abstract=899088 or http://dx.doi.org/10.2139/ssrn.899088

Manuel Frondel (Contact Author)

RWI Leibniz Institute for Economic Research ( email )

Hohenzollernstr. 1-3
45128 Essen
Germany

Ruhr University Bochum (RUB) ( email )

Universitätsstraße 150
Bochum, NRW 44780
Germany

Jörg Peters

RWI - Leibniz Institute for Economic Research ( email )

Hohenzollernstr. 1-3
45128 Essen
Germany
0049-201-8149-247 (Phone)

HOME PAGE: http://www.rwi-essen.de

University of Passau - Business Administration and Economics ( email )

Wirtschaftswissenschaftliche Fakultaet
Passau, D-94030
Germany

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