The Perverse Effects of Biofuel Public-Sector Policies

Harry de Gorter (), Dusan Drabik () and David Just

Annual Review of Resource Economics, 2013, vol. 5, issue 1, 463-483

Abstract: Biofuel policies are a subset of policies designed to achieve energy security, an improved environment, enhanced agricultural incomes, technological change, and overall economic benefits, with increased domestic energy production creating green jobs and foreign exchange savings. In assessing this broad spectrum of proclaimed policy goals with the outcome of biofuel mandates, subsidies, import barriers, binary sustainability standards, and indirect land use measures, we identify many perverse and contradictory effects. Most importantly, we show how biofuel policies established the crop-energy price link and hence the food-fuel trade-off, the contradictory effects of combining mandates with different subsidies, the various surprising welfare economic effects, and the various inconsistencies associated with binary sustainability standards and carbon leakages. We conclude with examples of how biofuel policies have generated paradoxical effects in many other different dimensions.

Keywords: biofuels; mandates; subsidies; tariffs; externalities; greenhouse gases; traffic congestion; air pollution; burden of taxation; agriculture; environment; energy (search for similar items in EconPapers)
JEL-codes: H21 H23 Q48 Q54 Q56 R48 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (4)

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