Linking soy oil demand from the US Renewable Fuel Standard to palm oil expansion through an analysis on vegetable oil price elasticities

Fabio Santeramo and Stephanie Searle

Energy Policy, 2019, vol. 127, issue C, 19-23

Abstract: The United States (US) Renewable Fuel Standard and California's Low Carbon Fuel Standard support the use of soy biodiesel and renewable diesel in the transport fuel supply for climate mitigation. However, linkages between the markets for soy oil and palm oil, which is associated with very high land use change emissions, could negatively affect the climate performance of soy-based biofuels. This study estimates the own and cross-price elasticities for the supply of soy and palm oils in the US using country-level data from 1992 to 2016 under rational expectations, through a seemingly unrelated regressions system of equations. We find a positive cross-price elasticity of palm oil import with respect to soy oil price and a positive reaction of supply of soy oil to increase in prices of palm oil. These results suggest that US biofuel policies may underestimate substitution between soy and palm oils and thus overestimate the climate benefits from soy-based biofuel.

Keywords: CODE: O13; P28; Q21; Q42; Biofuel; Price elasticity; Oils market; SURE (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301421518307924
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Linking soy oil demand from the US Renewable Fuel Standard to palm oil expansion through an analysis on vegetable oil price elasticities (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:127:y:2019:i:c:p:19-23

DOI: 10.1016/j.enpol.2018.11.054

Access Statistics for this article

Energy Policy is currently edited by N. France

More articles in Energy Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().