Biofuel Economics in a Setting of Multiple Objectives & Unintended Consequences

William K. Jaeger and Thorsten M. Egelkraut
Additional contact information
William K. Jaeger: Oregon State University
Thorsten M. Egelkraut: Oregon State University

No 2011.37, Working Papers from Fondazione Eni Enrico Mattei

Abstract: This paper examines biofuels from an economic perspective and evaluates the merits of promoting biofuel production in the context of the policies’ multiple objectives, life-cycle implications, pecuniary externalities, and other unintended consequences. The policy goals most often cited are to reduce fossil fuel use and to lower greenhouse gas emissions. But the presence of multiple objectives and various indirect effects complicates normative evaluation. To address some of these complicating factors, we look at several combinations of policy alternatives that achieve the same set of incremental gains along the two primary targeted policy dimensions, making it possible to compare the costs and cost-effectiveness of each combination of policies. For example, when this approach is applied to U.S.-produced biofuels, they are found to be 14 to 31 times as costly as alternatives like raising the gas tax or promoting energy efficiency improvements. The analysis also finds the scale of the potential contributions of biofuels to be extremely small in both the U.S. and EU. Mandated U.S. corn ethanol production for 2025 reduces U.S. petroleum input use by 1.75%, and would have negligible net effects on CO2 emissions; and although EU imports of Brazilian ethanol may look better given the high costs of other alternatives, this option is equivalent, at most, to a 1.20% reduction in EU gasoline consumption.

Keywords: Biofuel; Biodiesel; Cost-Effectiveness; Indirect Land Use Change Effects; Net Energy; Multiple Objectives; Ethanol; Ghg (search for similar items in EconPapers)
JEL-codes: Q42 Q48 Q54 (search for similar items in EconPapers)
Date: 2011-05
New Economics Papers: this item is included in nep-agr, nep-ene and nep-env
References: Add references at CitEc
Citations: View citations in EconPapers (27)

Downloads: (external link)
https://feem-media.s3.eu-central-1.amazonaws.com/w ... oads/NDL2011-037.pdf (application/pdf)

Related works:
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:fem:femwpa:2011.37

Access Statistics for this paper

More papers in Working Papers from Fondazione Eni Enrico Mattei Contact information at EDIRC.
Bibliographic data for series maintained by Alberto Prina Cerai ( this e-mail address is bad, please contact ).