Tax exemption for biofuels in Germany: Is bio-ethanol really an option for climate policy?

Jan Michael Henke, Gernot Klepper and Norbert Schmitz

No 1184, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: Last year the German Parliament exempted biofuels from the gasoline tax. The promotion of biofuels is being justified by allegedly positive effects on climate, energy, and agricultural policy goals. The paper takes a closer look at bio-ethanol as a substitute for gasoline. We analyze the basic conditions that provide the setting for the production and promotion of biofuels and show that the production of bio-ethanol in Germany is not competitive. Using energy and greenhouse gas balances we demonstrate that a possible increased use of bioethanol to reduce greenhouse gas emissions is inefficient and that there are preferred alternative strategies. In addition, scenarios on the development of the bio-ethanol market are derived from a model that allows for variations in decisive variables and reflects the production and trade chain of bio-ethanol.

Keywords: biofuels; ethanol; climate policy; agricultural policy; gasoline tax; energy balances; GHG balances (search for similar items in EconPapers)
JEL-codes: D61 H23 Q25 Q42 (search for similar items in EconPapers)
Date: 2003
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1184

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