martin banse (lei, netherlands)
TRANSCRIPT
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Impact of EU Biofuel Policies
Martin Banse
(LEI, Netherlands)
Expert Meeting on Bioenergy Policy, Markets and Trade and Food Security
FAO, Rome February 18-20, 2008
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Outline of Presentation� Introduction� Methodology� Modeling results of enhanced biofuel production
� Impact at Global level • Primary agricultural production• Trade • Land use
� Summary and conclusion
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Methodology (I)� Instruments applied analyzing policy options in the
area of biofuels� General equilibrium model: LEITAP
• Extended version of the GTAP model
• Land allocation function; land supply curve,
• Bio-energy crop use in petroleum sector
� Spatial land use model: CLUEs• disaggregate LEITAP/IMAGE to temporal resolution of two years
and a spatial resolution of 1 km• uses land claims of the different sectors at national level• Allocation of these claims over the land area according to
location suitability, spatial policies and transition rules
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Methodology (II)
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Methodology (III): Impact of an Increase in Land Demand
Q2’ ωQ2Q1 Q1’
Land Supply
P1’
P2’
D2’
D2
D1
Average land rental price
Agricultural Area
D1’
Limiteff
P1
P2
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Firm’s output
σVA
σ = 0
Value added Intermediate inputs
CapitalLandNatural resources
Labor
Skilled Unskilled
σLAB
σD
Domestic Imported
Region 1 Region r
σM
Standard GTAP: Production Structure
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Firm’s output
Value added & Energy Non-energyintermediate inputs
σ = 0
σVAE
Capital-Energycomposite
LandNatural resources
Skilled Unskilled
Labor
σLAB
σD
Domestic Imported
Region 1 Region r
σM
GTAP-E Production Structure (Burniaux, Truong, 2002)
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Electric
σENER
Non-electric
Coal
σNELY
Gas
σNCOL
Petroleum productsOil
Non-coal
Capital-Energy
Capital Energy
σKE
GTAP-E: Capital-Energy Composite
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Gas
σNCOL
Fuel
Non-coal
Modeling Biofuels in LEITAP
σEthanol
Sugar-beetand -cane
Wheat Grain
EthanolVeget. oil
σFuel
Petroleum products
Oil
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Implementing the Biofuel Policies
� Mandatory blending as an example of biofuel policy� Price incentive (subsidy or tax exempt) to use bio- fuel
crops� ‘Neutral subsidy’: Additional (endogenous) sales tax on
petrol finances the prices incentive to use bio-fuel crops
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Scenarios calculated
� Reference scenario� A1 SRES ‘Global Economy’� Reduction of price and income support to agriculture
� Policy scenarios� Implementation of EU biofuel directive (BFD)
• Targets– 5.75% share of biofuel consumption in transportation by 2010– 10% share of biofuel consumption in transportation by 2020
� Implementation of biofuel initiatives outside Europe
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US
Europe China
Japan
India
15 % – Ethanol
<= 5% Biodiesel
2017
5 % Biodiesel
25% Bioethanol
2020
Brazil
10 %
2020
15 %
2020
10 %
2010
10 %
2020
10 %
2030
10 %
2012
5.0 %
Date?
South
Africa
Targets for Bio-fuels Worldwide
Malaysia / Indonesia / Thailand
S.Korea
Sources: IEA Task 39 report May 2007, Governments of countries, Frost & Sullivan Consulting
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Impact of Biofuel Directives on World Prices, in %, 2020 relative to 2001
-15%
-10%
-5%
0%
5%
10%
15%
20%
Cereals Oilseeds Sugar Crude oil
Reference Biofuel policies, EU
Biofuel policies, global
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Development of Share of Biofuels, in %, 2020
Regional Communities
0%
5%
10%
15%
20%
25%
30%
35%
Germany France Nafta South
Africa
Japan Brazil Rest of
South
America
2001 Reference Biofuel, EU Biofuel, global
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Impact of Biofuel Directives on Biofuel Crop Production, in %, 2020 relative to 2001
-20
0
20
40
60
80
100
120
140
Africa Asia C&SAmer EU27 Nafta World
Reference Biofuel, EU Biofuel, global
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Impact of Biofuel Directives on Agricultural Land Use, in %, 2020 relative to 2001
-10%
0%
10%
20%
30%
40%
50%
Africa Asia C&SAmer EU27 HighInc World
Reference Biofuels, EU Biofuels, global
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Net-Exports in Biofuel Crops, in Bill. USD
-40
-30
-20
-10
0
10
20
30
40
50
Africa Asia C&SAmer EU27 HighInc
Initial, 2001 Reference, 2020
Biofuels, EU, 2020 Biofuels, global, 2020
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Initial Share of Biofuel Use and Subsidies on Inputs in Petroleum Industries, 2020
Regional Communities
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Sweden Germany France UK Czech
Republic
BFD BFD, high oil price
Initial Biofuel Shares:Sweden 2.9%Germany 1.9%France 0.9%UK 0.3%Czech Rep. 1.2%
Subsidy on Biofuel Crops in Petro.
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Biofuel cultivation at Regional Level in the EU, in 2020 as percentage of total land area
Hotspots of biofuel crop production:• in areas with high initial biofuel crop production (Germany, France) • in area with land reserves (new EU member states)
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Summary and Conclusions
� EU Biofuel Directive/ global biofuel initiatives� High subsidies indicate big challenges to fulfill the biofuel
targets� Impact on global agri-food markets� Strong effect on agricultural land use
� Limitations of empirical analysis� Focus on 1st generation� High uncertainties with regard to technological change and
development of crude oil price� Results may under-estimate real developments