The Market And Environmental Effects Of Alternative Biofuel Policies
| dc.contributor.author | Drabik, Dusan | en_US |
| dc.contributor.chair | de Gorter, Harry | en_US |
| dc.contributor.committeeMember | Just, David R. | en_US |
| dc.contributor.committeeMember | Conrad, Jon M | en_US |
| dc.contributor.committeeMember | Matthews, Alan Henry | en_US |
| dc.date.accessioned | 2013-09-05T15:56:37Z | |
| dc.date.available | 2018-05-27T06:00:34Z | |
| dc.date.issued | 2013-05-26 | en_US |
| dc.description.abstract | This dissertation analyzes market and environmental effects of alternative U.S. and Brazilian biofuel policies. Although we focus on corn- and sugarcane-ethanol, the advanced analytical framework can easily be extended to other biofuels and biofuel feedstocks, such as biodiesel and soybean. The dissertation consists of three chapters. The first chapter develops an analytical framework to assess the market effects of a set of biofuel policies (including subsidies to feedstocks). U.S. corn-ethanol policies are used as an example to study the effects of biofuel policies on corn prices. We determine the 'no policy' ethanol price, analyze the implications for the 'no policy' corn price and resulting 'water' in the ethanol price premium due to the policy, and generalize the surprising interaction effects between mandates and tax credits to include ethanol and corn production subsidies. The effect of an ethanol price premium depends on the value of the ethanol co-product, the value of production subsidies, and how the world ethanol price is determined. U.S. corn-ethanol policies are shown to be a major reason for recent rises in corn prices. The ethanol policy-induced increase in corn prices is estimated to be 33 - 46.5 percent in the period 2008 - 2011. The second chapter seeks to answer the question of what caused the significant increase in ethanol, sugar, and sugarcane prices in Brazil in the period 2010/11 to 2011/12. We develop a general economic model of the Brazilian fuel-ethanol-sugar complex. Unlike biofuel mandates and tax exemptions elsewhere, Brazil's fuel-ethanol-sugar markets and fuel policies are unique in that each policy, in this setting, theoretically has an ambiguous impact on the market price of ethanol and hence on sugarcane and sugar prices. Our empirical analysis shows that there are two policies that seemingly help the ethanol industry but do otherwise in reality: a low gasoline tax and a high anhydrous tax exemption result in lower ethanol prices. On the other hand, as expected, higher mandates, gasoline prices, and tax exemptions for hydrous ethanol lead to higher ethanol and sugar prices. Eliminating Brazilian ethanol tax exemptions and mandates reduces ethanol prices by 21 percent in 2010-11, which is very similar to the estimated effects of U.S. ethanol policies in the same time period. However, the marginal changes in Brazilian policies on ethanol prices between 2010-11 and 2011-12 are small both individually and collectively. The observed market changes can only be explained by outward shifts in fuel transportation and sugar export demand curves, and reduced sugarcane supply due to bad weather. In the third chapter, we investigate whether U.S. corn ethanol saves greenhouse gas emissions relative to the gasoline it is assumed to replace one-to-one (on an energy equivalent basis). This chapter shows that ethanol policies generate far greater carbon leakage in the fuel market than in the agricultural market, where leakage occurs in the form of land use change. Carbon leakage in the fuel market due to a tax credit is always greater than that of a mandate, while the combination of a mandate and subsidy generates greater leakage than a mandate alone. We show that corn-ethanol does not meet the U.S. EPA's sustainability threshold, regardless of the biofuel policy and whether one includes emissions from land use change. This result makes the controversy over how to measure land use change inconsequential. | en_US |
| dc.identifier.other | bibid: 8267085 | |
| dc.identifier.uri | https://hdl.handle.net/1813/33994 | |
| dc.language.iso | en_US | en_US |
| dc.subject | biofuels | en_US |
| dc.subject | policies | en_US |
| dc.subject | prices | en_US |
| dc.subject | environment | en_US |
| dc.subject | USA | en_US |
| dc.subject | Brazil | en_US |
| dc.title | The Market And Environmental Effects Of Alternative Biofuel Policies | en_US |
| dc.type | dissertation or thesis | en_US |
| thesis.degree.discipline | Agricultural Economics | |
| thesis.degree.grantor | Cornell University | en_US |
| thesis.degree.level | Doctor of Philosophy | |
| thesis.degree.name | Ph. D., Agricultural Economics |
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