The Impacts Of Biofuels On The Economy, Environment, And Poverty: A Global Perspective (natural Resource Management And Policy)

Interest in biofuels began with oil shocks in the 1970’s, but the more rapid development and consumption of biofuel industry in recent years has been primarily driven by mandates, subsidies, climate change concerns, emissions targets and energy security. From 2004 to 2006, fuel ethanol grew by 26% and biodiesel grew by 172%. As biofuel production continues to expand, investments in capacity expansion and research and development have been made. The 2008 food crisis emphasized the need to re-examine biofuel consequences. Biofuels remain an important renewable energy resource to substitute for fossil fuels, particularly in the transportation sector, yet biofuels’ success is still uncertain. The future of biofuels in the energy supply mix relies on mitigating potential and improving the environmental gains. This book brings together leading authorities on biofuel from the World Bank to examine all of the impacts of biofuel (economic, social, environmental) within a unified framework and in a global perspective, making it of interest to academics in agricultural and environmental economics as well as industry and policy-makers. Foreword 6 Acknowledgements 8 Contents 10 Contributors 12 List of Figures 14 List of Tables 18 Chapter 1: An Overview of Global Markets and Policies 20 1.1 Background 20 1.2 Production, Consumption, and Trade 21 1.3 Pricing 25 1.4 Policies 26 1.5 Investments in Capacity 27 1.6 Closing Remarks 29 Appendix: Biofuels Targets and Blending Mandates 30 References 31 Chapter 2: Biofuel Technologies and Potential 34 2.1 Introduction 34 2.2 Ethanol Production Process 35 2.2.1 Pretreatment 35 2.2.2 Hydrolysis 37 2.3 Lignocellulosic Feedstocks 37 2.3.1 Types of Feedstocks 37 2.3.2 Lignocellulosic Ethanol: Research and Development 39 2.3.3 Pilot Facilities for Lignocellulosic Ethanol Production 40 2.4 Biodiesel Production Process 41 2.4.1 Types of Biodiesel Feedstocks 41 2.4.2 Biodiesel: Research and Development 45 2.4.3 Microalgal Biodiesel: Pilot Facilities 46 2.5 Production of Biomethanol and Fischer–Tropsch Fuels 46 2.5.1 Gasification 46 2.5.2 Biomethanol Production from Syngas 48 2.5.3 Fischer–Tropsch Fuels 48 2.5.4 Biomethanol and F–T Fuels: Research and Development 49 2.6 Closing Remarks 49 References 50 Chapter 3: Production Costs of Biofuels 51 3.1 Introduction 51 3.2 First Generation Biofuels 52 3.2.1 Ethanol 53 3.2.2 Biodiesel 54 3.3 Cost of Second Generation Biofuels 56 3.3.1 Ethanol from agricultural residues 58 3.3.2 Forest Residues 59 3.3.3 Energy Crops 59 3.4 Closing Remarks 61 References 62 Chapter 4: Impacts of Biofuels on Food Prices 65 4.1 Introduction 65 4.2 Prior Research 66 4.3 Historical Price Trends 69 4.4 Methodology 72 4.4.1 Multi-market Analysis 72 4.4.2 Numerical Model 73 4.4.3 Numerical Scenarios 73 4.5 Results 74 4.5.1 The Baseline Scenario 75 4.6 Sensitivity Analysis 78 4.6.1 Inelastic Scenario 79 4.7 Conclusions 80 References 81 Chapter 5: Economic Impacts of Biofuels 83 5.1 Introduction 83 5.2 Methodology 84 5.3 Impacts on GDP 86 5.4 Impacts on Economic Welfare 88 5.5 Impacts on Sectoral Outputs 88 5.6 Impacts on International Trade 90 5.7 Impacts on Commodity Prices 92 5.8 Conclusions 94 References 95 Chapter 6: Biofuels and Poverty 96 6.1 Introduction 96 6.2 Analytical Framework 97 6.3 Effects on World Prices of Feedstock and Food 98 6.4 Effects on Factor Prices and Income 99 6.5 Effects on Labor Movement 100 6.6 Effects on Poverty and Income Distribution 101 6.7 Closing Remarks 105 References 105 Chapter 7: Land-Use Change and Food Supply 107 7.1 Introduction 107 7.2 Land-Use Change due to Biofuels in the Short Run 108 7.3 Land-Use Change due to Biofuels in the Long Run 112 7.4 Conclusions 115 Appendix 116 References 117 Chapter 8: Oil Price and Biofuels 119 8.1 Introduction 119 8.2 Impacts of Increased Oil Prices on Biofuels 120 8.3 Impacts of Biofuels on Other Energy Commodities 123 8.4 Conclusions 124 References 125 Chapter 9: Biofuels and Climate Change Mitigation 127 9.1 Introduction 127 9.2 Methodology to Calculate GHG Emissions 131 9.3 The Impacts of Biofuel Expansion on GHG Emissions 132 9.3.1 Impacts on Annual Emissions 132 9.3.2 Impacts on Cumulative Emissions 133 9.4 Securing Climate Change Mitigation from Biofuels 134 9.5 Closing Remarks 137 References 137 Chapter 10: Biofuel Policies: Subsidy vs. Carbon Tax 139 10.1 Introduction 139 10.2 Simulation Scenarios 140 10.3 Simulation Results 140 10.3.1 Comparing Across Scenarios 140 10.3.2 Comparing Across Countries, Regions 141 10.4 Impacts on CO 2 Emissions 144 10.5 Conclusions 145 References 145 Chapter 11: Political Economy of Biofuels 146 11.1 Introduction 146 11.2 A Conceptual Framework 149 11.3 Special Cases 151 11.3.1 United States 151 11.3.2 Brazil 152 11.3.3 Europe 153 11.3.4 Asia 154 11.4 Conclusions 155 Appendix 156 References 157 Front Matter....Pages i-xviii An Overview of Global Markets and Policies....Pages 1-14 Biofuel Technologies and Potential....Pages 15-31 Production Costs of Biofuels....Pages 33-46 Impacts of Biofuels on Food Prices....Pages 47-64 Economic Impacts of Biofuels....Pages 65-77 Biofuels and Poverty....Pages 79-89 Land-Use Change and Food Supply....Pages 91-102 Oil Price and Biofuels....Pages 103-110 Biofuels and Climate Change Mitigation....Pages 111-122 Biofuel Policies: Subsidy vs. Carbon Tax....Pages 123-129 Political Economy of Biofuels....Pages 131-144