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Implications of Biofuel Support Policies in Europe - A Quantitative Analysis in an Open Economy María Blanco, Shailesh Shrestha, Marcel Adenaeuer and Arno.

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Presentation on theme: "Implications of Biofuel Support Policies in Europe - A Quantitative Analysis in an Open Economy María Blanco, Shailesh Shrestha, Marcel Adenaeuer and Arno."— Presentation transcript:

1 Implications of Biofuel Support Policies in Europe - A Quantitative Analysis in an Open Economy María Blanco, Shailesh Shrestha, Marcel Adenaeuer and Arno Becker Contact: maria.blanco@upm.es María Blanco, Shailesh Shrestha, Marcel Adenaeuer and Arno Becker Contact: maria.blanco@upm.es 16 th ICABR / 126 th EAAE – Ravello 24-27 June 2012

2 Outline  EU biofuels support  Biofuels modelling with CAPRI  Scenario setting  Main results  Concluding remarks 2

3 EU biofuels support EU biofuels support

4 Blanco et al. 2012 Biofuels production and use have significantly grown during the last decade in the EU Growth in biofuels production and use mainly driven by public support EU Renewable Energy Directive  Target of 10% renewable energy in total transport energy consumption by 2020  Implementation mechanisms at the MS level: quota obligations and tax exemptions for biofuels 4

5 EU Biodiesel Production (1000 t) Source: CAPRI database (several raw sources)

6 EU Ethanol Production (1000 t) Source: CAPRI database (several raw sources)

7 Blanco et al. 2012 The development of the biofuel sector raises a number of concerns Contribution to reduce dependence from fossil fuels? Contribution to reduce GHG emissions? Contribution to maintain agricultural income? Food-fuel linkages, in particular competition for land and impacts on food prices 7

8 Research questions  What are the impacts of the current EU biofuels strategy on global biofuel and agricultural markets?  How these impacts will change if the EU eliminate tariffs for biofuels imports?  How these impacts will change in case of a faster development path of second generation technologies? 8

9 Biofuels modelling with CAPRI Biofuels modelling with CAPRI

10 Blanco et al. 2012 What is CAPRI? Global Spatial Multi-Commodity Model Regional Programming Models 280 regions for EU27+Norway +Western Balkans, detailed representation of farming decisions and CAP measures 77 countries in 40 trade blocks, 60 primary and secondary products, agricultural and trade policy measures Spatial partial equilibrium model of agricultural commodity markets at the global level Two interlinked modules: 10

11 Blanco et al. 2012 Biofuels module Global representation of biofuels markets (ethanol and biodiesel) Endogenous supply, demand and trade flows for biofuels For domestic production, two technological pathways (first generation and second generation biofuels) 11

12 Blanco et al. 2012 Ethanol markets 12

13 Blanco et al. 2012 Biodiesel markets 13

14 Scenario setting Scenario setting

15 Blanco et al. 2012 Scenario setting 15 Baseline 2020 Agricultural market developments (in line with DG- AGRI baseline 2010) EU biofuels support (mandates and tax exemptions) Status quo for agricultural and trade policies Counterfactual scenarios 1. No EU biofuel support (no mandates and no tax exemptions) 2. No EU biofuel tariffs (no EU tariffs for biofuel imports) 3. High second generation (faster development path for 2 nd gen. technologies)

16 Scenario results Scenario results

17 Baseline results compared to last year data (EU27) EthanolBiodiesel

18 Baseline results (MS level) Ethanol (1000 t)Biodiesel (1000 t) SupplyNet TradeDemandSupplyNet TradeDemand European Union 2715202-9811618315480-363319113 European Union 159784-41081389113724-366017384 European Union 125418312722921756271730 Germany1416-2197361443269473380 France26031485111836175703048 Spain133310712261075-19713047 Italy403-137717801107-12822389 United Kingdom2469-57730461614-3992013 Czech Republic71834936931528287 Poland130835994968725661 Romania13411167174113-24137

19 Biofuels market balances in the EU Baseline (1000 t) Percentage change compared to baseline No biofuel supportNo biofuel tariffsHigh 2nd gen. EthanolBiodieselEthanolBiodieselEthanolBiodieselEthanolBiodiesel Production1524515469-73.8-76.4-11.7-1.36.310.7 of which 1st gen.1226610921-71.4-68.3-14.6-1.8-32.8-23.2 of which 2nd gen.29794549-83.3-95.90.0 167.392.3 Consumption1618319113-75.7-79.55.10.86.75.2 of which fuel use1458619113-84.8-79.55.60.87.25.2 Baseline (Euros/ toe) Percentage change compared to baseline No biofuel supportNo biofuel tariffsHigh 2nd gen. EthanolBiodieselEthanolBiodieselEthanolBiodieselEthanolBiodiesel Consumer price 126313087.8-18.3-11.1-1.9-11.7-16.2

20 Biofuels market balances in the EU Baseline (1000 t) Percentage change compared to baseline No biofuel supportNo biofuel tariffsHigh 2nd gen. EthanolBiodieselEthanolBiodieselEthanolBiodieselEthanolBiodiesel Imports 59035181-82.7-88.835.86.1-9.0-10.4 Exports436119113 -27.4-80.2-9.0-2.612.68.6 BaselineNo biofuel supportNo biofuel tariffsHigh 2nd gen. EthanolBiodieselEthanolBiodieselEthanolBiodieselEthanolBiodiesel Energy share (%) 10.18.01.51.610.58.110.68.5

21 First generation biofuels by feedstock (EU27) Percentage change compared to baseline Baseline (1000 t) No biofuel support No biofuel tariffs High 2nd generation Ethanol from Wheat3836-75.8-15.1-35.6 Barley1912-72.3-15.6-32.8 Rye854-58.7-13.1-22.5 Oats381-74.3-13.8-34.6 Maize2015-76.4-16.8-35.7 Other Cereals358-71.3-19.0-32.1 Sugar2840-64.6-11.6-29.9 Biodiesel from Rape oil7129-61.0-1.1-17.3 Sunflower oil1205-78.1-2.0-26.3 Soy oil1102-77.3-3.8-27.7 Palm oil1484-89.1-3.3-45.9

22 Effects on EU crop production Percentage change compared to baseline Baseline (1000 t) No biofuel support No biofuel tariffs High 2nd generation Soft wheat141738-2.3-0.4 Durum wheat10264-1.3-0.2-0.6 Barley60964-2.7-0.5-1.1 Rye and meslin10436-5.4-1.4-2.5 Oats14371-2.1-0.3-0.9 Grain maize65586-2.8-0.5-1.1 Sugar beet107716-5.2-0.8-2.2 Rape seed24622-5.1-0.1-2.1 Sunflower seed7701-2.30.1-0.8 Soya seed11780.1 0.0

23 Effects on EU crop producer price Percentage change compared to baseline Baseline (1000 t) No biofuel support No biofuel tariffs High 2nd generation Soft wheat136.1-4.0-0.5-1.5 Durum wheat168.4-2.1-0.2-0.8 Barley125.8-4.8-0.7-1.7 Rye and meslin98.7-11.2-2.5-4.1 Oats119.2-4.6-0.7-1.6 Grain maize136.9-4.2-0.6-1.5 Sugar beet30.5-15.4-1.8-6.7 Rape seed290.0-7.2-0.2-2.8 Sunflower seed294.3-4.60.1-1.6 Soya seed375.7-0.80.1-0.3

24 Effects on EU cropland allocation Percentage change compared to baseline Baseline (1000 t) No biofuel support No biofuel tariffs High 2nd generation Soft wheat22947.0-0.2-0.5 Durum wheat3120.0-0.7-0.1-0.3 Barley12845.7-1.4-0.3-0.7 Rye and meslin3024.0-1.6-0.5-1.2 Oats4251.2-0.6-0.1-0.4 Grain maize8591.8-1.4-0.2-0.5 Sugar beet1396.8-4.9-0.7-2.0 Rape seed6783.4-3.50.0-1.5 Sunflower seed3544.3-1.30.1-0.5 Soya seed462.90.20.10.0

25 Regional effects on agricultural income (%change) No EU biofuel supportNo EU biofuel tariffsHigh 2 nd generation

26 Demand balance (maize) Percentage change compared to baseline Baseline (1000 t) No biofuel support No biofuel tariffs High 2nd generation Total Demand66133-3.3-0.6-1.3 Human Consumption 53840.20.00.1 Feed499223.51.12.1 Processing37167.61.12.8 Biofuels processing5554-76.4-16.8-35.7 Other uses1557-1.2-0.2-0.5

27 Blanco et al. 2012 Biofuels trade 27 Percentage change compared to baseline Baseline (1000 t) No biofuel support No biofuel tariffs High 2nd generation Ethanol Ukraine 633.7-92.133.8-19.0 USA 408.2-95.846.1-38.8 Brazil 474.4-95.654.8-37.7 Asian Tigers 392.7-92.040.7-26.3 Asian South East 611.4-92.272.9-26.6 Biodiesel USA 1462.5-91.58.5-18.4 Argentina 1281.6-92.110.3-18.0 Malaysia and Indonesia 371.7-96.111.9-19.1 Asian South East 52.5-96.816.0-25.9

28 Global biofuels production Baseline (1000 t) Percentage change compared to baseline No biofuel supportNo biofuel tariffsHigh 2nd gen. EthanolBiodieselEthanolBiodieselEthanolBiodieselEthanolBiodiesel EU1524515469-73.8-76.4-11.7-1.36.310.7 Non-EU13343916648-1.4-8.31.21.1-0.4-1.3 Russia40670.2-0.10.1 Ukraine2522-9.34.2-2.0 USA546683058-0.9-9.70.41.1-0.3-2.0 Canada8403600.10.60.40.0 0.2 Brazil574732251-0.62.80.4-0.1 0.9 Argentina4593043-0.3-12.70.12.0-0.1-1.1 India22252939-0.90.10.80.0-0.30.0 China4340-0.10.1-0.1 Malaysia and Ind.4551886-1.2-18.70.32.3-0.2-3.5 Asian Tigers1091-19.37.6-5.5 Asian South East21771174-8.1-2.97.00.6-2.4-0.6 World14868432118-8.8-41.1-0.10.00.34.5

29 Concluding remarks  Biofuels production and use will remain mainly driven by public support  Strong links of biofuels to agricultural markets  Development of second generation technologies would ease food-fuel links 29

30 Thanks for your attention!

31 2020 Quota obligation BIODBIOE BL6.0 DK6.0 DE9.08.7 AT7.56.4 NL6.72.9 FR8.05.2 PT5.52.8 ES7.67.5 EL5.23.5 IT8.24.1 IR6.02.9 FI5.94.5 SE6.0 UK6.4 CZ6.04.1 EE4.12.8 HU6.02.4 LT5.14.2 LV5.72.0 PL6.03.4 SI8.02.6 SK5.93.0 CY2.90.8 MT1.10.6 BG2.41.7 RO2.31.6 EU biofuels support

32 Conversion rates tonnes/1000 llitres/tonnetoe/tonne Diesel0.8312051.01 Gasoline0.7213891.05 Biodiesel0.8811360.86 Ethanol0.7912660.64

33 Fuel consumption Baseline (1000 t) Percentage change compared to baseline No biofuel supportNo biofuel tariffsHigh 2nd gen. GasolineDieselGasolineDieselGasolineDieselGasolineDiesel Use in the transport sector (1000 t) 79026.0 185973. 9 9.57.0-0.6-0.1-0.8-0.5 Energy share in total fuel use (%) 89.992.09.67.0-0.5-0.1-0.5 Consumer price (Euro/ton) 1411.41087.10.00.10.0 Consumer taxes (Euro/Ton) 736.8493.60.1 0.0

34 Blanco et al. 2012 Trade blocks in CAPRI Asian Tigers (Hong Kong, Singapore, South Korea) Asian South East (Vietnam, Thailand, Brunei)

35 Blanco et al. 2012 Global biofuel production and recent trends 35

36 Blanco et al. 2012 Previsiones de futuro

37 Blanco et al. 2012 Increase in cereals production driven by biofuels feedstock demand 37 Fuente: Comisión Europea (2011)

38 Blanco et al. 2012 Crop prices will stay high 38 Fuente: Comisión Europea (2011)

39 Blanco et al. 2012 Production and consumption of biofuels will double in the EU in the next 10 years 39 Fuente: Comisión Europea (2011)

40 Blanco et al. 2012 Important role of biofuels imports 40 Fuente: Comisión Europea (2011)

41 Blanco et al. 2012 Ethanol: increasing feedstock demand 41 Fuente: Comisión Europea (2011)

42 Blanco et al. 2012 Biodiesel: dependence on imports 42 Fuente: Comisión Europea (2011)

43 Blanco et al. 2012 US: uso creciente de DDGS en alimentación animal 43 Fuente: Taheripour et al. 2010

44 Blanco et al. 2012 UE: uso creciente de tortas de oleaginosas en alimentación animal 44 Fuente: Taheripour et al. 2010

45 Blanco et al. 2012 UE: disminución del precio relativo de la torta de colza respecto a otras materias primas 45 Fuente: Taheripour et al. 2010

46 Blanco et al. 2012 Tariffs

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