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Modelling the Global Trade and Environmental Impacts of Biofuel Policies

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Antoine Bou√ęt, Betina V. Dimaranan, Hugo Valin
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This report develops a methodology for assessing the indirect land use change effects related to biofuel policies. This methodology is then applied to look at the impacts of biofuel (ethanol) policies for transportation in the United States and in the European Union with and without ethanol trade liberalization and concludes that emissions released because of ethanol programs significantly worsen the total carbon balance of biofuel policies. The authors rely on a modified version of the trade policy computable general equilibrium (CGE) model MIRAGE, or modeling international relationships in applied general equilibrium, and on an expanded global trade analysis project (GTAP) Seven database.