A Global General Equilibrium Analysis of Biofuel Mandates and Greenhouse Gas Emissions

In the last decade, global biofuel production has grown rapidly as a result of oil price increases and government policies promoting the development of biofuels. Though reducing greenhouse gas (GHG) emissions is one of the stated policy goals (along with increasing energy security and promoting rural development), the GHG implications of biofuels have come under intense scrutiny. Particular attention has been focused on GHG impacts of the direct and indirect land use change (LUC) associated with feedstock production for the commercially viable,first-generation biofuels. Global biofuel production currently represents about 3% of total transportation fuels, with the vast majority of production concentrated in the United States, Brazil, and the European Union. The primary sources are maize feedstock ethanol in the United States, sugarcane feedstock ethanol in Brazil, and oilseed feedstock biodiesel in the European Union.All three regions have mandatory requirements to increase production or consumptionofbiofuelsoverthenextfivetoseven years, as well as other policies in place to promote production. The conventional wisdom has been that substituting ethanol for gasoline will reduce GHG emissions modestly with maize feedstock and substantially with sugarcane or second-generation cellulosic feedstocks and