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GTAP Resource #3959

"Growth of the Brazilian biofuel sector: an inter-temporal general equilibrium analysis"
by Vinyes, Cristina and Terry Roe

Approximately 90% of the worlds commercially produced energy is obtained from non-renewable fossil fuels such as crude oil, coal, and gas (Birur et al. 2008). In order to enhance energy security and independence, many countries, such as Brazil, have supported the production and use of renewable energy sources such as biofuels.
According to Martines-Filho et al. 2006, Brazil is the only country in the world able to produce ethanol from sugarcane at sufficiently low costs to be competitive. As ethanol in Brazil is made from sugarcane, sugar industry developments are now increasingly linked to policy initiatives in ethanol markets. Sugar represents a particularly important component of Brazils economy, with the sugar/ethanol industry contributing 2% to national gross domestic product (Valdes, C. 2007) which places Brazil as the worlds largest exporter of sugar and ethanol (ANFAVEA, 2006). A complex linkage between the production of sugarcane, sugar and ethanol has evolved as per capita income has grown and capital deepening has occurred.
One major factor is felt to contribute to the growth of biofuels, the improvement in the external terms of trade, induced indirectly by the rise in fossil fuel prices and the complex inter-linkages with the sugar sector.
Though there is a plethora of literature modeling the economics of biofuels, one major problem of these studies is that they do not provide a validating exercise of their models forecasts. In addition, they fail to depict the economic forces of structural transformation in which sectors of the economy compete for economy-wide resources in the process of economic growth, and hence these models poorly capture, if at all, the effects of possible impediments to growth on the biofuel sector or the dynamic effects of changes in a countries terms of trade over time.

Resource Details (Export Citation) GTAP Keywords
Category: 2012 Conference Paper
Status: Published
By/In: Presented at the 15th Annual Conference on Global Economic Analysis, Geneva, Switzerland
Date: 2012
Created: Vinyes, C. (5/3/2012)
Updated: Vinyes, C. (5/3/2012)
Visits: 1,532
- Economic growth
- Renewable energy
- Dynamic modeling
- South America

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