GTAP Resources: Resource Display
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"Interactions between on liquid fossil fuel subsidies and global biofuels mandates" by Argueyrolles, Robin and Ruth Delzeit Abstract Fossil Fuel Subsidy Reforms (FFSR) to support governments’ climate objectives are gaining traction in the political sphere, such as in the European Union, where it is explicitly mentioned in the ‘Green Deal’. At the same time, mandates like the Renewable Energy Directive (RED) that aim to increase biofuel consumption and often inscribed in government energy transition strategy. These two fuel types are known to interact through price mechanisms (Delzeit et al. 2021c; Winchester & Ledvina, 2017), yet the impact of fossil fuels and biofuel policies on one another remains to be investigated. Using the DART-BIO model, a Computable General Equilibrium (CGE) model, we study how phasing out fossil fuel consumption subsidies and biofuel mandates would impact one another. We find that phasing out subsidies increases the price of fossil fuels and lowers consumption. Regions with biofuel mandates would therefore benefit from a Fossil Fuel Subsidy Reform (FFSR) as the government support needed to reach a biofuel consumption target would lower. Some fossil fuel consumption would however be diverted to exports, resulting in downward pressures on the world price. Regions with no or relatively low subsidies, would therefore experience an increase in fossil fuel consumption and require larger government support to reach their biofuel targets. Still, regardless of the leakage effect of both policies, the policies have an additive effect and both lead to a drop in the consumption of fossil fuels and an increase in the consumption of biofuels while lowering government spending. |
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- Renewable energy - Climate change policy |
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Public Access  The interconnections between Fossil Fuel Subsidy Reforms and biofuels mand (777.2 KB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions No instructions have been specified. |
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Last Modified: 9/15/2023 2:05:45 PM
