World Oil Price and Biofuels : A General Equilibrium Analysis

Timilsina, Govinda R.; Mevel, Simon; Shrestha, Ashish

World Oil Price and Biofuels : A General Equilibrium Analysis

Autores

Timilsina, Govinda R.

Mevel, Simon

Shrestha, Ashish

Descripción

The price of oil could play a significant role in influencing the expansion of biofuels. However, this issue has not been fully investigated yet in the literature. Using a global computable general equilibrium model, this study analyzes the impact of oil price on biofuel expansion, and subsequently, on food supply. The study shows that a 65 percent increase in oil price in 2020 from the 2009 level would increase the global biofuel penetration to 5.4 percent in 2020 from 2.4 percent in 2009. A doubling of oil price in 2020 from its baseline level, or a 230 percent increase from the 2009 level, would increase the global biofuel penetration in 2020 to 12.6 percent. The penetration of biofuels is highly sensitive to the substitution possibility between biofuels and their fossil fuel counterparts. The study also shows that aggregate agricultural output drops due to an oil price increase, but the drop is small in major biofuel producing countries as the expansion of biofuels would partially offset the negative impacts of the oil price increase on agricultural outputs. An increase in oil price would reduce global food supply through direct impacts as well as through diversion of food commodities and cropland toward the production of biofuels.

Palabras clave

AGRICULTURAL COMMODITIES, AGRICULTURAL ECONOMICS, AGRICULTURAL OUTPUT, AGRICULTURAL PRODUCTION, AGRICULTURE, ALLOCATION, ALTERNATIVE SCENARIOS, AVAILABILITY, BALANCE, BILATERAL TRADE, BIODIESEL, BIOFUEL, BIOFUEL PRODUCTION, BIOFUELS, BIOFUELS PRODUCTION, CAPITAL STRUCTURE, CARBON SEQUESTRATION, CLEAN DEVELOPMENT, CLIMATE, CLIMATE CHANGE, CLIMATE CHANGE POLICY, CLIMATE POLICY, COAL, COMMERCIAL ENERGY, CONSUMER PRICE, CONSUMER PRICE INDEX, CORN, COST OF CARBON, CROP, DEFORESTATION, DEMAND FOR ENERGY, DEMAND FOR FOOD, DEVELOPMENT ECONOMICS, DIESEL, DYNAMIC COMPUTABLE GENERAL EQUILIBRIUM, DYNAMIC MODEL, ECONOMIC ANALYSIS, ECONOMIC SYSTEMS, ECONOMY-WIDE IMPACTS, EFFICIENCY IMPROVEMENT, ELECTRIC ENERGY, ELECTRICITY, EMISSION, EMISSIONS, ENERGY CAPITAL, ENERGY DEMAND, ENERGY ECONOMICS, ENERGY ECONOMISTS, ENERGY EFFICIENCY, ENERGY EFFICIENCY IMPROVEMENT, ENERGY SECTOR, ENERGY SECURITY, ENERGY USE, ENERGY-INTENSIVE MANUFACTURING, ENVIRONMENTAL IMPACTS, ENVIRONMENTAL MANAGEMENT, ETHANOL, EXPENDITURE, EXPORT MARKETS, FEEDSTOCK, FEEDSTOCKS, FINANCIAL SUPPORT, FOOD CROPS, FOOD SUPPLY, FOSSIL, FOSSIL FUEL, FOSSIL FUEL COUNTERPARTS, FOSSIL FUELS, FREE TRADE, FRUIT, FRUITS, FUEL CONSUMPTION, FUEL MIX, FUEL OILS, FUEL SUPPLY, GAS, GASOLINE, GENERAL EQUILIBRIUM MODEL, GHG, GLOBAL FOOD SUPPLY, GRAINS, GROSS OUTPUT, HOUSEHOLD CONSUMPTION, HOUSEHOLD EXPENDITURES, HOUSEHOLD INCOME, HOUSEHOLD SECTOR, IMPORT PRICES, IMPORTS, INCOME, INTERMEDIATE GOODS, INTERNATIONAL TRADE, LAND USE, LAND USE CHANGE, LAND-USE CHANGE, LIQUID FUEL, MARKET CLEARING PRICE, MARKET EQUILIBRIUM, MARKET PRICE, MONETARY VALUE, OIL, OIL PRICE, OIL PRICES, OIL SEEDS, OILS, PER CAPITA CONSUMPTION, POLICY MAKERS, POWER, PRICE CHANGES, PRICE INCREASE, PRICE INCREASES, PRICE INDEX, PRICE LEVEL, PRICE OF OIL, PROCESSED FOODS, PRODUCER PRICE, SALES, SENSITIVITY ANALYSES, SOYBEANS, STEEL, SUBSTITUTION, SUGAR, SUGAR BEET, SUGAR CANE, SUGAR CROPS, SUGARCANE, SUPPLIERS, SUPPLY SIDE, TOTAL DEMAND, TRANSPORTATION FUEL, VEGETABLES, VEHICLES, WHEAT