The Effect of Biodiesel Policies on World Oilseed Markets and Developing Countries

de Gorter, Harry; Drabik, Dusan; Timilsina, Govinda R.

The Effect of Biodiesel Policies on World Oilseed Markets and Developing Countries

Autores

de Gorter, Harry

Drabik, Dusan

Timilsina, Govinda R.

Editor

World Bank, Washington, DC

Descripción

Using an empirical model, this study provides some insights into the functioning of the oilseed-biodiesel-diesel market complex in a large country that determines the biodiesel price, reflecting market equilibrium changes resulting from volatility in the crude oil price. Oilseed crushing produces joint products -- oil and meal -- and this weakens the link between the biodiesel and oilseed feedstock prices. Higher crude oil prices increase biodiesel prices if biofuel benefits from a fuel tax exemption, but lower them with a blending mandate (minimum biofuel content requirement in marketed fuel). When both canola and soybeans are used to produce biodiesel, an increase in the crude oil price leads to higher canola prices, but the effect on soybean prices is ambiguous and depends on relative elasticities of meal demand and canola supply because canola produces more oil than soybeans. An oil price shock with a blending mandate results in a smaller change in oilseed prices compared with a fuel tax exemption. Jumps in world crude oil prices have differential impacts on commodity prices and welfare in developing countries, depending on which policy determines the biodiesel price in OECD countries.

Palabras clave

BAGASSE, BARREL, BIODIESEL, BIOFUEL, BIOFUEL PRODUCTION, BIOFUELS, CANOLA, CO, COMMODITIES, COMMODITY, COMMODITY PRICES, CONSUMER FUEL, CONVENTIONAL DIESEL, CORN, CORN PRICES, CORN-ETHANOL, CRUDE OIL, CRUDE OIL MARKET, CRUDE OIL PRICE, CRUDE OIL PRICE VOLATILITY, CRUDE OIL PRICES, DEMAND CURVE, DEMAND CURVES, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DEVELOPING ECONOMIES, DIESEL, DIESEL FUEL, DIESEL FUEL CONSUMPTION, DUMPING, ECONOMIC PERSPECTIVES, ELECTRICITY, EMPIRICAL MODEL, ENERGY POLICIES, ENVIRONMENTAL PROTECTION, ENVIRONMENTAL PROTECTION AGENCY, ETHANOL, ETHANOL CASE, ETHANOL MARKET, ETHANOL PRICES, ETHANOL PRODUCTION, FEEDSTOCK, FEEDSTOCK PRICES, FEEDSTOCK SUPPLY, FEEDSTOCKS, FINANCIAL SUPPORT, FOOD PRICES, FUEL, FUEL CONSUMPTION, FUEL DEMAND, FUEL MARKET, FUEL PRICE, FUEL PRICES, FUEL TAX, FUEL TAXES, FUEL USE, FUELS, GASOLINE, GENERATION, GRAIN PRICES, INCOME, INDIVIDUAL MARKET, JATROPHA, MARGINAL COST, MARGINAL COSTS, MARKET EQUILIBRIUM, MARKET PARTICIPANTS, MARKET PRICE, MARKET PRICES, OIL CONSUMPTION, OIL MARKETS, OIL PRICES, OILS, PRICE DECREASES, PRICE INCREASES, PRICE SETTING, PRICE VOLATILITY, PRIMARY FEEDSTOCK, RAPESEED, RENEWABLE FUEL, SMALL COUNTRY, SOYBEAN MEAL, SOYBEAN OIL, SOYBEAN PRODUCTION, SOYBEANS, SUBSTITUTES, SUBSTITUTION, SUGAR, SUGARCANE, SUGARCANE-ETHANOL, SUPPLY CURVE, SUPPLY ELASTICITY, TAX CREDIT, TAX EXEMPTION, VEGETABLE OIL, VOLATILITY, WORLD MARKETS