Cross‐trade in Biofuels: How Uncoordinated Environmental Legislation Fuels Resource Use and GHG Emissions. (December 2013)

• Record Type: Journal Article
• Authors: Meyer, Seth; Schmidhuber, Josef; Barreiro‐Hurlé, Jesús
• Is Part Of: EuroChoices. Volume 12:Number 3(2013)
• Page Start: 45
• Page End: 52
• Publication Date: 2013-12
• Subjects: Agriculture -- Economic aspects -- Europe -- Periodicals; Agricultural industries -- Europe -- Periodicals; 338.109405
• DOI: 10.1111/1746-692X.12040
• Languages: English
• ISSNs: 1478-0917

Abstract

<abstract abstract-type="main" id="euch12040-abs-0001"> <title>Summary</title> <p>The uncoordinated and distinct biofuel policies in Brazil and the US have induced cross‐trade of physically identical, but legislatively differentiated, ethanol between the two countries. US biofuel policy distinguishes between biofuels based primarily on feedstocks and estimated greenhouse gas reduction scores. In doing so, the US treats ethanol produced from maize starch differently than that produced from sugarcane, giving preference to sugarcane ethanol. Alternatively, Brazil makes no distinction between feedstocks, instead setting a minimum ethanol inclusion rate for retail gasoline blends, giving rise to arbitrage opportunities through biofuel exchange between the two countries. Under the US Energy Independence and Security Act of 2007, future cross‐trade between the two countries could be multiples of what has been seen to date and recent actions by the EU commission concerning the Renewable Energy Directive could draw it into the trilateral trade of biofuels. The proposed 'book and claim' system could allow countries to maintain individual policy objectives and mitigate the negative externalities – additional transport costs and greenhouse gas emissions – of biofuel cross‐trade due to uncoordinated biofuel policies.</p> </abstract>