Employment impacts of EU biofuels policy: Combining bottom-up technology information and sectoral market simulations in an input–output framework

Abstract

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp08049.pdf 1 Non-Technical SummaryThis paper analyses the employment consequences of policies aimed to support biofuels in the European Union. The promotion of biofuel use has been advocated as a means to promote the sustainable use of natural resources and to reduce greenhouse gas emissions originating from transport activities on the one hand, and to reduce dependence on imported oil and thereby increase security of the European energy supply on the other hand. The employment impacts of increasing biofuels shares are calculated by taking into account a set of elements comprising the demand for capital goods required to produce biofuels, the additional demand for agricultural feedstock, higher fuel prices or reduced household budget in the case of price subsidisation, price effects ensuing from a hypothetical world oil price reduction linked to substitution in the EU market, and price impacts on agro-food commodities. This paper uses input-output methods to combine information originating from bottom-up studies and energy and agricultural simulations that were conducted in parallel and used as input to the input output (IO) model. This paper complements the existing literature in several ways. From a policy point of view, it provides a rich set of simulation results for several policy-relevant biofuels penetration scenarios under different financing schemes including a set of sensitivity runs. From a methodological point of view, we provide an extension of previous input-output approaches by combining bottom-up technology information and sectoral market simulations in our input-output framework. The input-output model is based on a 57-sector input-output table for the EU-25, whereas 7 new sectors were then added to the IO table to describe petrol and diesel fuels and their bio-based substitutes -bioethanol and biodiesel each produced by two different technologies -and a sector providing the capital goods for the production of biofuels. The input-output model incorporates different modules, including a mixed endogenous-exogenous variables IO model (which was used to accommodate constraints on agricultural production), an IO price model that computed the endogenous vector of commodity prices after an exogenous price increase, and a Quadratic Almost Ideal Demand System, which calculated the final demand vector subject to prices and to the household budget. The calculations refe...

The impacts of the German biofuel quota on sectoral domestic production and imports of the German economy

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Employment and structural impacts of material efficiency strategies: results from five case studies

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Road project opportunity costs subject to a regional constraint on greenhouse gas emissions

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