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The Downside of Domestic Substitution of Oil with Biofuels: Will Brazil Catch the Dutch Disease?

Giesecke, James A ORCID: 0000-0002-7283-0551, Horridge, Jonathan ORCID: 0000-0002-1070-5763 and Scaramucci, Jose (2007) The Downside of Domestic Substitution of Oil with Biofuels: Will Brazil Catch the Dutch Disease? Working Paper. Centre of Policy Studies (CoPS).

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Abstract

In response to oil price rises and carbon emission concerns, policies promoting increased ethanol usage in gasoline blends are being implemented by many countries, including major energy users such as USA, EU and Japan. As a result, Brazil, as the largest ethanol producer and exporter in the world, can expect growing foreign demand for ethanol exports. Also, the introduction of flex-fuel vehicles in Brazil is causing domestic sales of ethanol to increase steadily. In this paper, we investigate the regional and industrial economic consequences of rapid growth in Brazilian ethanol consumption and exports. For this, we use a disaggregated multi-regional computable general equilibrium (CGE) model with energy industry detail. Our modelling emphasises a number of features of ethanol production in Brazil which we expect to be important in determining the adjustment of its regional economies to a substantial expansion in ethanol production. These include regional differences in ethanol and sugar production technologies, sugarcane harvesting methods and the elasticity of land supply to sugarcane production.

Item Type: Monograph (Working Paper)
ISBN: 0732615763
Additional Information:

CoPS/IMPACT Working Paper Number G-169

Uncontrolled Keywords: D58; Q13; Q42; R11; R49; CGE models; energy; ethanol; Brazil
Subjects: FOR Classification > 1402 Applied Economics
Faculty/School/Research Centre/Department > College of Business
Faculty/School/Research Centre/Department > Centre of Policy Studies (CoPS)
Depositing User: Symplectic Elements
Date Deposited: 06 Oct 2015 00:22
Last Modified: 18 Jul 2019 02:31
URI: http://vuir.vu.edu.au/id/eprint/29305
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