The Effect of Biodiesel Policies on World Oilseed Markets and Developing Countries
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...
| Main Authors: | , , |
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2013/05/17734486/effect-biodiesel-policies-world-oilseed-markets-developing-countries http://hdl.handle.net/10986/15592 |
| Summary: | 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. |
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