Economywide Implications from US Bioenergy Expansion

This paper assesses the long term economic impacts from meeting the Renewable Fuels Standard (RFS) using an economywide model. We determine the impacts on US household consumption and GDP of meeting the RFS. This paper finds that the economywide benefits of meeting the RFS measured as household cons...

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Bibliographic Details
Published in:The American economic review 2010-05, Vol.100 (2), p.172-177
Main Authors: Gehlhar, Mark, Somwaru, Agapi, Dixon, Peter B., Rimmer, Maureen T., Winston, Ashley R.
Format: Article
Language:English
Subjects:
Agriculture
AGRICULTURE AND ENERGY: NEW DIRECT AND INDIRECT LINKS CAN LEAD TO UNINTENDED CONSEQUENCES
Biodiesel fuels
Biofuels
Cost control
Crude oil prices
Economic growth
Economic impact
Energy economics
Ethanol
Ethanol fuels
Gasoline
Gasoline prices
GDP
Gross Domestic Product
Household consumption
International trade
Long term
Motors
Oil prices
Petroleum
Production costs
Studies
Supply
Tax credits
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Summary:This paper assesses the long term economic impacts from meeting the Renewable Fuels Standard (RFS) using an economywide model. We determine the impacts on US household consumption and GDP of meeting the RFS. This paper finds that the economywide benefits of meeting the RFS measured as household consumption gains outweigh costs associated with the tax credits currently accompanying the RFS mandate. US GDP is likely to fall when the RFS is accompanied by tax credits. The elimination of tax credits would provide benefits for the US economy by expanding household consumption and increasing GDP. The lower the oil price, the more the effectiveness of displacing petroleum based motor fuels is weakened in meeting the RFS. Measures to discourage petroleum use along with incentives to encourage biofuel use would serve the goal of improving energy independence.
ISSN:0002-8282
1944-7981
DOI:10.1257/aer.100.2.172