A Global General Equilibrium Analysis of the Interactions between Biofuel Mandates and Greenhouse Gas Mitigation Policy

Using a global general equilibrium model, we simulate a reference scenario and three policy scenarios with a focus on capturing net carbon dioxide (CO2) emissions from fossil fuels and land use change. The three policy scenarios are (1) global mandates for first-generation biofuels; (2) a price of US$ 15 per ton CO2 imposed on Annex I countries; and (3) biofuel mandates combined with the Annex I country CO2 price. The general-equilibrium modeling framework is comparative-static with 18 world regions, representing biofuel policies anticipated for year 2015. For the scenarios with a price on CO2 emissions, the price is imposed on fossil fuel emissions only. However, we calculate changes in CO2 emissions from both the energy system and land use change. Land use change emissions are annualized over 30 years for comparison with fossil fuel emissions. In the scenario with biofuel mandates only, CO2 emissions from fossil fuels decline but are partly offset by annualized emissions from land use change. Global emissions decline by 3,060 Mt CO2 in the scenario with only a CO2 price. The decline in global emissions is 3,185 Mt CO2 for the scenario with both biofuel mandates and a CO2 price.