Brewer 20Final 20Version 20 20Biofuels 20for 20CCM

Informal Report on a Study in ProgressBiofuels for Climate Change MitigationInternational Trade, Investment and Technology Transfer Issues: 

Informal Report on a Study in Progress Biofuels for Climate Change Mitigation International Trade, Investment and Technology Transfer Issues Thomas L. Brewer Georgetown University, Washington, DC and Centre for European Policy Studies (CEPS), Brussels

Context: Biofuels on the Agenda: 

Context: Biofuels on the Agenda FAO (GBEP; IBEP; forthcoming special report) EU-US Cooperation Agreement on Biofuels EU Review of Biofuels Directive US: Farm Bill & Ethanol Tariff (2007 extensions) …and… IEA and OECD COP/MOP WTO (CTE) G8+5 Summit (2007 in Germany)

My Focus Today: 

My Focus Today Cost-Effectiveness Issues International Trade and Investment Policy Issues

Data Sources: 

Data Sources Berg, “World Fuel Ethanol Analysis and Outlook,” 2004, and other materials from F.O. Licht “Fuel Ethanol,” at www.ethanolmarket.com, 2006 Greene, et al., “Growing Energy,” NRDC, 2004 IEA, “Biofuels for Transport,” 2004 Paustian, et al., “Agriculture’s Role in Greenhouse Gas Mitigation,” Pew Center, 2006 US International Trade Commission, “The Economic Effects of Significant U.S. Import Restraints,” Fourth Update 2004

All charts have been compiled by the author and are preliminary.Please do not cite without permission.: 

All charts have been compiled by the author and are preliminary. Please do not cite without permission.

Effectiveness of Fuel Ethanolfor Reducing GHGs (Compiled by the author from data in IEA, 2004): 

Effectiveness of Fuel Ethanol for Reducing GHGs (Compiled by the author from data in IEA, 2004)

Comparative Production Costs(Compiled by the author from data in IEA, 2004): 

Comparative Production Costs (Compiled by the author from data in IEA, 2004)

Production Cost Estimates:Brazil-Cane and US-Corn(IEA and Paulsian et al. - USD/Liter) : 

Production Cost Estimates: Brazil-Cane and US-Corn (IEA and Paulsian et al. - USD/Liter)

Production Costs: Cellulose Ethanol (Compiled by author from data in Greene, et al., NRDC; Table 18, p. 56): 

Production Costs: Cellulose Ethanol (Compiled by author from data in Greene, et al., NRDC; Table 18, p. 56)

Cellulose Ethanol Production Cost Estimates(IEA and Greene, et al.): 

Cellulose Ethanol Production Cost Estimates (IEA and Greene, et al.)

Cost-Effectiveness(Compiled by the author from data in IEA, 2004): 

Cost-Effectiveness (Compiled by the author from data in IEA, 2004)

International Trade and Investment Policy Issues: 

International Trade and Investment Policy Issues Imports: Tariffs and Quotas Foreign Direct Investment: Outward and Inward

Comparative Tariff Levels(Compiled by the author from data in IEA, 2004): 

Comparative Tariff Levels (Compiled by the author from data in IEA, 2004)

US Imports: Tariffs and Quotas: 

US Imports: Tariffs and Quotas Tariff $0.54/gallon ($0.14/liter) >applies to imports from Brazil Preferential treatment for Caribbean Basin countries (CBERA) >includes Costa Rica, El Salvador, Jamaica Zero tariff … on imports up to larger of 60 million gallons or 7% of US domestic consumption in previous year

US Domestic versus Import Costs (Compiled by the author using Paulsian cost estimate for Brazil cane based ethanol): 

US Domestic versus Import Costs (Compiled by the author using Paulsian cost estimate for Brazil cane based ethanol)

US Ethanol Fuel Production and Imports: 

US Ethanol Fuel Production and Imports Estimates for 2006 (Billions of Gallons) US Production 4.6 Imports 0.2 Source: Computed by the author from data in “Ethanol Fuel” (2006)

Source Countries of US Imports(millions of gallons): 

Source Countries of US Imports (millions of gallons)

International Investment Issues: 

International Investment Issues Outward investment from the US Inward investment in Brazil

Outward Foreign Direct Investmentfrom the US: 

Outward Foreign Direct Investment from the US Cargill Case FDI facility in Jamaica (CBERA country) Import feedstock from Brazil Export fuel ethanol to US (tariff-free) Policy Issue US Government (OPIC) subsidies for US firm’s FDI in CBERA country to circumvent US tariffs on ethanol from Brazil

Inward Foreign Investment in Brazil(Ethanol and Sugar Industries): 

Inward Foreign Investment in Brazil (Ethanol and Sugar Industries) 15 international M&As in sugar and ethanol from 1996 through June 2006 6 international investments in ethanol facilities in 18 months: 2005-June 2006 “The Brazilian government is keeping an eye on growing foreign investment in the country’s booming sugar and ethanol sector…” “World Ethanol & Biofuels Report,” 5,1 (September 7, 2006): 14

Conclusion: 

Conclusion Ethanol is a technologically and economically viable way to reduce GHG emissions. International trade, investment and technology transfer can facilitate its contribution. International trade policies constrain its contribution.

Slide22: 

Related topics needing more analysis Biodiesel International joint ventures Role in technology transfer Government policies concerning IJVs Government export and production subsidies Policies of all G8+5 countries

For further information…: 

For further information… brewert@georgetown.edu www.usclimatechange.com