Last year the German Parliament exempted biofuels from the gasoline tax. The promotion of biofuels is being justified by allegedly positive effects on climate, energy, and agricultural policy goals. The paper takes a closer look at bio-ethanol as a substitute for gasoline. We analyze the basic...

In June 2002 the German Parliament decided to exempt biofuels from the gasoline tax. The policy to promote biofuels is being justified by allegedly positive effects on the climate, energy, and agricultural policy. The working paper takes a closer look at bio-ethanol as a substitute for gasoline...