Replaced with revised version of paper 12/06/06.

In its Progress Report on Biofuels the European Commission proposes a more restrictivebiofuel directive which sets a mandatory minimum share of biofuels in total fuel consumption in thetransport sector of 10% per Member State by 2020. This is likely to have a strong impact on demandfor biofuel...

We analyze the impact of trade liberalization and removal of the federal tax credit in the United States on U.S. and Brazilian ethanol markets using a multi-market international ethanol model calibrated on 2005 market data and policies. The removal of trade distortions induces a 23.9 percent...