We show how leakage differs, depending on the biofuel policy and market conditions. Carbon leakage is shown to have two components: a market leakage effect and an emissions savings effect. We also distinguish domestic and international leakage and show how omitting the former like the IPCC does...

We show carbon leakage depends on the type of biofuel policy (tax credit versus mandate), the domestic and foreign gasoline supply and fuel demand elasticities, and on consumption and production shares of world oil markets for the country introducing the biofuel policy. The components of carbon...

This paper analyzes the impact of an ethanol import tariff in conjunction with a consumption mandate and tax credit. A tax credit alone acts as a subsidy to ethanol producers, equally benefiting exporters like Brazil. If an import tariff is imposed to offset the tax credit, world prices of...

With a mandate, U.S. policy of ethanol tax credits designed to reduce oil consumption does the exact opposite. A tax credit is a direct gasoline consumption subsidy with no effect on the ethanol price and therefore does not help either corn or ethanol producers. To understand this, consider...

We show how leakage differs, depending on the biofuel policy and market conditions. Carbon leakage is shown to have two components: a market leakage effect and an emissions savings effect. We also distinguish domestic and international leakage. International leakage is always positive, but...

A general theory is developed to analyze the efficiency and income distribution effects of a biofuel consumer tax exemption and the interaction effects with a price contingent farm subsidy. Using U.S. policy as an example, ethanol prices rise above the gasoline price by the amount of the tax...

This paper analyzes the impact of an ethanol import tariff in conjunction with a consumption mandate and tax credit. A tax credit alone acts as a subsidy to ethanol producers, equally benefiting exporters like Brazil. If an import tariff is imposed to offset the tax credit, world prices of...

A general theory is developed to analyze the efficiency and income distribution effects of a biofuel consumer tax credit and the interaction effects with a price contingent farm subsidy. Using the U.S. ethanol market as a stylized example, ethanol prices rise above the gasoline price by the...

We determine how the U.S. ethanol tax credit and import tariff affect the corn-ethanol-gasoline markets and how farm subsidies interact with these policies. We show how the ethanol tax credit and import tariff each uniquely affect the ethanol and gasoline prices. The ethanol import tariff alone...

The federal "sustainability standard" requires ethanol to emit at least 20 percent less carbon dioxide (CO2) than gasoline. Recent rulings by California and the Environmental Protection Agency, however, have cast doubt on the methodology of the sustainability calculus and whether those standards...