Environmental, Social & Economic Impacts projects

Market Context for Biofuels Microeconomics - Completed

This project collected historical data on production and trade of ethanol, biodiesel, and oil, and fit the data to economic models in order to extrapolate for future market performance.  The group paid particular attention to potential market fluctuations in the 10-30-year time frame, especially pertinent to introduction and marketing of major new biofuels technologies. Projected overall market price fluctuations are an essential input to microeconomic analyses of the detailed flow of materials and money in regional biofuels production and consumption networks. The project developed probability distributions for a range of economic and political factors that influence market conditions.

project Highlights

2009 Highlights

Esfahani’s group found that where cane is the primary feedstock, ethanol prices are more responsive to oil prices. In temperate regions, however, national policies have responded more slowly to security concerns connected with oil price variations. Quantitative analysis suggests this pattern will continue, with biofuels challenged to capture more than 10 to 15 percent of temperate region transportation fuels markets unless oil prices remain close to biofuels production costs per unit of combustion energy.

 


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