Biofuels policy in Colombia: A reconfiguration to the sugar and palm sectors?

Abstract

In Colombia, the national biofuels policy made it possible to create the ethanol and biodiesel industries around the sugar and palm sectors, respectively. These production chains have generated a direct interaction between biofuels and the agri-food industry. Thus, this paper seeks to analyze whether the national biofuels policy allowed a reconfiguration of the production dynamics of both the sugar and palm sectors in Colombia, in the period 2008–2018. The analysis methodology used is based on the time series models approach of the autoregressive distributed lag models type. The results show that this policy of promoting the use of biofuels has transformed the dynamics of the sugar and palm sectors, in such a way that ethanol production generated a substitutive production relationship with sugar for export, while biodiesel allowed a greater expansion of the entire palm sector. These results open the debate on whether to gamble on the continuity of the biofuel-promoting policy around these two current sectors or productive alternatives should be considered through an adjustment of incentives.