Market impacts of China and India meeting biofuel targets using traditional feedstocks

Abstract

Biofuel production has largely occurred in Brazil, the European Union (EU), and the United States (U.S.), but several other countries have articulated large biofuel targets. Among them, China and India stand out with large populations, with a prominent food versus fuel debate. Recent research has recognized the importance of biofuels in replacing traditional transportation fuels in these two countries; but such work has largely considered unconventional pathways such as lignocellulosic feedstocks. This work takes a more straight-forward approach, using a computable general equilibrium (CGE) model to estimate the market impacts of achieving biofuel targets in 2020. Along with projections in food and fuel demand to 2020, we also consider several options in meeting biofuel targets. China's biofuel policy focuses on ethanol, and the result of meeting a 10 percent ethanol blend target, along with food and feed demand, is an increase in coarse grain production of 19 percent. India's largest potential biofuel component is biodiesel, where reaching a 20 percent target would entail a triple-digit increase in vegetable oil production. Results indicate that these impacts could be somewhat mediated if biofuel trade access is increased; in addition, utilizing stockpiled grain in China, or implementation of an effective waste cooking oil collection-to-biodiesel program in either country could substantially reduce agricultural feedstock requirements.