Sugarcane ethanol: Contributions to climate change - BAFF

Chapter 8
$/mt.
300.00
250.00
200.00
150.00
100.00
50.00
0.00
40 60 80 100
Oil price
120 140
Figure 4. Maize price under alternative policies and oil prices.
Bil.l./yr
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
fixed sub no sub var sub RFS RFS+sub
fixed sub no sub var sub RFS RFS+sub
1.06 0.83 0.55
40 60 80 100
Oil price
120 140
Figure 5. Ethanol production under alternative policies and oil prices.
RFS. It is also an implicit tax on consumers. �e model follows the RFS rule, and ‘requires’
that the stipulated level of ethanol be produced. To the extent that the cost of ethanol is
higher than the cost of gasoline, this higher cost gets passed on to consumers in the form
of an implicit tax on consumers. �us, a RFS functions very di�erently from a subsidy.
�e subsidy is on the government budget, whereas the mandate cost is paid by consumers
186 Sugarcane ethanol
0.29
0.07
0.00