Agriculture Reference
In-Depth Information
Chapter 15
DETERMINING EFFICIENT BIO-FUEL TAX
EXEMPTION POLICY IN FRANCE FOR
GREENHOUSE GAS EMISSION ABATEMENT
Stelios Rozakis, Jean-Claude Sourie and Daniel Vanderpooten
1. INTRODUCTION
This chapter presents a micro-economic modeling framework for decision-
making on tax exemptions and bio-fuel production levels allocated to the
French bio-fuel industry. The agricultural sector is represented by about
700 arable cropping farms upon which energy crops can be cultivated.
Processes undertaken where biomass is transformed into bio-fuel include
ester and ethanol chains. Agriculture and industry data and technical
performance parameters are projected for the year 2002.
The government acts as a leader, since bio-fuel chain viability
depends on subsidies. Budgetary, environmental and social concerns will
affect policy decisions, whereas farmers and the industry are assumed to
act rationally. A multi-criteria optimisation module is used to assist in
decision-making when conflicting objectives are involved.
Cost-effective tax credit levels and bio-industry configurations
have been determined. Trade-offs are estimated for different targets of
public expenditure and emission abatement.
The French bio-fuel program was launched in 1993 with the decree
of a tax exemption for bio-fuels
1
, as a result of fuel supply uncertainty and
environmental concerns. Set aside land obligations by the revised Common
Agricultural Policy of 1992, that aimed at controlling cereal over-
production, created a favourable environment for growing non-food crops
2
and has been the decisive factor that incited farmers to produce energy
crops in sufficient quantities to supply bio-fuel industry. As a matter of
fact, the part of energy crops cultivated in land set aside increased to reach
30% in 1999 (Figure 15.1).
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