The impacts of the German biofuel quota on sectoral domestic production and imports of the German economy

This study analyses the impacts of the German biofuel quota on sectoral domestic production and imports of the German economy. The effects are calculated as net effects, i.e. accounting for the direct and indirect effects of both the additional demand for biofuels and the reduced demand for fossil fuels. The analysis uses an input-output model and information on quantities, production processes, import quotas etc. To calculate the impacts for the agricultural sector, which is obviously of high relevance for biofuel production two cases are differentiated: first, and in line with classical input-output assumptions, we propose that agricultural production is not constrained by the availability of agricultural land. Thus, biofuel production is basically added to other agricultural outputs. In the second case, agricultural land is considered a limiting factor for production. As a consequence, biofuel production substitutes other agricultural outputs. The results indicate a clear increase of domestic production and a decline of net imports in the first case. In the second case gains in domestic production are smaller and net imports are, in contrast to the first case, increasing.