2. Policy Background
US Programs: Interest in biofuels initially came about in the late 1970s as OPEC
reduced crude oil supply on the world market and fuel prices increased substantially. Both the US and Brazil launched ethanol programs during this period with ethanol subsidies. Until 2006, Brazil was the global leader in ethanol production – in large part due to the relatively greater efficiency of sugar cane-based ethanol conversion. However, as a result of government policies and higher oil prices, ethanol production in the US has recently surged, and it now exceeds that in Brazil. Subsidization of ethanol in the US began with the Energy Policy Act of 1978. At the time, the main arguments that were used to justify the subsidy were enhanced farm income and, to a lesser extent, energy security. In 1990, the Clean Air Act was passed, which required vendors of gasoline to have a minimum oxygen percentage in their product. Adding oxygen enables the fuel to burn cleaner, so a cleaner environment became another important justification for ethanol subsidies. By requiring the oil industry to meet an oxygen percentage standard instead of a direct clean air standard, the policy favored additives like ethanol that contain a high percentage of oxygen by weight. However, methyl tertiary butyl ether (MTBE), a competitor for oxygenation, was generally cheaper than ethanol, so it continued to be the favored way of meeting the oxygen requirements throughout the 1990s.
There is broad scope for expanding the issues studied here. For one, the welfare interaction between the domestic economy and the rest of the world was captured just through world prices, but the model could readily be extended to recognize that domestic policy affects foreign greenhouse gas emissions. This “leakage” problem, as for example the case of indirect land use changes discussed in the introduction, clearly impacts domestic welfare. Moreover, there are significant dynamic issues that arise in this context and that we have not addressed explicitly in the model. Strategic considerations and international cooperation to address what is, ultimately, the global externality issue connected with climate change, are also outside the scope of the current paper. All that is the object of ongoing
Aside from land conversion for biofuel feedstock cultivation, Hertel et al. (2010b) use the Global Trade Analysis Project (GTAP) model show that the harvested area for various crops can also be expected to change as a result of expanded biofuel production from 2006 to 2015 to satisfy US and EU biofuel mandates. They find substantial increases in harvested area for oilseeds in the EU, Canada and Oceania (47.8%, 19.4% and 19.3%, respectively) and for sugarcane in Brazil (22.9%). Coarse grain acreage is seen to rise by 6.2% in the US but only increases moderately in most other regions (except for significant declines in Brazil and the EU). Oilseed acreage, however, exhibits significant gains in all regions, implying that the EU biofuels mandate will have immense repercussions on the global oilseeds market. Hertel et al. (2010a) incorporate market-mediated responses and by-product use into their analysis of the land requirements of increased maize ethanol production in the US to meet the mandated volume in 2015. They show that these factors reduce the gross feedstock land requirement of 15.2 Mha so that only 0.28 ha of land conversion occurs for every hectare of maize cultivation diverted to ethanol production, resulting in the global conversion of 3.8 Mha of forest and pasture land to cropland due to the US mandate.
the most recent estimates for the ILUC are significantly lower than the earlier estimates.
Searchinger et al. (2008) have provided the first peer-reviewed estimate for the ILUC (about 0.73 hectares of new cropland area per 1000 gallon of ethanol capacity). Those authors used a partial equilibrium modeling framework (FAPRI) to assess the ILUC due to US ethanol program. After that Hertel et al. (2010) using a general equilibrium model showed that full accounting for market mediated price responses to ethanol production, as well as the geography of world trade, contributed to significant reductions in estimated ILUC impacts. Those authors estimated that the ILUC for the US ethanol program is about 0.29 hectares per 1000 gallons of ethanol. In more recent work Taheripour, Hertel, and Tyner (2011) made several changes in the GTAP-BIO modeling framework and its data base and used the improved model to examine consequences of biofuel mandates for the global livestock industry. These authors projected that the US and EU biofuel mandates will jointly expand the global cropland area by 11.8 million hectares, but they have not evaluated the ILUC due to mandates of each region. In another line of research in this area Tyner et al. (2010) have extended the model developed in Taheripour, Hertel, and Tyner (2011) and provided three sets of estimates for the ILUC due to the US ethanol. As shown in Figure 1, the estimates provided by Tyner et al. (2010) are significantly lower than provided in Hertel et al. (2010). Several modifications such as incorporating cropland pasture into the GTAP land use data base, assigning higher productivity rates to new croplands (obtained from the Terrestrial Ecosystem Model (TEM)), and establishing a new baseline contributed to these further reductions.
Biofuels have drawn lot of attention across the world in the recent years due to concerns of oil dependence and interest in reducing green house gas (GHGs) emissions. Passing of biofuel friendly legislation in several countries has resulted in an exponential growth in globalbiofuels production. For instance, the “Energy Independence and Security Act (EISA) of 2007” in the U.S., mandates a ‘renewable fuels standard (RFS)’ to use 36 billion gallons of renewable fuels per year by 2022. This includes a cap on corn starch-derived ethanol at 15 billion gallons and a 3 billion gallons increment of advanced biofuels every year starting 2015 until 2022 (Yacobucci and Schnepf, 2007). The European Union Biofuels Directive requires that member states realize a 10% share of biofuels on the liquid fuels market by 2020 (European Commission, 2008). Brazil, with its geographic comparative advantage to grow sugarcane, has massive potential to produce ethanol.
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The increasing global fuel demand is a great challenge as reduction in fossil fuel stock at an alarming rate is a matter of great concern and has led to search for an alternative fuel that should be clean, ecofriendly and sustainable. At this juncture the global scientific community should focus on discovering and developing modified energy crops with enhance properties of producingbiofuels. The plant fatty acid seeds containing triacylglycerols has emerged as a best alternative with potentiality to be used as a fuel. Various fatty acid seeds containing triacylglycerols can be synthesize into useful fuel using modern scientific tools and techniques through biotechnological principles. A series ofmethods and mechanism are formulated for converting viscous liquid into fatty acid esters and enhancing the fuel property in the plant seeds.The various methods for biofuel production, along with the modern and modified biotechnological production techniques and their relevancy are reviewed. The challenges and limitations witnessed during this operation are also discussed.
Stillman et al. incorporate several assumptions into their analysis, one the most important being that the EU is only capable of meeting two thirds of its biofuels mandate due to capacity limitations in domestic rapeseed production, as well as the reluctance to import less-environmentally friendly tropical oils. Another set of important assumptions involves the incorporation of distillers dried grains solubles (DDGS), a by-product of corn-ethanol production, back into the corn market as a substitute for feed corn. Stillman et al. assume that a pound of corn used in ethanol produces approximately one third of a pound of DDGS, and that one pound of these DDGS is equivalent to one pound of feed corn in beef rations. Corn DDGS are less suitable for other livestock, and subsequently, lower replacement ratios are used for hogs, poultry, dairy, etc. These feed assumptions are significant, in that they are likely to mitigate some of the price impacts of all three scenarios. Three scenarios are examined using the model and the assumptions described above.
For this study, the two most important coefficients were those estimated for the INFUSED and MANDATE variables. As seen in Table 5, both of these coefficients were estimated to be negative and statistically significant. The magnitude of the INFUSED coefficient indicates that students studying economics through infusion in a history course scored 17.7 percent below their cohorts, holding all else the same. Clearly, this result suggests that the one course infusion approach is not the optimal strategy to implement successful economic education at the high school level. The magnitude of the MANDATE coefficient indicates that students who were required to take economics as a graduation requirement scored 8.2 percent below their cohorts, holding all else constant. This result is consistent with the previously cited inter-state research on economics course mandates. Thus, there appears to be something about implementing a course mandate that results in the observation of significantly lower student performance scores relative to those observed for students when the same course is offered as an elective.
When a recall does occur, a company moves into the responsiveness phase. The success of this phase is based on how quickly and efficiently it reacts to the recall and creates an action plan. ‘Responsiveness’ can be strengthened in a company by implementing many different practices. A response team should immediately determine the seriousness and type of recall before any action is taken (Smith et. al., 1996). These determinations play a large role in how the recall should be handled. After this step is taken, DiBenedetto (2007b) advised that companies quickly create a reverse logistics plan and have answered questions prepared before communicating the recall to the public, as it will ensure a clear and accurate depiction of the situation. Conducting a root-cause analysis is the next step; understanding where the error occurred in the process will allow the company to eliminate the problem (Smith et. al., 1996).
A last point on construction. Except for local gravel, asphalt and concrete cement, and some local labor and other relatively minor inputs, nearly everything else that goes into making a modern ethanol plant must be purchased from outside of the region and, significantly, from outside of the state. Only a comparatively small amount of the total investment cost gets spent locally. Modelers who assume otherwise or who naively shock the construction sector by the total amount of capital outlay grossly overstate localized benefits and distort the construction effects (not impacts) that accrue. Again, as it has already been said, the costs of construction are already a portion of the input-output accounts on an amortized basis.
A stochastic simulation model provides estimates of the market impacts of these two policy changes for the upcoming 2013/14 US corn marketing year that begins on
September 1, 2013. The results demonstrate how ethanol trade links the US and Brazilian markets even though the total volume of trade between the two countries is low relative to total production and consumption. The results also demonstrate how US mandates link ethanol and biodiesel markets because biodiesel is allowed to meet its own mandate, the mandate for other advanced biofuel, and even the conventional mandate. Sorting out the net effects of these policy changes across both countries and across fuels requires a detailed model of each key market. Because a model is only as good as the assumptions and data that underlie it, it is important to be transparent about the assumptions and the data used to parameterize the supply and demand curves that make up the model. Because the model used in this analysis is updated often, interested readers who disagree with assumptions used or who have better data are welcome to share their insights and data.
The biofuel industry has been rapidly growing around the world in recent years. Biofuels are produced in conjunction with other by-products such as Condense Distillers Solubles CDS, Dried Distillers Grains with Solubles (DDGS), Wet Distillers Grains with Solubles (WDGS), and soy and rapeseed meals (BDBP) 1 . The rapid growth of the biofuel industry has led to the massive production of these by-products as well. For example, the US DDGS production has increased from about 4.5 million metric tons in 2001 to 11.25 million metric tons in 2006. These by- products represent an important component of the biofuel industry revenues. For example one bushel of corn used in a typical dry milling ethanol plant generates roughly about 2.7 gallons of ethanol and 18 pounds of DDGS. Correspondingly, producing one gallon of biodiesel from soybean/rapeseed generates 32/10.3 pounds soy/rapeseed meal. According to our calculation about 16 percent of a corn based dry milling ethanol plant’s revenue comes from DDGS sales. Corresponding shares for typical rapeseed and soybean based biodiesel producers are about 23% and 53%, respectively. These by-products are mainly used as a protein source and are strong complements to coarse grains in the animal feed rations. Furthermore, their prices are highly correlated with the prices of grains and oilseeds.
The Michigan Occupational Safety and Health Administration (MIOSHA) has issued emergency rules clarifying the safety requirements employers must follow to protect their employees from COVID-19. The emergency rules implement workplace safeguards for all Michigan businesses and include specific requirements for industries, including manufacturing, construction, retail, health care, exercise facilities, restaurants, and bars. Among other requirements, businesses resuming in-person work must:
Brazil has the most developed and integrated biofuels program in the world. Its initiation dates back to the first oil crisis in 1973. In 1975 Brazil introduced the National Al- cohol Program Pro` alcool focusing on the production of anhydrous (or pure) ethanol from sugar cane to be blended with gasoline. The objective was to limit energy supply constraints, provide a stable internal demand for the excess production of sugar cane and counterweight variations in international sugar prices (Walter and Cortez, 1999). Following the second oil shock in 1979 the government extended the program to large scale production of hydrated ethanol (95% ethanol and 5% water). The latter required a specially designed engine and agreements with manufacturers were made to develop a market for purposely modified vehicles. The construction of distilleries including many autonomous facilities, concentrated in the S˜ ao Paulo State and kept pace with the ris- ing national trends. While production shifted toward hydrated ethanol, the plan proved successful and 96% of automobiles sold in Brazil in 1985 were ethanol powered (Co- lares, 2008). The initial triumphs were soon displaced by the decline of oil prices that followed 1985. Sales of ethanol powered vehicles plummeted to 1% by the late 1990s and the over-valuation of Brazilian currency (1994-1999) increased ethanol production costs. The government tried to limit these drawbacks by implementing legislation in 1993 that required a 22% ethanol content added to gasoline. In 2003 this percentage was raised to 25%. During the 1990s further deregulatory legislation in the energy and fuel markets contributed to the future successes of the program. In 1998 the government liberalized the price of hydrated alcohol to be used in fuels and in 1999 it stipulated that hydrated ethanol fuel sales were to be carried out through public auctions 64 . The surge in oil prices that characterized the 2003-2008 period brought ethanol back to its initial success. Ethanol became once again a cheap and sought after alternative to oil. Furthermore, the introduction of Flex-Fuel engine technology, which allows drivers to run on gasoline or on ethanol, contributed to this resurgence. In 2006 83% of the cars sold in Brazil were Flex-Fuel Vehicles (FFV) and the country achieved oil independence (Colares, 2008). According to De Almeida’s et al. (2008) estimates, “FFVs could make up 27% of the Brazilian car fleet in 2010 and 43% in 2015” 65
De Nederlandsche Bank
W.Jos Jansen and Ad C.J. Stokman *
We investigate to what extent the expansion of FDI and the internationalization of production can be related to the recent phenomenon of more synchronized business cycles. We first focus on the relationship between bilateral FDI positions and cross-country output correlations in the period 1982- 2001. We find that countries that have comparatively intensive FDI relations exhibit a greater degree of output comovement, and that this positive association seems to become stronger over time. We then present evidence that international rent sharing might be an important aspect of global economic linkages. German, French, Belgian and Dutch labour markets are significantly affected by profits of foreign-based multinationals, with employment being more sensitive than wages. By contrast, US and UK labour market conditions do not, or hardly, react to changes in foreign profitability.
Furthermore, with the emphasis on bargaining in GPN 2.0, there is the need to guard against treating power relations as expressive of rationalist actors and a zero-sum game in which there are only winners and losers. Economic actors are irrational, socialised entities subject to and encompassing alternative values and motives, and living through heterogeneous and often contradictory societal conventions and formal and informal institutional landscapes (Williams and Lee, 2011). Such conditions characterise MNEs that are themselves heterogeneous, constituted by diverse aims and rationalities. One must treat bargaining therefore as a socialised, emergent and irrational affair subject to various social processes (Geppert, 2003). An emphasis of this kind is critical given that MNEs, with all their resources and capabilities, remain susceptible to the ‘experimental’ nature of power because of the deliberative manner of action (Morgan, 2009). This stems from a pragmatist belief in the anti-foundational nature of knowledge and power which is created through social transactions rather than pre-existing (Allen, 2008). Power is exercised and experienced in an experimental manner with no guarantee that actors will achieve their desired outcomes. This is because ‘power in its various guises is mediated relationally through space and time’, since it relies on the deliberate actions of actors as they seek to enact power (e.g. organising resources), their social interactions with other actors who can have different conceptions of truth, and disparate environments and situations (Allen, 2008: 30). Understanding of the ‘micro-politics’ of actors in mediating such landscapes is therefore critical.
which these activities belong. The back end activities requiring specific FSA bundles include all activities outside this critical interface with customers, but which are also significant to the firm’s success, again irrespective of the value chain function in which these activities occur.
In this context, Figure 2 shows two hypothetical accumulation patterns over time, of the MNE’s FSAs at the back end (sourcing/production) and the front end (sales). At either end of the value chain, these resource bundles consist of non-location bound FSAs, conventional location (read country) bound FSAs and region bound FSAs. The poor market performance achieved in host triad regions suggests that most firms are not capable of accessing and deploying the required knowledge bundles at the customer end side, because these bundles are likely to be quite different from the knowledge combinations effective in the home triad region, whereas this does not necessarily hold for back end activities. In broader terms, national and home region organizing principles adopted by MNEs, and engrained in their FSAs, appear to limit most MNEs’ repertoire of customer end strategies required to be effective in the host region market. This is particularly interesting given that many markets, especially for commodity products, are characterized by ‘global’ (uniform) prices, driven by ‘global’ competition. In contrast, it appears much easier to adopt effective sourcing (and manufacturing) strategies associated with a broad geographical coverage. The liability of foreignness faced by the MNE, Hymer (1976) Zaheer (1995) thus needs to be unbundled into customer end and back end components.
1995) and the 27 th Trend Survey of Overseas Business Activities held in 1997 (data for fiscal year 1996). The Basic Survey is an extensive survey among Japanese multinational firms conducted every three years and the Trend Survey is a shortened survey conducted in the two years between the Benchmark Surveys. Both surveys are conducted by the Japanese Ministry of Economy, Trade and Industry (METI, former MITI) and ask firms to supply information for the parent firm each of their foreign affiliates. The response rates of the surveys at the parent firm level are 60.4% and 59.1%, respectively, but because non-responding firms are usually small in size, the coverage in terms of global affiliates is substantially higher. Affiliate data on capital stocks are only included in the Basic Survey, but gross fixed capital investment data are included in all surveys. We merged the two datasets at the parent and affiliate level to analyze investments in fiscal year 1996 (the year ending March 1997) as a ratio of the capital stock at the end of fiscal year 1995 (March 1996). Data on capital stocks and gross fixed capital investments in Japan were drawn from the third and the fourth Basic Survey of Japanese Business Structure and Activities held in 1996 and 1997 by METI (data for fiscal 1995 and 1996). This survey is mandatory and has a response rate exceeding 90 percent.
Governance for sustainability differs from previous approaches to environmental governance – not least in that it is broader than just environment, it also incorporates human development. Many of the environmental problems facing the world today are global by nature; issues such as a stable climate (a public good), fisheries management (a common pool resource) and acid rain (a transboundary problem) require cooperation across national borders. Another pressure for global governance of sustainability comes from the globalisation of the economy, wherein states face challenges because of the way that sustainability problems are embedded in production and consumption processes not under their control (Paterson 2009). These globalising processes have resulted in a shift in governance for sustainability, one that has mirrored wider economic paradigm changes. Governance has moved away from the top-down, command and control approaches that characterised the 1960s and 70s towards the market- based policy mechanisms that have prevailed since the late 1980s and early 90s (Glasbergen 2007; Paterson 2009). This shift has taken place at national and global levels, reflecting wider shifts from statism to liberalism in the governance of capitalism (Paterson 2009; see also Goldthau (2012) for a discussion of shifts in global energy governance). Paterson (2009) argues that governance for sustainability increasingly aims to promote a ‘green capitalism’ that enables private actors to pursue economic interests in ways that promote sustainability. This is also reflected in ecological modernisation which, as discussed in Chapter Two, also assumes an increased role for non-state actors and a move away from hierarchical modes of governance. However, the politically-driven nature of biofuels implies a dominant role for the state in their governance 11 , both in creating the market and in regulating their use; albeit a role shaped by wider shifts in the global political economy. Yet the politicised nature of these mandated markets also creates opportunities for non-state actors to influence the form and structure of national and global biofuel markets (Pilgrim and Harvey 2010). In particular, concerns about the potential negative externalities associated with biofuels has led to intermediate, or hybrid, governance arrangements which reflect Goldthau’s ‘interventionist’ (i.e. state-market) model of governance (2012). Under this mode of governance, biofuels are viewed as having strategic qualities in several policy fields (e.g. energy, environment, development) that cannot be delivered by the market alone. These issues will be explored in greater detail in subsequent sections, specifically in relation to the governance of biofuels by the EU.