From a rise in B to a fall in C? SVAR analysis of environmental impact of biofuels.

This is the first paper that econometrically estimates the impact of rising B ioenergy production on global CO 2 emissions. We apply a structural vector autoregression (SVAR) approach to time series from 1961 to 2009 with annual observation for the world biofuel production and global CO 2 emissions. We find that in the medium- to long-run biofuels significantly reduce global CO 2 emissions: the CO 2 emission elasticities with respect to biofuels range between −0.57 and −0.80. In the short-run, however, biofuels may increase CO 2 emissions temporarily. Our findings complement those of life-cycle assessment and simulation models. However, by employing a more holistic approach and obtaining more robust estimates of environmental impact of biofuels, our results are particularly valuable for policy makers. [ABSTRACT FROM AUTHOR]