Biofuels in Mercosur and their link with the policies of the European Union

Global demand for biofuels has risen sharply in the last fifteen years, initially due to increased oil prices and the need of countries to achieve greater security in energy supply. Measures to support the development of biofuels were established in many countries recognizing the potential of its use for reducing dependence on fossil fuels, the possible increase in the income of farmers and also environmental issues reducing the emission of greenhouse gases compared to non-renewable fuel sources. In recent years, however, there has been some skepticism about the positive impact of biofuels, partly because of its influence in international agricultural markets, but also by environmental potential effect thereof as regards indirect changes land use, as long as forests and rangelands areas can be incorporated into crop production due to market expansion of biofuels. This paper focuses on the study of the link between policies to support the production of biofuels in MERCOSUR and guaranteed demand due to measures of the European Union. Aspects linked to price changes, environmental regulations and commercial policies, which can affect demand of raw materials used for the production of biofuels, taking into account possible changes in the pattern of land use, will be contemplated. In order to achieve the objectives are employed sectorial models that, by means of an aggregation process, allow to consider the impacts of public policies, both at farm level and the industry producing biofuels, as well as at national and regional level.