de Gorter, HarryDrabik, DusanKliauga, Erika M.Timilsina, Govinda R.2013-09-262013-09-262013-06World Bank, Washington, DChttps://hdl.handle.net/10986/15882The lack of growth in the Brazilian sugarcane-ethanol complex since the 2008 financial crisis has been blamed on policies: lower mandate, holding gasoline prices below world levels, high fuel taxes, and inadequate fuel tax exemptions for ethanol. This paper develops an empirical model of the Brazilian fuel-ethanol-sugar complex to analyze the impacts of these policies. Unlike biofuel mandates and tax exemptions elsewhere, Brazil's fuel-ethanol-sugar markets and fuel policies are unique such that each policy, in theory, has an ambiguous impact on the market price of ethanol and hence on sugarcane and sugar prices. The results indicate two policies that seemingly help the ethanol industry do otherwise in reality: low gasoline taxes and high anhydrous tax exemptions lower ethanol prices. But higher mandates, hydrous ethanol tax exemptions, and gasoline prices had the expected impact of increasing ethanol and sugar prices. Eliminating Brazilian ethanol tax exemptions and mandates reduces ethanol prices by 21 percent. Observed changes in prices are explained by outward shifts in fuel transportation and sugar export demand curves, and bad weather reducing sugarcane supply.en-USCC BY 3.0 IGOAGGREGATE DEMANDALTERNATIVE ENERGYALTERNATIVE ENERGY SOURCESALTERNATIVE FUELANHYDROUS ETHANOLAPPROACHBAGASSEBIOENERGYBIOFUELBIOFUELSBIOMASSBOILERSCOCOLLECTION COSTSCOMMODITY PRICESCOMPETITIVENESSCONSUMER PRICECONSUMER PRICESCONSUMPTION OF FUELCONVENTIONAL GASOLINECORNCORN ETHANOLCOST OF ETHANOLCOST OF FEEDSTOCKCOST OF SUGARCANECRUDE OILDEMAND CURVEDEMAND CURVESDEMAND FOR ETHANOLDEMAND FOR GASOLINEDEMAND FUNCTIONSELECTRICITYELECTRICITY COGENERATIONELECTRICITY GENERATIONELECTRICITY PRICESELECTRICITY PRODUCTIONENERGY ECONOMICSENERGY MARKETSENERGY SOURCESENVIRONMENTAL IMPACTSETHANOLETHANOL CONSUMPTIONETHANOL DEMANDETHANOL FROM SUGARCANEETHANOL FUELETHANOL INDUSTRYETHANOL MARKETETHANOL MARKET PRICESETHANOL MARKETSETHANOL PRICEETHANOL PRICESETHANOL PRODUCERETHANOL PRODUCERSETHANOL PRODUCTIONETHANOL PROGRAMETHANOL YIELDETHANOL YIELDSEXCESS ELECTRICITYEXPORT MARKETFEEDSTOCKSFREE MARKETFUELFUEL CONSUMPTIONFUEL DEMANDFUEL MARKETFUEL PRICEFUEL PRICESFUEL QUANTITIESFUEL TAXFUEL TAXESFUEL VOLUMEGASOLINEGASOLINE CONSUMPTIONGASOLINE EQUIVALENTGASOLINE MARKETGASOLINE PRICEGASOLINE PRICE INCREASESGASOLINE PRICESGASOLINE SUPPLYGASOLINE TAXGRAIN PRICESGREENHOUSE GASHIGH ETHANOLHIGHER ETHANOLINFLATIONINTERNATIONAL TRADEKILOWATT HOURSMARKET CONDITIONSMARKET DEMANDMARKET DEVELOPMENTSMARKET EQUILIBRIUMMARKET PRICEMARKET SHAREMARKETINGMERCHANDISENATURAL GASOIL PRICESPETROLEUMPHPRICE CHANGEPRICE CHANGESPRICE DECREASEPRICE INCREASEPRICE LEVELSPRICE OF ELECTRICITYPRICE OF ETHANOLPRICE OF FUELSPRICE OF GASOLINEPRICE VOLATILITYPRODUCER PRICEPURCHASINGQUANTITY OF FUELRELEVANT MARKETSRETAILSALESSOURCE OF ETHANOLSPOT PRICESUGARSUGAR CANESUGARCANESUGARCANE ETHANOLSUGARCANE PRODUCTIONSUGARCANE-ETHANOLSUPPLIES OF ETHANOLSUPPLY CURVESUPPLY CURVESSUPPLY ELASTICITYSUPPLY OF ELECTRICITYTAX BREAKSTAX CREDITTAX CREDITSTAX EXEMPTIONTAX EXEMPTIONSTRANSPORTATION FUELTRANSPORTATION FUELSVEHICLEVEHICLESWHOLESALE GASOLINEWHOLESALE GASOLINE PRICEWHOLESALE PRICEWORLD MARKETflex-plantblend mandateWorld Bank10.1596/1813-9450-6524