Economy-Wide Impacts of Biodiesel Production and Use in India: A Computable General Equilibrium Model Assessment

Biofuels are receiving the attention of policy makers of energy-deficient nations as a means to enhance energy security and reduce carbon emissions. Economy-wide impacts of allocating vast amounts of agricultural resources for energy crop production are not well understood. This paper assesses the economy-wide impacts of growing biodiesel crops to meet 20% blending target set in the biofuel policy of India. The results show that biodiesel can generate 0.7%-1.0% one-time incremental growth in India's economy with significant employment generation in rural areas, without adverse effects on the other sectors of the economy.