Is bioenergy trade good for the environment

Abstract

This paper analyzes the impacts of bioenergy trade on greenhouse gas emissions using a two-good, three-factor model. Bioenergy is an intermediate good produced by the agricultural sector and used by the industry as a substitute for fossil fuels. Countries impose Pigovian taxes on pollution emitted by both sectors without international coordination. We assume that Northern countries have a larger labor endowment than Southern ones and that agriculture is less pollution intensive than industry (after taxation). We show that compared to autarky, trade liberalization either increases or decreases worldwide emissions depending on regional comparative advantages. Keywords: bioenergy; intermediate product ; North-South trade ; global pollution

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