Analysis of Costs Associated with Biofuel Policy Implementation in Thailand

An international team of researchers (from the University of North Carolina at Chapel Hill (United States), the King Monkut's University of Technology (Thailand) and the Center for Energy Technology and Environment of the Thailand Ministry of Education) conducted an economic analysis "to contextualize and monetize the various effects" of attaining biofuel policy targets in Thailand. The "net cost" of the Thailand biofuels program was an objective.

Adoption of national policies for the development and use of biofuels in many countries usually take the form of "government incentive structures" (such as mandatory blending or tax exemptions/subsidies). There are both positive ("benefits") and negative ("cost") factors involved when implementing biofuel development programs. The positive factors include job creation, income generation, stabilization of crop prices to farmers, and reduction in greenhouse gas (GHG) emissions. The negative factors include increased emissions of volative organic compounds which could adversely affect public health, adverse land-use changes in pursuit of higher feedstock demands, and biodiversity loss.

Many of these factors are important for policy/decision making, and are usually not included in many economic computations. The researchers attempted to "contextualize and monetize" many of these factors in their study. Some of their findings include the following: (1) domestic biofuel production in Thailand (valued at about 317 million US dollars) is calculated to be more expensive than importing the equivalent amount of petroleum fuel; however, ‘domestic production allows virtually all of the money to stay within the Thai economy, as opposed to being sent abroad, (2) "significant uncertainty in future petroleum prices could strongly influence the direction of Thai policy with respect to biofuels".

The complete paper is published in the journal, Energy Policy (URL above).