Domestic energy policy effects on the US biomass market

This study develops and applies a structural, partial-equilibrium model of United States biomass supply and demand. The aim is to examine the biomass price and expenditure effects of domestic biofuel policies. The results indicate that the cellulosic biofuel sub-mandate alone could increase biomass prices by an average of 50%-100% over the baseline values. Biomass expenditures including those by biofuel producers increase by an average of 140% relative to the baseline. A sensitivity analysis focusing on supply response indicates that the results are fairly sensitive to the supply elasticity. This study contributes to the literature by providing policymakers and other energy policy stakeholders with a forward looking analysis of potential policy effects on the US biomass market. (C) 2012 Elsevier Ltd. All rights reserved.