Price of biofuels

Evaluation of the cost price of biofuels in France: consideration of externalities and comparison with the cost of diesel and unleaded petrol 95 Alexander Proy

Keywords: price, cost, biofuels, comparison, fossil energies, profitability, historical, curves

REIMS MANAGEMENT SCHOOL, TEMA 2004-2005, End of Studies Project

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Introduction

The probable depletion of fossil fuels on the horizon of the end of this century is an idea shared by most and a question arises: by what will they be replaced?

To this question, suddenly out of a lot "green gold", cataloged as "organic" fuel and now favorite of the competition, "which will replace oil." A favorite fast classified as ideal resource, a priori non-polluting, inexpensive and with this fair for participants in its development.

However, now that we are conditioned to increase the price of our energy, the blood of our economy and the fruit of our well-being, we can perhaps take the time to get organized!

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Indeed, the stakes are high and the decline took on this "new" form of energy, brings us now to know well its ins and outs. But questions remain alive and curiosity "when the relay will he do? "," What will be the economic incentive to develop this industry "and" in what condition it is he will do? ".

Therefore, beyond academic research, this memory has been pushed by a personal and professional interest associated with the first link in the chain, the agricultural resources. To answer these questions, this research paper highlighted the comparison of cost between fossil and renewable energy, to reveal the development potential of this "green gold". The cost price is the decisive factor in its development, since each player wishing to participate in the development of biofuels must obviously find an economic interest at least as attractive as in the competing sector, namely fossil fuels.

The breakdown of the cost price will allow one hand to unveil what is the interest, if any, for farmers to participate in the development of this sector and also to analyze the variables of the different costs of returns.

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Given that the arrival of biofuels is a priori accompanied by environmental, energy and economic issues, it appeared interesting to estimate the perceived gains and to integrate them into their cost price. The investigation carried out attempted to define what the social cost could be, that is to say a cost in which the external effects of biofuels are integrated. The research carried out on this subject was largely inspired by the work carried out by the consultancy firm PriceWaterhouseCoopers in 2002 and 2003, both on biofuels themselves and on their externalities.

So in the first part, the context and the biofuels market will be detailed to clearly identify the positions taken by the main players. The involvement of the State will be analyzed and of course compared with our European neighbors.

Then, in a second part, the issues related to the use of biofuels will be listed and monetised, to enter the price analysis of field returns of biofuels.

The last part will compare the cost between renewable energy and their fossil counterparts with and without external costs previously calculated. Different variables explaining the cost, as the price of oil will be analyzed to identify the importance and influence.

Alongside this research will be revealed conflicts of interest between the players and the stakes for the agricultural sector which finds a new outlet. A market even more important that the National Research Council of the United States believes that the substitution rate of Agricultural Resources fossil sources could reach 50% in the middle of this century!

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