Transport energy from agriculture in the European community: some conceptual considerations for economic analysis

Most contemporary transport fuels are drawn from nonrenewable resources. Hence the problem of availability of transport energy is likely to become acute unless alternative energy sources are found. This paper provides a conceptual framework to assess the economic viability of extracting ethanol as a source of transport fuel from agricultural resources in the European Economic Community (EEC). The framework is set in the context of some explicit objectives of the EEC namely: self sufficiency in food; reductions in import expenditure; the maintenance of environmental quality and adequate health standards. Hence consideration is given to the following: trade‐offs between food production and energy creation; effects of the EEC's subsidies to agriculture resulting in surplus food production; and the lower levels of pollution due to the use of ethanol as a transport fuel. These considerations lead to the definition of the net social gain from using agricultural resources as a source of transport energy. The paper also includes the formulation of mathematical programming models to generate the components of the conceptual framework.