Environmental Cost-Effectiveness of Bio Diesel Production in Greece : Current Policies and Alternative Scenarios

Following European Directive 2003/30/EC, the Greek Government adapted legislation that introduces and regulates the bio diesel market. The implemented quota scheme allocates the country’s annual, predetermined, tax exempt production of bio diesel to industries based on their ability to meet several criteria. A number of bio diesel supply chain stakeholders have criticized this policy for being efficiency-robbing and vague. This paper uses 2007 data from energy crop farms and three bio diesel producing companies in order to assess these criticisms. We study the economic and environmental aspects of the currently adopted policy and compare them to three alternative scenarios. We conclude that such criticisms have a merit and that policy makers need to reconsider their alternative options regarding the promotion of bio diesel in transport. Permission of sales directly to local consumers and promotion of forward integration by farmers are efficiency enhancing and environmentally friendly means of promoting the use of bio diesel in transport