THE IMPACT OF DIFFERENT ENERGY POLICY OPTIONS ON FEEDSTOCK PRICE AND LAND DEMAND: THE CASE OF BIOGAS IN LOMBARDY.

The effectiveness of bioenergy subsidisation policy in greenhouse gas mitigation and their hypothetical effect on the increase of the agricultural commodity prices, have led to a lively debate at the international level. The issue recurred in Italy as well, as a consequence of the growing demand of green maize for biogas production in the Po Valley. Such emerging activity has been accused to increase land rents and maize price, jeopardizing, in turn, important agri-food chains. The aim of this thesis is to quantify the extent to which the rapid spread of biogas raised the maize price at regional level, increasing the demand of land for energy crops. For this purpose we built a partial-equilibrium model simulating the agricultural sector and the biogas industry in Lombardy, under two alternative subsidization schemes. Results show that policy measures implemented in 2013 – reducing the average subsidy per kWh – may contribute to enforce the sustainability of the sector and decreasing its competition with agri-food chains: Maize demand for biogas would decrease, compared to the old scheme, lessening the market clearing price and reducing land demand for energy purposes.