Is bioenergy trade good for the environment?

► We analyze the effects of international trade in biofuels on the environment. ► We use a general equilibrium North-South model with two goods, agriculture and industry. ► North may end up exporting the industrial pollution intensive good despite having a higher pollution tax than South. ► The effect of trade on pollution depends on competitive advantages. ► If North exports the industrial good then world pollution falls when trade is liberalized.