OOS 22-9 - Food, fuel and GHG mitigation with biofuels: Trade-offs under alternative policies

Wednesday, August 8, 2012: 10:50 AM
A105, Oregon Convention Center
Madhu Khanna, Department of Agriculture and Consumer Economics, University of Illinois, Energy Biosciences Institute

Concerns about energy independence, high oil prices and greenhouse gas (GHG) emissions from transportation fuels have led to various types of policy initiatives to induce a switch to biofuels in the  US. These initiatives include biofuel mandates, tax credits and other low carbon fuel policies that seek to shift the emphasis from first generation to second generation biofuels from dedicated energy crops, forest and crop residues. This research examines the economically viable mix of biofuels in the US over the 2015-2035 period, the implications of biofuels for land use and food and fuel prices and the trade-offs among the goals of energy security, greenhouse gas emissions and economic benefits under alternative policy scenarios.  A dynamic, multi-market equilibrium  model, Biofuel and Environmental Policy Analysis Model (BEPAM) is developed to determine land allocation, fuel mix, prices in markets for fuel, biofuel, food/feed crops and livestock and on GHG emissions in the US at annual time scales over the period 2007-2035 under various policy, technology and land availability scenarios.  The model undertakes an integrated analysis of the agricultural and fuel sectors and considers several types of biofuels that can be blended with gasoline and diesel. These include the first generation biofuels produced domestically from corn and soybeans and imported sugarcane ethanol. We also consider various second generation biofuels from cellulosic feedstocks including crop residues, forest residues and dedicated energy crops, namely perennial grasses such as switchgrass and miscanthus. Competition for land for food, feed and fuel is modeled explicitly by considering the net returns to land under alternative uses, the responsiveness of land use to crop prices and constraints on the flexibility to land use change imposed by historical patterns of land use. Alternative scenarios are constructed for biofuel production in the future by considering policies that could either replace or supplement the RFS. 


Specifically, we find that supplementing the RFS with a carbon tax or tax credits for cellulosic biofuels or a low carbon fuel standard would lead to larger reduction in fuel consumption and GHG emissions and have less negative impact on crop prices compared to the RFS alone. Our analysis suggests that the availability of a commercial technology for cellulosic biofuels together with biofuel policies that encourage low carbon, high yielding feedstocks can result in significant increase in second generation biofuel production and reduction in US GHG emissions with limited impact on food prices in the next two decades.