LAND-USE AND GREENHOUSE GAS IMPLICATIONS OF BIOFUELS: ROLE OF TECHNOLOGY AND POLICY

Xiaoguang Chen, Haixiao Huang () and Madhu Khanna ()
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Haixiao Huang: Energy Biosciences Institute, Institute for Genomic Biology, University of Illinois at Urbana Champaign, 1206 West Gregory Drive, Urbana, IL 61801, USA
Madhu Khanna: Department of Agricultural and Consumer Economics, University of Illinois at Urbana Champaign, 326 Mumford Hall, 1301 West Gregory Drive, Urbana, IL 61801, USA

Climate Change Economics (CCE), 2012, vol. 03, issue 03, 1-25

Abstract: This paper examines the changes in land use in the U.S. likely to be induced by biofuel and climate policies and the implications of these policies for greenhouse gas (GHG) emissions over the 2007–2022 period. The policies considered here include a modified Renewable Fuel Standard (RFS) by itself as well as combined with a cellulosic biofuel tax credit or a carbon price policy. We use a dynamic, spatial, multi-market equilibrium model, Biofuel and Environmental Policy Analysis Model (BEPAM), to endogenously determine the effects of these policies on cropland allocation, food and fuel prices, and the mix of first- and second-generation biofuels. We find that the RFS could be met by diverting 6% of cropland for biofuel production and would result in corn prices increasing by 16% in 2002 relative to the business-as-usual baseline. The reduction in GHG emissions in the U.S. due to the RFS is about 2%; these domestic GHG savings can be severely eroded by emissions due to indirect land-use changes and the increase in gasoline consumption in the rest of the world. Supplementing the RFS with a carbon price policy or a cellulosic biofuel tax credit induces a switch away from corn ethanol to cellulosic biofuels and achieves the mandated level of biofuel production with a smaller adverse impact on crop prices. These supplementary policies enhance the GHG savings achieved by the RFS alone, although through different mechanisms; greater production of cellulosic biofuels with the tax credit but larger reduction in fossil fuel consumption with a carbon tax.

Keywords: Land use; greenhouse gas emissions; biofuel production mandate; biofuel tax credits; carbon tax; indirect land use change; rebound effect (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (31)

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Related works:
Chapter: Land Use and Greenhouse Gas Implications of Biofuels: Role of Technology and Policy (2017)
Working Paper: Land Use and Greenhouse Gas Implications of Biofuels: Role of Technology and Policy (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:wsi:ccexxx:v:03:y:2012:i:03:n:s2010007812500133

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DOI: 10.1142/S2010007812500133

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