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Towards a Genuine Sustainability Standard for Biofuel Production

Harry de Gorter () and Yacov Tsur

No 48927, Working Papers from Cornell University, Department of Applied Economics and Management

Abstract: Sustainability standards for biofuel production calculated via life cycle accounting (LCA) require a certain reduction in greenhouse gas (GHG) emissions relative to gasoline. Recently it has been shown that LCA gives biased results and should be extended to incorporate indirect land use change (iLUC). We show that even including iLUCs, LCA is still biased and distorted because it is based on GHG emission and uptake calculations, which assume economic values only if (i) the environmental price of carbon is constant over time and (ii) the social discount rate (SDR) equals zero. We offer a sustainability standard free of these restrictions, expressed in terms of a range of SDRs and a maximal GHG payback period. Applying our methodology to Brazilian and U.S. data, we find that in Brazil conversion to biofuel production of two land types is genuinely sustainable, i.e., satisfies our sustainability standard, whereas in the United States no land type satisfies our criterion. Furthermore, the social value of CO2e savings by having the ethanol production from 12.8 million hectares of U.S. corn be produced in Brazil instead may be as high as $817.7 bil.

Keywords: Environmental Economics and Policy; International Development; International Relations/Trade; Political Economy (search for similar items in EconPapers)
Pages: 23
Date: 2009-03
New Economics Papers: this item is included in nep-ene and nep-env
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http://ageconsearch.umn.edu/record/48927/files/WP%202009-12.pdf (application/pdf)

Related works:
Working Paper: Towards a Genuine Sustainability Standard for Biofuel Production (2010) Downloads
Working Paper: Towards a Genuine Sustainability Standard for Biofuel Production (2008) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:ags:cudawp:48927

DOI: 10.22004/ag.econ.48927

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