Advanced BioFuels USA

(Phys.Org/ University of Illinois at Urbana-Champaign)  … To penalize the carbon emissions from this so-called indirect land use change, the USEPA and California Air Resources Board include an indirect land use change factor when considering the carbon savings with biofuels for their compliance with the federal Renewable Fuel Standard or California’s Low-Carbon Fuel Standard.

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” … We examine the costs and benefits of using this approach at a national level,” says University of Illinois agricultural economist Madhu Khanna.

A research paper on the subject by Khanna and her colleagues appears today in Nature Communications in which they ask: By how much would carbon emissions be reduced as a result of regulating indirect land use change like they are attempting to do in California? At what cost? And, who bears those costs?

Khanna says a low-carbon fuel standard creates incentives to switch to low-carbon advanced biofuels, but including the indirect effect makes compliance more costly and fuel more expensive for consumers.

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“Inclusion of the indirect land use change factor makes it much more costly to achieve the Low Carbon Fuel Standard,” Khanna says. “It penalizes all biofuels and increases their carbon emissions per gallon. It imposes a hidden tax on all fuels that is borne by fuel consumers and blenders.”

“What we find is the inclusion of this indirect land use change factor leads to a relatively small reduction in emissions and this reduction comes at a very large cost to fuel consumers and fuel blenders,” Khanna says. “The economic cost of reducing these carbon emissions is much higher than the value of the damages caused by those emissions, as measured by the social cost of carbon. What our findings suggest is that it’s not optimal to regulate indirect land use change in the manner that it is currently done in California and of extending that to other parts of the country.”

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The social cost of carbon, Khanna says, is $50 per ton of carbon dioxide on average. The economic cost of reducing carbon emissions by including California’s indirect land use change factor at a national level is $61 per ton of carbon dioxide.

The use of California’s indirect land use change factors applied nationally would imply that the cost of reducing a ton of carbon is 20 percent higher than the avoided damages from those emissions.

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“We need to think of better ways to prevent indirect land use change that would be more cost-effective,” Khanna says.

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” … We may be more productive if we focus more on the direct carbon saving with biofuels and incorporating those in trying to encourage the move toward lower carbon biofuels rather than regulating the indirect effects. Estimates of the indirect effects of biofuels have also become much smaller over time and it’s time to re-evaluate the benefits of continuing the policy of regulating indirect emissions,” Khanna says.

The paper, “The social inefficiency of regulating indirect land use change due to biofuels,” is written by Madhu Khanna, Weiwei Wang, Tara W. Hudiburg, and Evan H. DeLucia and is published in Nature Communications.  READ MORE  Abstract (Nature Communications)