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Indirect fuel use change (IFUC) and the lifecycle environmental impact of biofuel policies

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Author Info

  • Rajagopal, D.
  • Hochman, G.
  • Zilberman, D.

Abstract

A common assumption in lifecycle assessment (LCA) based estimates of greenhouse gas (GHG) benefits (or costs) of renewable fuel such as biofuel is that it simply replaces an energy-equivalent amount of fossil fuel and that total fuel consumption remains unchanged. However, the adoption of renewable fuels will affect the price of fuel and therefore affect total fuel consumption which, may increase or decrease depending on the policy regime and market conditions. Using a representative two-region model of the global oil market in which, one region implements a domestic biofuel mandate and the other does not, we show that the net change in global fuel consumption due to the policy, which we term indirect fuel use change (IFUC), can have a significant impact on the net GHG emissions associated with biofuel. If LCA-based regulations are designed to account for indirect emissions such as indirect land use change, then we argue that IFUC emissions cannot be ignored. Our work also shows how different policies can affect the environmental impact from adopting a given clean technology differently.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 39 (2011)
Issue (Month): 1 (January)
Pages: 228-233

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Handle: RePEc:eee:enepol:v:39:y:2011:i:1:p:228-233

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Web page: http://www.elsevier.com/locate/enpol

Related research

Keywords: Biofuels Lifecycle Emissions;

References

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  1. Stephen P. Holland & Jonathan E. Hughes & Christopher R. Knittel, 2009. "Greenhouse Gas Reductions under Low Carbon Fuel Standards?," American Economic Journal: Economic Policy, American Economic Association, vol. 1(1), pages 106-46, February.
  2. Daniel J. Graham & Stephen Glaister, 2002. "The Demand for Automobile Fuel: A Survey of Elasticities," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 36(1), pages 1-25, January.
  3. Delucchi, Mark, 2005. "Incorporating the Effect of Price Changes on CO2-Equivalent Emissions From Alternative-Fuel Lifecycles: Scoping the Issues," Institute of Transportation Studies, Working Paper Series qt606506g7, Institute of Transportation Studies, UC Davis.
  4. Carolyn Fischer, 2010. "Renewable Portfolio Standards: When Do They Lower Energy Prices?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 101-120.
  5. Krichene, Noureddine, 2002. "World crude oil and natural gas: a demand and supply model," Energy Economics, Elsevier, vol. 24(6), pages 557-576, November.
  6. Searchinger, Timothy & Heimlich, Ralph & Houghton, R. A. & Dong, Fengxia & Elobeid, Amani & Fabiosa, Jacinto F. & Tokgoz, Simla & Hayes, Dermot J. & Yu, Hun-Hsiang, 2008. "Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land-Use Change," Staff General Research Papers 12881, Iowa State University, Department of Economics.
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Citations

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Cited by:
  1. Drabik, Dušan & de Gorter, Harry, 2013. "Emissions from Indirect Land Use Change: Do they Matter with Fuel Market Leakages?," Review of Agricultural and Applied Economics (RAAE), Faculty of Economics and Management, Slovak Agricultural University in Nitra Provider-Homepage: http://www.roaae.org & Association of Agricultural Economists in Slovakia (APES), vol. 16(2).
  2. Kim Pingoud & Tommi Ekholm & Ilkka Savolainen, 2012. "Global warming potential factors and warming payback time as climate indicators of forest biomass use," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 17(4), pages 369-386, April.
  3. Klotz, Richard & Bento, Antonio M. & Landry, Joel R., 2013. "Economic Insights Required for Using Lifecycle Analysis for Policy Decisions," 2014 Allied Social Science Association (ASSA) Annual Meeting, January 3-5, 2014, Philadelphia, PA 161654, Agricultural and Applied Economics Association.
  4. Karel Janda & Ladislav Kristoufek & David Zilberman, 2011. "Modeling the Environmental and Socio-Economic Impacts of Biofuels," Working Papers IES 2011/33, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Oct 2011.
  5. Valencia, Monica J. & Cardona, Carlos A., 2014. "The Colombian biofuel supply chains: The assessment of current and promising scenarios based on environmental goals," Energy Policy, Elsevier, vol. 67(C), pages 232-242.
  6. Chen, Xiaoguang & Huang, Haixiao & Khanna, Madhu & Önal, Hayri, 2014. "Alternative transportation fuel standards: Welfare effects and climate benefits," Journal of Environmental Economics and Management, Elsevier, vol. 67(3), pages 241-257.
  7. Xiangzheng Deng & Jianzhi Han & Fang Yin, 2012. "Net Energy, CO 2 Emission and Land-Based Cost-Benefit Analyses of Jatropha Biodiesel: A Case Study of the Panzhihua Region of Sichuan Province in China," Energies, MDPI, Open Access Journal, vol. 5(7), pages 2150-2164, June.
  8. Chrz, Stepan & Hruby, Zdenek & Janda, Karel & Kristoufek, Ladislav, 2013. "Provazanost trhu potravin, biopaliv a fosilnich paliv
    [Interconnections within food, biofuel, and fossil fuel markets]
    ," MPRA Paper 43958, University Library of Munich, Germany.
  9. Moschini, GianCarlo & Cui, Jingbo & Lapan, Harvey, 2012. "Economics of Biofuels: An Overview of Policies, Impacts and Prospects," Staff General Research Papers 35548, Iowa State University, Department of Economics.
  10. Bento, Antonio M. & Klotz, Richard & Landry, Joel R., 2011. "Are there Carbon Savings from US Biofuel Policies? Accounting for Leakage in Land and Fuel Markets," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 104008, Agricultural and Applied Economics Association.

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