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Mix of First- and Second-Generation Biofuels to Meet Multiple Environmental Objectives: Implications for Policy at a Watershed Scale

Author

Listed:
  • Mashor Housh

    (Department of Natural Resources and Environmental Management, University of Haifa, Haifa, Israel)

  • Madhu Khanna

    (Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, USA)

  • Ximing Cai

    (Department of Civil and Environmental Engineering, University of Illinois at Urbana-Champaign, USA)

Abstract

Biofuel mandates are being widely used by countries to achieve multiple objectives of energy security and climate change mitigation. The Renewable Fuel Standard (RFS) in the US specifies arbitrarily chosen volumetric targets for different types of biofuels in the US based on their greenhouse gas intensity only. Cellulosic biofuels from high yielding energy crops like miscanthus have the potential to co-generate multiple environmental impacts, including reducing nitrate runoff, being a sink for Greenhouse Gas (GHG) emissions and providing a given volume of biofuel with less diversion of land from food crop production than corn ethanol, but at a significantly higher cost. This paper quantifies the tradeoffs between profitability, food and fuel production, GHG emissions and nitrate runoff reduction with different types of biofuels in the Sangamon watershed in Illinois and analyzes the optimal mix of biofuels as well as the policies that should supplement the mandate to achieve multiple environmental outcomes. We find that a two-thirds share of cellulosic biofuel in the mandated level could reduce nitrate run-off by 20% while reducing GHG emissions by 88–100% but would reduce profits by 15–27% depending on whether a GHG policy or a Nitrate policy is used relative to the case where the mandate is met by corn ethanol alone. Additionally, the ratio of corn stover to miscanthus used to produce cellulosic biofuels is higher under a GHG policy compared to a Nitrate policy that achieves the same level of nitrate reduction. Our results show that the optimal mix of different types of biofuels and the policy to induce it depend on the environmental objectives and the tradeoffs that society is willing to make between low cost energy security, food production and various environmental benefits.

Suggested Citation

  • Mashor Housh & Madhu Khanna & Ximing Cai, 2015. "Mix of First- and Second-Generation Biofuels to Meet Multiple Environmental Objectives: Implications for Policy at a Watershed Scale," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 1(03), pages 1-26.
    • Handle: RePEc:wsi:wepxxx:v:01:y:2015:i:03:n:s2382624x1550006x
    DOI: 10.1142/S2382624X1550006X
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    References listed on IDEAS

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    1. Malcolm, Scott A., 2008. "Weaning Off Corn: Crop Residues and the Transition to Cellulosic Ethanol," Environmental and Rural Development Impacts Conference, October 15-16, 2008, St. Louis, Missouri 53500, Farm Foundation, Transition to a Bio Economy Conferences.
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    Cited by:

    1. Catherine L. Kling & Raymond W. Arritt & Gray Calhoun & David A. Keiser, 2016. "Research Needs and Challenges in the FEW System: Coupling Economic Models with Agronomic, Hydrologic, and Bioenergy Models for Sustainable Food, Energy, and Water Systems," Center for Agricultural and Rural Development (CARD) Publications 16-wp563, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    2. James Shortle & Richard D. Horan, 2017. "Nutrient Pollution: A Wicked Challenge for Economic Instruments," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 3(02), pages 1-39, April.
    3. Madhu Khanna & Ruiqing Miao, 2022. "Inducing the adoption of emerging technologies for sustainable intensification of food and renewable energy production: insights from applied economics," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 66(1), pages 1-23, January.

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