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Economic Potential of Biomass-Based Fuels for Greenhouse Gas Emission Mitigation

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Author Info
Schneider, Uwe A.
McCarl, Bruce A.

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Abstract

Use of biofuels diminishes fossil fuel combustion, thereby also reducing net greenhouse gas emissions. However, subsidies are needed to make agricultural biofuel production economically feasible. To explore the economic potential of biofuels in a greenhouse gas mitigation market, the authors incorporate data on production and biofuel processing for the designated energy crops--switchgrass, hybrid poplar, and willow—in a U.S. Agricultural Sector Model, along with data on traditional crop-livestock production and processing, and afforestation of cropland. Net emission coefficients on all included agricultural practices are estimated through crop growth simulation models or are taken from the literature. The authors simulate potential emission mitigation policies or markets using hypothetical carbon prices ranging between $0 and $500 per ton of carbon equivalent. At each carbon price level, the Agricultural Sector Model computes the new market equilibrium, revealing agricultural commodity prices, regionally specific production, input use, welfare levels, environmental impacts, and adoption of alternative management practices such as biofuel production. Results indicate there is no role for biofuels below carbon prices of $50 per ton of carbon equivalent. At these incentive levels, emission reductions through reduced soil tillage and afforestation are more cost efficient. At carbon prices above $50, however, biofuels become increasingly important, and at prices above $180 they dominate all other agricultural strategies.

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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 2011.

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Date of creation: 18 Oct 2001
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Handle: RePEc:isu:genres:2011

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A1 - General Economics and Teaching - - General Economics

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  1. Alig, Ralph J & Adams, Darius M & McCarl, Bruce A, 1998. "Impacts of Incorporating Land Exchanges between Forestry and Agriculture in Sector Models," Journal of Agricultural & Applied Economics, Southern Agricultural Economics Association, vol. 30(2), pages 389-401, December.
  2. Robert N. Stavins, 1999. "The Costs of Carbon Sequestration: A Revealed-Preference Approach," American Economic Review, American Economic Association, vol. 89(4), pages 994-1009, September. [Downloadable!] (restricted)
  3. Pautsch, Gregory R. & Kurkalova, Lyubov A. & Babcock, Bruce A. & Kling, Catherine L., 2000. "Efficiency of Sequestering Carbon in Agricultural Soils (The)," Staff General Research Papers 1870, Iowa State University, Department of Economics.
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  4. Pautsch, Gregory R, et al, 2001. "The Efficiency of Sequestering Carbon in Agricultural Soils," Contemporary Economic Policy, Oxford University Press, vol. 19(2), pages 123-34, April.
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  1. Uwe A. Schneider & Michael Obersteiner & Erwin Schmid & Bruce A. McCarl, 2007. "Agricultural adaptation to climate policies under technical change," Working Papers FNU-133, Research unit Sustainability and Global Change, Hamburg University, revised Jan 2008. [Downloadable!]
  2. Uwe A. Schneider & Bruce A. McCarl, 2001. "Greenhouse Gas Mitigation through Energy Crops in the United States with Implications for Asian-Pacific Countries," Center for Agricultural and Rural Development (CARD) Publications 01-wp274, Center for Agricultural and Rural Development (CARD) at Iowa State University. [Downloadable!]
    Other versions:
  3. Uwe A. Schneider & Bruce A. McCarl, 2003. "Implications Of A Carbon Based Energy Tax For U.S. Agriculture," Working Papers FNU-17, Research unit Sustainability and Global Change, Hamburg University, revised Jan 2003. [Downloadable!]
    Other versions:
  4. Adriana Ignaciuk, 2005. "Energy policies and their impact on establishing nature areas in Poland - an AGE analysis," ERSA conference papers ersa05p600, European Regional Science Association. [Downloadable!]
  5. Schneider, Uwe A. & McCarl, Bruce A., 2002. "The Potential of U.S. Agriculture and Forestry to Mitigate Greenhouse Gas Emissions: An Agricultural Sector Analysis," Staff General Research Papers 2107, Iowa State University, Department of Economics. [Downloadable!]
  6. Carlo Giupponi & Francesco Bosello & Andrea Povellato, 2007. "A Review of Recent Studies on Cost Effectiveness of GHG Mitigation Measures in the European Agro-Forestry Sector," Working Papers 2007.14, Fondazione Eni Enrico Mattei. [Downloadable!]
  7. Uwe A. Schneider & Bruce A. McCarl, 2002. "Potential of U.S. Agriculture and Forestry to Mitigate Greenhouse Gas Emissions: An Agricultural Sector Analysis, The," Center for Agricultural and Rural Development (CARD) Publications 02-wp300, Center for Agricultural and Rural Development (CARD) at Iowa State University. [Downloadable!]
  8. Fabiosa, Jacinto F. & Beghin, John C. & Dong, Fengxia & Elobeid, Amani & Tokgoz, Simla & Yu, Tun-Hsiang (Edward), 2008. "Land Allocation Effects of the Global Ethanol Surge: Predictions from the International FAPRI Model," Staff General Research Papers 12877, Iowa State University, Department of Economics. [Downloadable!]
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