Economic effects of bioenergy policy in the United States and Europe: A general equilibrium approach focusing on forest biomass

Renewable energy is an option for many countries simultaneously seeking to reduce dependence on imported petroleum and to reduce greenhouse gas (GHG) emissions that contribute to climate change. Forestry can play a role in environmental policies, such as renewable portfolio standards for bioelectricity, renewable fuel standards for biofuels, and forest carbon sequestration. This paper models interactions and interdependencies between bioelectricity and biofuel production, particularly from forest biomass. A global computable general equilibrium (CGE) model is used to measure the economic effects of bioenergy production from forest products, forest residues, and dedicated energy crops. The land use and emissions impacts on the global economy of revenue-neutral GHG mitigation policies are evaluated. Results show that mandated bioenergy production can substantially reduce carbon dioxide (CO2) emissions, especially through fossil fuel substitution in the electricity sector. Although emissions reductions from bioenergy production in the transportation fuel sector are less dramatic than those in the electricity sector, biofuels also have lower emissions rates than petroleum-based transportation fuels.