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Land Use and Greenhouse Gas Implications of Biofuels: Role of Technology and Policy

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  • Chen, Xiaoguang
  • Huang, Haixiao
  • Khanna, Madhu

Abstract

This paper examines the extensive and intensive margin changes in land use in the U.S. likely to be induced by biofuel policies and the implications of these policies for GHG emissions over the 2007-2022 period. The policies considered here include the Renewable Fuel Standard (RFS) by itself as well as combined with current biofuel tax credits or a carbon price policy. We use a dynamic, spatial, multi-market equilibrium model, Biofuel and Environmental Policy Analysis Model (BEPAM), to endogenously determine the effects of these policies on cropland allocation, food and fuel prices, and the mix of first and second-generation biofuels. We find that the increase in crop prices under the RFS is likely to be less than 20% in most cases and this increase is much smaller when the RFS is accompanied by volumetric subsidies or a carbon price policy since these policies induce a switch away from corn ethanol to cellulosic biofuels. The impact of the RFS on GHG emissions reduction in the U.S. is fairly modest in size but increases when the RFS is accompanied by volumetric subsidies or a carbon price policy. However, domestic savings in GHG emissions achieved by the RFS can be severely eroded by the indirect land use changes and the rebound effect on global gasoline consumption. The net reductions in global GHG emissions are largest when the RFS is accompanied by a carbon price policy.

Suggested Citation

  • Chen, Xiaoguang & Huang, Haixiao & Khanna, Madhu, 2011. "Land Use and Greenhouse Gas Implications of Biofuels: Role of Technology and Policy," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103216, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea11:103216
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    Cited by:

    1. Piroli, Giuseppe & Rajcaniova, Miroslava & Ciaian, Pavel & Kancs, d׳Artis, 2015. "From a rise in B to a fall in C? SVAR analysis of environmental impact of biofuels," Renewable and Sustainable Energy Reviews, Elsevier, vol. 49(C), pages 921-930.
    2. Vorotnikova, Ekaterina & Seale, James L, 2014. "U.S. Ethanol Mandate Is a Hidden Subsidy to Corn Producers," 2014 Annual Meeting, February 1-4, 2014, Dallas, Texas 162551, Southern Agricultural Economics Association.
    3. Chakravorty, Ujjayant & Hubert, Marie-Helene & Nostbakken, Linda, 2012. "The Long Run Impact of Biofuels on Food Prices," Working Papers 2012-11, University of Alberta, Department of Economics.
    4. Ladislav Kristoufek & Karel Janda & David Zilberman, 2012. "Mutual Responsiveness of Biofuels, Fuels and Food Prices," CAMA Working Papers 2012-38, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    5. Ujjayant Chakravorty & Marie-Hélène Hubert & Beyza Ural Marchand, 2012. "Food for Fuel: The Effect of the U.S. Biofuel Mandate on Poverty in India," CESifo Working Paper Series 3910, CESifo Group Munich.
    6. 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).
    7. Ladislav Kristoufek & Karel Janda & David Zilberman, 2013. "Non-linear price transmission between biofuels, fuels and food commodities," Working Papers IES 2013/16, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Oct 2013.
    8. Ujjayant Chakravorty & Marie-Hélène Hubert & Michel Moreaux & Linda Nøstbakken, 2012. "Do Biofuel Mandates Raise Food Prices?," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201214, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    9. Khanna, Madhu & Wang, Weiwei & Hudiburg, Tara & DeLucia, Evan, 2016. "The Economic Cost of Including the Indirect Land Use Factor in Low Carbon Fuel Policy: Efficiency and Distributional Implications," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235774, Agricultural and Applied Economics Association.
    10. Ujjayant Chakravorty & Marie-Hélène Hubert & Beyza Ural Marchand, 2016. "The effect of the US biofuels mandate on poverty in India," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 2016-13, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.

    More about this item

    Keywords

    Biofuel Mandates; Land Use; GHG Emissions; Technology; Environmental Economics and Policy; Land Economics/Use; Resource /Energy Economics and Policy;

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