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EPA Continues to Move Toward Calculation of Indirect GHGs

December 4, 2008
Dr. Bruce Dale of Michigan State University published a Commentary in the Washington Times on Nov. 26, calling for sound science in development of the EPA’s rule on the Renewable Fuel Standard.

Dr. Dale points out, “No actual data exist that connect U.S. domestic ethanol production with, to cite a widely quoted example, the clearing of the Amazon rain forest. Instead, the paper's conclusions depend entirely on economic modeling and assumptions.” He then discusses his own recently completed research that shows that changes to the assumptions and different calculations for some of the variables can dramatically change the outcome of the lifecycle greenhouse gas equation. His research is to be published in a forthcoming edition of Environmental Science and Technology.

See Dale: Unexplored Variables and Dale: Unexplored Variables Supporting Information

The New Fuels Alliance on Oct. 23 sent a letter to the California Air Resources Board raising similar cautions about using estimates of indirect impacts in regulating biofuels. The letter notes:

CGE [computable general equilibrium] models like GTAP [Global Trade Analysis Project] provide estimates of land use change in distant locations, but at the price of severe limits in accuracy and at the expense of a realistic inclusion of complex causes of land use change.”

The NFA notes that CARB has not investigated the indirect effects of other fuels, particularly petroleum, an idea explored in previous posts to this blog. (See here and here.) The indirect effects of petroleum prices are vast, according to the letter. “If the rising price of agricultural commodities is a concern – as the catalyst for additional planting – it is now clear that oil prices have a profound effect on agricultural commodity markets.” In fact, researchers at FAPRI include oil prices as a significant cause of uncertainty in calculating the indirect effects of biofuels on land use.

In general, Dr. Dale’s conclusion is consistent with NFA’s statement, “The fundamental assumption of the current ILUC argument – that using an acre of land in the U.S. for fuel will require almost an acre of crop development somewhere else – produces questionable results when applied to ‘good’ public policy initiatives.”

The EPA’s Regulatory Impact Analysis from the 2005 version of the Renewable Fuel Standard makes clear that they do use this assumption in several places. The reason for accepting these assumptions, according to the EPA, is that existing life cycle models fail to take into account general equilibrium principles on market impacts.

The agricultural sector modeling results indicate that, compared to the 2012 Reference Case, approximately two and a half million acres will come out of CRP land as a result of increased renewable fuel production. Not all of these two million acres will go directly into corn production used to produce ethanol. However, the entire amount of CO2 emissions from the CRP land use change is attributable to the increased amount of ethanol produced, as without the increased demand for corn there would be no change in CRP land.”

And they indicated with the publication of the RIA that they will use the assumption in estimating indirect land use in future legislation:

Due to decreasing corn exports some changes to international land use may occur, for example, as more crops are planted in other regions to compensate for the decrease in crop exports from the U.S. While the emissions associated with domestic land use change are well understood and are included in our lifecycle analysis, we did not include the potential impact on international land use and any emissions that might directly result.”

EPA at the time also applied this assumption to oil production:

Under a full lifecycle assessment approach, the savings associated with reducing overseas crude oil extraction and refining are included here, as are the international emissions associated with producing imported ethanol. This assumes that for every gallon of gasoline that’s not imported into the US, the corresponding quantity of crude oil is not extracted or processed to make this gasoline regardless where the extraction or production takes place.”

A fuller exploration of the market impacts of biofuels and oil are warranted, particularly after this year’s food and gas price swings.