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Using Cellulosic Ethanol to ‘Go Green’: What Price for Carbon?

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  • Miranowski, John A.
  • Rosburg, Alicia

Abstract

The revised Renewable Fuels Standard (RFS2) mandates that cellulosic biofuels be part of the liquid transportation fuel mix and contribute to reducing our carbon footprint. Unfortunately, since no commercial cellulosic biorefinery exists and cellulosic biomass production is typically smaller scale than conventional crop production, limited knowledge exists of the actual costs of producing cellulosic biomass and converting it to cellulosic ethanol. Understanding of the implications of RFS2 requires a better understanding of the economics of producing cellulosic ethanol. We use the Biofuel Breakeven model (BIOBREAK), a simple long run breakeven model that represents the feedstock supply system and biofuel refining process, along with estimates of the potential reduction in carbon emissions from biofuels relative to conventional fuels, to derive the implicit carbon price (or carbon credit) needed to sustain a biomass market and cellulosic ethanol industry. We evaluate BIOBREAK under different oil prices, the RFS2 mandate, and with and without other biofuel incentives.

Suggested Citation

  • Miranowski, John A. & Rosburg, Alicia, 2010. "Using Cellulosic Ethanol to ‘Go Green’: What Price for Carbon?," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61395, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea10:61395
    DOI: 10.22004/ag.econ.61395
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    References listed on IDEAS

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    1. Harry de Gorter & David R. Just, 2008. "The Economics of a Blend Mandate for Biofuels," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(3), pages 738-750.
    2. Harry de Gorter & David R. Just, 2007. "The Welfare Economics of a Biofuel Tax Credit and the Interaction Effects with Price Contingent Farm Subsidies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(2), pages 477-488.
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    Cited by:

    1. Leilei Zhang & Guping Hu & Lizhi Wang & Yihsu Chen, 2016. "A bottom-up biofuel market equilibrium model for policy analysis," Annals of Operations Research, Springer, vol. 236(1), pages 75-101, January.
    2. Leilei Zhang & Guping Hu & Lizhi Wang & Yihsu Chen, 2016. "A bottom-up biofuel market equilibrium model for policy analysis," Annals of Operations Research, Springer, vol. 236(1), pages 75-101, January.

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