Global Land Use Changes and Consequent CO2 Emissions due to US Cellulosic Biofuel Program: A Preliminary Analysis

The economic and land use consequences of US biofuel programs and their contributions to GHG emissions have been the focal point of many debates and research studies in recent years. However, most of these studies focused on the land use emissions due to the first generation of biofuels such as corn ethanol, sugarcane ethanol, and biodiesel (e.g. [1, 2] [3, 4]). A quick literature review indicates that only a few attempts have been made to estimate these emissions for the second generation of biofuels which convert cellulosic materials into liquid fuels. Gurgel et al. [5] have used a highly aggregated computational model (CGE) to evaluate land use consequences of producing biofuels from biomass feedstock. This model does not distinguish between the first and second generation of biofuels, aggregates all agricultural products in one sector thereby over simplifying the competition for land among its alternative uses, and relies on an old data set which represents the world economy in 1999. These authors predict that producing energy from biomass requires a considerable amount of land, about 0.5 hectares per 1000 gallons of ethanol. More recently, the United States Environmental Protection Agency (EPA) has released its emissions assessments for alternative biofuels including ethanol produced from corn stover and a dedicated crop (switchgrass) [6]. To provide these assessments EPA has mainly relied on the FASOM and FARPRI partial equilibrium models to evaluate domestic and international land use impacts of the US cellulosic biofuel targets. The simulation results obtained from these models show that producing ethanol from corn stover has insignificant land use impacts. However, producing ethanol from switchgrass will cause major land use changes in the US and other countries across the world. The EPA results show that producing 7.9 billion gallons of ethanol from switchgrass will increase global cropland areas by about 3 million hectares of which 1.7 million hectares will occur in the US. In addition, according to the EPA estimates, producing ethanol from switchgrass will curb acreages of US soybeans, wheat, hay, and other crops by 3.36 million hectares as well. On the other hand several research studies have concluded that dedicated energy crops can be grown on marginal lands (including idled cropland and cropland pasture) and that considerable amounts of these lands are available across the world to use without imposing a major impact on cropland and no consequences for food security [7-9],. These papers simply assume that these marginal lands have no opportunity costs. The economic and land use impacts of producing biofuels from dedicated crops could be more complicated than corn ethanol. Production of dedicated crops for significant volumes of biofuels could alter relative prices of crops and their profitability leading farmers to produce them on their existing active croplands or convert their idled or marginal croplands to produce these crops. This could cause major implications for livestock producers who use marginal lands (such as cropland pasture) in their production process. This will alter demand for feedstocks leading to major changes in markets of agricultural commodities, animal feed items such as DDGS (a by-product corn ethanol) and oilseed meals (co-products of biodiesel), and livestock products. The impacts of producing cellulosic biofuels from dedicated energy crops go beyond agricultural sectors and affect many economic activities at local, regional, national, and global scales. This paper discusses these impacts and explains interactions among the first and second generations of biofuels and their joint implications for other economic activities and markets. Then it provides a preliminary analysis of the economic and land use changes induced by cellulosic feedstocks for biofuel production. It develops an economy-wide computational general equilibrium (CGE) model based on the modeling framework developed at the Center for Global Trade Analysis (GTAP) to assess the economic and land use consequences of producing biofuels from cellulosic materials including corn stover and a dedicated energy crop. In particular, it extends the model developed in Tyner et al. [4]. The paper extends this model and its database in several directions. The new model works based on the latest version of GTAP databases (version 7). Following Taheripour et al. [10] the first generation of biofuels are introduced into the database. Then new industries and commodities are introduced into the database to support production and consumption of an advanced cellulosic biofuel (named Bio-Gasoline). In particular, a new crop industry is introduced to produce a dedicated energy crop (miscanthus) and a new industry is defined to supply agricultural residues (corn stover). The production technologies and cost structures of new industries are taken from the literature. The land use and land cover component of the data base is also updated according to the work done by Avetisyan et al. [11]. To introduce cellulosic biofuels we assumed several regions including US, some EU members, Brazil, and China produce tiny volumes of cellulosic biofuels from miscanthus in the base year in order to be able to shock the model for larger volumes of production. Then the GTAP modeling framework is revised to handle production, consumption, and trade of new industries and commodities at a global scale. To accomplish this task all production, supply, and demand functions included in the model are revised and necessary changes are made in market clearing conditions as well. In addition, the land use module of the model is altered to handle competition for land (including marginal lands) among the new dedicated crop and traditional land use industries such as forestry, livestock, and crops. Econometric analyses on land cover changes are used to update the economic parameters of the land use module as well. Furthermore the model is augment with a procedure which links productivity of marginal lands with their rent. This component will play an essential role in assessing the economic impacts of advanced biofuels. The CGE model is used to assess the economic and land use impacts of alternative biofuel scenarios including in the US Renewable Fuel Standard Program (RFS2). The numerical results obtained from these simulations show that producing bio-gasoline from corn stover has no significant land use impacts and generates economic gains. On the other hand, the numerical results indicate that the economic land use impacts of producing bio-gasoline from miscanthus vary across alternative assumptions. For example, producing bio-gasoline from miscanthus increases global cropland areas by about 0.2 hectares per 1000 gallons of ethanol equivalent in the presence of yield improvement on cropland pasture. This experiment indicates that about 40% of this land requirement will occur in the US, and forest has a small share (about 4%) in this land conversion. This figure is significantly higher than the additional land requirement of corn ethanol (about 0.13hectares per 1000 gallon ethanol). The results obtained from this experiment shows that production and consumption of each gallon of Bio-Gasoline (converted to ethanol equivalent) produced from miscanthus generates 891 grams CO2 emissions. This figure is 7% percent less than the corresponding figure for corn ethanol. In this case the livestock industry will not suffer from bio-gasoline production. However, when farmers do not improve yield on cropland pasture more land with higher share from forest is needed. Finally, based on the numerical results the paper offers a set of policies to support production of the second generation of biofuels which reduce welfare costs of the RFS policies. References 1. Searchinger, T., et al., Use of U.S. croplands for biofuels increases greenhouse gases through emissions from land use change. Science, 2008. 319(5867): p. 1238-1240. 2. Taheripour, F., T. Hertel, and W.E. Tyner, Biofuels and Their By-Products: Global Economic and Environmental Implications. Biomass and Bioenergy, 2010. 34: p. 278-89. 3. Hertel, T., W. Tyner, and D. Birur, The Global Impacts of Multinational Biofuels Mandates. Energy Journal, 2010. 31(1): p. 75-100. 4. Tyner, W., et al., Land Use Changes and Consequent CO2 Emissions due to US Corn Ethanol Production: A Comprehensive Analysis, A Report to Argonne National Laboratory. 2010, Department of Agricultural Economics, Purdue University. 5. Gurgel, A., J.M. Reilly, and S. Paltsev, Potential Land Use Implications of a Global Biofuels Industry. Journal of Agricultural and Food Industrial Organization, 2007. 5: p. Article 9. 6. Environmental Protection Agency, Renewable Fuel Standard Program (RFS2) Regulatory Impact Analysis. 2010: Washington, D.C. 7. Tyner, W.E., F. Taheripour, and Y. Han., Preliminary Analysis of Land Use Impacts of Cellulosic Biofuels, Argonne National Laboratory and the California Energy Commission, Editor. 2009. 8. Campbell, J.E., et al., The Global Potential of Bioenergy on Abandoned Agricultural Lands. Environmental Science and Technology, 2008. 42(15): p. 5791-5794. 9. Cai, X., X. Zhand, and D. Wang, Land Availability for Biofuel Production. Environmental Science and Technology, 2011. 45(1): p. 334-39. 10. Taheripour, F., et al., Introducing Liquid Biofuels into the GTAP Database, in GTAP Research Memorandum No 11, GTAP, Editor. 2007, Purdue University: West Lafayette, IN. 11. Avetisyan, M., U. Baldos, and T. Hertel, Development of the GTAP Version 7 land Use Data Base, in GTAP Research Memorandum No. 19. 2010, Purdue University: West Lafayette.