Cost-benefit analysis of first-and second-generation biofuels based on an economic valuation of life-cycle impacts

In the face of the current push for liquid biofuels worldwide, the design of policies compatible with sustainable development requires a careful and comprehensive analysis of their respective benefits and drawbacks. The environmental impacts of biofuels are usually quantified with life-cycle assessment (LCA), which provides indicators for a suitable range of impacts but leaves their prioritization up to decision-makers. Cost-benefit analysis (CBA) may be used to aggregate these impacts through an economic valuation of positive and negative effects on the environment. Here, we propose a simplified and ad hoc framework to combine LCA with CBA based on different valuations found in the literature, and apply it to a case-study comparing first-and second-generation biofuels in the Picardy region (northern France). The results were compared to 2 other methods already used to monetize externalities: the Eco-Cost method, and a method developed as part of the European Nitrogen Assessment. In terms of LCA, 2G bioethanol from miscanthus emitted 30 to 90% less pollutants than its 1G counterpart from sugar-beet, due to its lower requirements in agricultural inputs. This was directly reflected in the ad hoc CBA results, with a 3 to 6-fold decrease between the external costs of sugar-beet and miscanthus ethanol for the 4 impact categories monetized. There was a large variation between the valuation methods, which varied within an order of magnitude. For instance, the eutrophication costs associated with sugar-beet ethanol varied from 4 10-4to 4 10-3€/MJ of biofuel. Compared to fossil fuels, miscanthus-based ethanol incurred an overall net positive externality of 0.1€/MJ of biofuel, which is on a par with the tax exemption level put in place by the French government for 2ndgeneration biofuels.