Domestic Fuel

Europe’s $13 billion biodiesel industry could be in jeopardy according to an article published by Reuters that claims that the European Union (EU) plans to tackle unwanted side effects of biofuel production. The turn-about in support of biodiesel has been in part spurred by fear over climate change and several recent papers leaked from the European Commission that purport that biodiesel’s indirect impacts cancel out the majority of its benefits.

As the EU looks to increase current biodiesel use from 3 percent to 10 percent by 2020, they are also concerned that such a move would increase environmental damage rather than reduce environmental concerns. Their own analysis concludes that a 10 percent biodiesel mandate could lead to “an indirect one-off release of around 1,000 megatonnes of carbon dioxide — more than twice the annual emissions of Germany.” In addition, one report concludes that more use of biofuels could “squeeze food supplies and increase global hunger.”

The studies to which Reuters is referring have not been released by the European Commission and the authors surmise it is because it would “have significant implications for the existing EU biodiesel industry.”

These negative impacts could include a reduction of investments in plants and infrastructure. It could also cause a reduction of biodiesel use, rather than what the country has been aiming for since 2003, an increase in biodiesel use.
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FAO has released a new report that contains methodology designed to aid policymakers assess the pros and cons of investing in the bioenergy industry. The “Bioenergy and Food Security (BEFS) Analytical Framework” was written to help governments evaluate the potential of bioenergy as well as assess its possible food security impacts. The framework was developed over a three-year time frame and cites development and field tests that took place in Peru, Tanzania and Thailand.

The report is comprised of a series of step-by-step evaluations that seek to answer critical questions regarding the feasibility of bioenergy development and the impacts on food availability and household food security. In addition, social and environmental dimensions are also considered. The paper also serves as a platform for bringing key ministries and institutions together so they can work on the same page.

“Our goal is to help policy-makers take informed decisions regarding whether bioenergy development is a viable option and, if so, identify policies that will maximize benefits and minimize risks,” explains Heiner Thofern, who heads FAO’s Bioenergy and Food Security (BEFS) project.

The drive to biofuels have been driven by both worries over greenhouse gas emissions from fossil fuels as well as high oil prices and energy security concerns. FAO believes that one important benefit of investments into the bioenergy sector is that it could spark much-needed investment in agricultural and transport infrastructure in rural areas. This would create jobs and boost household income. These benefits could lesson both poverty and food security concerns. FAO has also conducted separate studies that show small-scale bioenergy projects not designed for export markets can improve food security and help boost rural economies.

“FAO has been saying for years that under-investment in agriculture is a problem that seriously handicaps food production in the developing world, and that this, coupled with rural poverty, is a key driver of world hunger,” says Thofern. “Done properly and when appropriate, bioenergy development offers a chance to drive investment and jobs into areas that are literally starving for them.”

Yet while there are major potential benefits to bioenergy production, FAO warns there are also potential negatives. They write that large-scale biofuel production could come at the expense of food production, leading to less food available, and higher food prices. In addition, deforestation is also a concern. Therefore, potential risks and benefits need to be weighed.

In a new study released today by Michigan State University (MSU), biofuel production in the United States through 2007, “probably has not induced any indirect land use change.” The report was conducted by Seungdo Kim and Bruce Dale, both MSU scientists, and the results will be published in the next issue of the Journal of Biomass and Bioenergy. ILUC is the theory that any acre used in the production of feedstocks for biofuels in the U.S. results in a new acre coming into food or feed production somewhere else in the world.

Dale and Kim empirically tested whether indirect land use change (ILUC) occurred through 2007 as a result of the expansion of the U.S. biofuels industry, spurred in part by the Renewable Fuels Standard (RFS2) that calls for 36 billion gallons of renewable fuel to be blended in fuel supplies by 2022. The researcher’s derived their conclusion after studying historical data on U.S. croplands, commodity grain exports to specific regions and land use trends in these geographical regions.

The authors write, “Biofuel production in the United States up through the end of 2007 in all probability has not induced indirect land use change. There are two feasible dependent conclusions that might be drawn from this interpretation: 1) crop intensification may have absorbed the effects of expanding US biofuel production or 2) the effects of US biofuel production expansion may be simply negligible, and not resolvable within the accuracy of the data.”

In response to the study, Renewable Fuels President and CEO Bob Dinneen stated, “Solving America’s energy crisis must rely on the best available science. Since its inception, the notion indirect land use change has been deeply flawed and repeatedly disputed. It is refreshing to see academia using real-world data and actual market behaviors to challenge the hypothetical results and ‘what if’ scenarios that have so far dominated the ILUC discussion.”

“Biofuels like ethanol offered unparalleled environmental benefits as a renewable alternative to gasoline. Hiding behind the faux science of ILUC, some have attempted to stall and thwart the sustainable growth of biofuels across the globe and especially in the U.S. This work from MSU, coming on the heels of other recent scientific analyses, has demonstrated that ILUC as a matter of science and fact is wrong,” continued Dinneen.

This report comes on the heels of report from the U.S. Department of Energy’s Oak Ridge National Laboratory that concluded ILUC resulting from corn ethanol expansion over the past decade has likely been “minimal to zero.”

Kim and Dale noted in the report that “prior ILUC studies have failed to compare their predictions to past global historical data.” Both the Environmental Protection Agency and the California Air Resources Board have used highly controversial ILUC modeling tools. The report concludes, “No arable land increases from the 1990s are observed in the United States. Furthermore, no declines in natural ecosystem lands in the United States have been observed since 1998.” In addition, the analysis suggests cropland expansion in foreign countries is not well correlated to U.S. biofuels demand for certain feedstocks.

According to a new report, “Making Integrated Food-Energy Systems (IFES) Work for People and Climate – An Overview,” the simultaneous production of food and fuel by farmers can help to reduce poverty in countries such as Africa, Asia and Latin America. This according to FAO who published the report this week.

“Farming systems that combine food and energy crops present numerous benefits to poor rural communities,” said Alexander Müller, FAO Assistant Director-General for Natural Resources. “For example, poor farmers can use leftovers from rice crops to produce bioenergy, or in an agroforestry system can use debris of trees used to grow crops like fruits, coconuts or coffee beans for cooking.”

Müller noted that other types of food and energy systems use byproducts from livestock or biogas production and with this type of integrated systems, farmers can save money – they don’t have to buy expensive fossil fuel or chemical fertilizers. Rather, than can use the slurry from biogas production, a more sustainable, less costly alternative.

“They can then use the savings to buy necessary inputs to increase agricultural productivity, such as seeds adapted to changing climatic conditions — an important factor given that a significant increase in food production in the next decades will have to be carried out under conditions of climate change. All this increases their resilience, hence their capacity to adapt to climate change,” said Müller.

IFES are also beneficial to women as they can eliminate the need to leave their crops to go in search of firewood. In addition, the report concludes that IFES farming can help to mitigate climate change, especially emissions stemming from land use change, because there is less chance land will need to be converted.

In conclusion, Olivier Dubois, an FAO energy expert said, “Promoting the advantages of IFES and improving the policy and institutional environment for such systems should become a priority. FAO is well placed to coordinate these efforts by providing knowledge and technical support for IFES implementation.”

According to a new paper published in the journal Environmental Science and Technology, “Land Availability for Biofuel Production,” authored by researchers from the University of Illinois, using detailed land analysis, biofuel crops cultivated on available land could produce up to half of the world’s current fuel consumption. This could be done, the researchers say, without negatively affecting food crops or pastureland.

The study was led by civil and environmental engineering professor Ximing Cai who identified land around the globe available to produce grass crops for biofuels, with minimal impact on agriculture or the environment. Cai noted going into the study that prior research concentrated on biofuel crop viability focused on biomass yield or how productive a crop could be regionally; yet, there was little research on land availability, a key constraint of biofuel development. He also noted that there is major concern as to whether, on a global scale, biofuels can meet fuel demand without compromising food production.

“The questions we’re trying to address are, what kind of land could be used for biofuel crops? “If we have land, where is it, and what is the current land cover?” said Cai.

For this particular study, Cai’s team assessed land availability from a physical perspective – focusing on soil properties, soil quality, land slope, and regional climate. The researchers collected data on soil, topography, climate and current land use from some of the best data sources available, including remote sensing maps but the point of differentiation of this research was that the study only considered marking land for biofuel crops. By doing this, current crop land, pasture land and forests were ruled out as viable land options for biofuel production. In addition, the research team ruled out any land that must be irrigated, thus eliminating concerns over the need to divert water from agriculture crops.
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According to CABI and Hart Energy Consulting, while there has been much attention given to the idea that biofuel development will change land use around the world, there are still many gaps in knowledge about how much and in what ways those changes will manifest. To determine where more information about land use change is needed, the two organizations worked together to author a new paper, “Biofuels and Land Use Change: A Science and Policy Review.”

The report sets forth the premise that while two goals of biofuel production are to reduce greenhouse gases and to protect natural resources, they may in fact exacerbate the problems rather than help them. Therefore the report recommends that before decisions are made, future monitoring, experimenting and modeling in different locations must take place in an effort to assess the true impact of changing land use caused by biofuel production.

“There is a need to establish standard methodologies to evaluate the wide range of effects, direct and indirect, that ensue from the growing global biofuels market. This would enable much greater confidence when comparing future studies and enable decision-makers to make more informed judgments,” said Tammy Klein, Assistant Vice President of Hart Energy Consulting.

According to the report, “marginal, abandoned, degraded and unused lands” are really the only possible sources of significant land for biofuel expansion. Yet the report continues, it is these very lands that are rarely quantified and so the report asks how much of this type of land is available and what problems would need to be overcome to bring these lands into production.

In conclusion, the report calls for the establishment of effective land-use management and best agriculture practice policies for biofuels feedstock crops.

“The switch away from fossil fuels to renewable alternatives will have unforeseen consequences, especially for highly populated resource-poor countries,” said Janny Vos, Business Development Manager of CABI. “At present the role of biofuels in this process is unclear. We hope that this review goes some way towards identifying the questions that need to be asked about land use change, and the areas in which we need further research.”

Rainforest deforestation rates have reached new lows, which further challenges the theory of international land use change that has been used to penalize corn ethanol for its carbon footprint.

Brazilian President Luiz Inacio Lula da Silva announced today that deforestation rates in the Brazilian Amazon declined 14 percent from August 2009 to July 2010, reaching the lowest rates ever recorded for the second consecutive year.

Satellite images analyzed by Brazil’s National Institute for Space Research (INPE) show that an estimated 6,450 square kilometers of forests were cleared in the 12-month period, bringing rates to their lowest since monitoring started in 1988. The record-breaking decrease represents a major contribution to reducing Brazil’s greenhouse gas emissions, as global negotiations progress at the 16th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP16), currently underway in Cancun, Mexico.

In a post on the Renewable Fuels Association E-xchange blog, Vice President of Research and Analysis Geoff Cooper says this development is yet another blow to the already roundly rejected hypothesis of international land use change (ILUC) first proposed three years ago by Environmental Defense Fund attorney Timothy Searchinger.

“Today’s announcement by Lula is just the latest exhibit in a recent barrage of evidence that is undermining the argument that ILUC is a significant concern in the context of U.S. biofuels expansion,” writes Cooper, noting that annual U.S. ethanol production stood at 3.4 billion when deforestation peaked in 2004. “In 2010, the ethanol industry will produce nearly 13 billion gallons. So, Amazon deforestation has fallen 76% since 2004, while U.S. ethanol production has increased 279% in the same period.”

Cooper adds that he hopes the news out of Brazil will be greeted warmly by the environmental community, but he doubts it. “Unfortunately, I have a feeling the response from NRDC and others may go something like this: “Well, how much lower would deforestation have been without biofuels in the U.S.?” This response, of course, dodges the real issues at hand and resorts back to hypotheticals and computer models.”

Earlier this month, the California Air Resources Board (CARB) made a positive step for ethanol by updating its indirect land use models in the Low Carbon Fuel Standard (LCFS). This in effect, will reduce the ILUC penalties in half. Unfortunately, the new rule doesn’t take effect until mid-2011 although LCFS kicks in on January 1, 2011.

In light of this change, the ethanol industry is calling for the Environmental Protection Agency (EPA) to also reevaluate its modeling of lifecycle GHG emissions as defined in the Renewable Fuels Standard (RFS2). Recently the Renewable Fuels Association (RFA) submitted a letter to EPA Administrator Lisa Jackson asking for this very change. In fact, EPA was represented on CARB’s LCFS Workshop and has publicly highlighted the fact that its ILUC results were similar to those originally obtained by CARB.

“The proposed changes to the California LCFS analysis are likely to result in substantially lower ILUC values, meaning EPA’s analysis for the RFS2 will be inconsistent with the latest science being adopted by CARB. Because EPA was represented by two staff members on the LCFS Expert Workgroup that recommended the changes to CARB’s LUC analysis, we are curious as to whether EPA similarly plans to revisit its LUC analysis for the RFS2 and incorporate more up-to-date assumptions and data,” wrote RFA President and CEO Bob Dinneen in a letter dated November 23, 2010.

According to RFA, while EPA and CARB used different modeling approaches, some of the changes being adopted by CARB would result in lower values for ILUC in EPA’s RFS2 as well. Currently, corn-based ethanol has been given a 20 percent GHG emission reduction number in RFS2, but the industry wants to see this number much higher. Other areas that RFA would like EPA to visit again are the treatment of crop yields on newly converted land, treatment of carbon sequestration in harvested wood products and the effect of higher prices on crop yields.

The second purpose of the letter to Jackson was to respond to the EPA’s letter sent to RFA on September 29, 2010. Back in September, the RFA wrote to EPA “examining the impact of volume increases for individual biofuels in isolation of one another exaggerates the LUC impacts and misrepresents the real-world progression of the RFS2 as required by [the Energy Independence and Security Act].” They have argued, and continue to argue, that EPA’s isolation approach to calculating ILUC values for the various biofuels covered under the RFS2 ignores the dynamic relationships that exist between the fuels, the feedstocks and in the marketplace.

The bottom line, says RFA, is that the science behind ILUC is constantly evolving and requires continual monitoring and updating to ensure the best available science is being utilized to make decisions.

According to a new study released this week, the European Union (EU) plans to increase its use of biofuels over the next 10 years and it will require 69,000 square kilometers of new land causing climate change to become worse. “Driving to Destruction” was commissioned by a coalition of environmental and development NGOs and the study reports that by 2020, 90 percent of the 9.5 percent of biofuels will come from food crops.

“Biofuels are not a climate-friendly solution to our energy needs. The EU plans effectively give companies a blank cheque to continue grabbing land from the world’s poor by growing biofuels that fill our cars rather than their stomachs,” said Laura Sullivan, ActionAid’s European Policy and Campaigns Manager. “Europe’s energy policies are putting millions of people in danger and threaten Africa’s fragile food security.”

The global biofuels community is not taking the report lying down. “As a matter of record, our industry has always welcomed the debate about biofuels sustainability in large part because the alternative – more oil – is by definition unsustainable,” said Bliss Baker with the Global Renewable Fuels Alliance (GRFA). “However, NGO’s that use this debate as an opportunity to stoke fears and sell memberships in their organizations do a disservice to us all.”

According to the report, an area over twice the size of Belgium will need to be converted into biofuels plantations putting poor communities in danger if European countries use industrial biofuels to meet their renewable energy targets by 2020. Even more, the report claims that when indirect land use change is taken into account, a highly contested theory, biofuels will emit an extra 27-56 million tonnes of greenhouse gas emissions per year – the equivalent to an extra 12 to 26 million cars on Europe’s roads by 2020. Lastly, the report states that under the plans, 5 countries will be responsible for three quarters of all extra emissions. The UK, Spain, Germany, Italy, and France are projected to produce the most extra greenhouse gas emissions from biofuels.

Baker continued, “The research is chalk full of allegations disguised as facts. The report repeatedly makes statements as if they are facts such as ‘…the EU plans WILL result in the conversion of up to 69,000 sq. km of land for the use of biofuels.’ Sounds ominous but for the one word “upto.” It could be 1 square kilometer that gets converted. The point is they don’t know how many kilometres will be converted (if any) and predicting it with any degree of confidence has yet to be demonstrated anywhere.”
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In a report that will be published soon,”Decomposition Analysis of U.S. Corn Use for Ethanol Production from 2001-2008,”the Department of Energy’s Oak Ridge National Laboratory concludes that the indirect land use change (ILUC) as a result from the expansion of corn ethanol production over the past decade has likely been “minimal to zero.” The study was requested by the California Air Resources Board (CARB), which has appointed several teams of expert working groups to assess the methodology and data that went into California’s Low Carbon Fuel Standard.

In response to the news, Geoff Cooper, the Vice President for Research and Analysis for the Renewable Fuels Association remarked, “The most recent work on ILUC is showing that ethanol expansion in the U.S. simply isn’t incurring the type of land use changes that were originally hypothesized. The initial results recently presented by the Department of Energy are further proof that America can continue to meet its global responsibilities to provide food and feed, while simultaneously providing a cleaner, domestic alternative to petroleum—all without needing to bring new lands into agriculture.”

The results of the study were released during the last CARB meeting focused on ILUC held last week. The time frame reviewed was during 2001-2008, when the U.S. ethanol industry more than quadrupled. The researchers concluded, “Empirical evidence does not support significant effects on U.S. commodity exports [and] other crops or cropland expansion in the U.S.”

“This should put the stake into the heart of the bizarre ILUC scheme. Here are some of the best scientists in the country – scientists who have no stake in the game – who found that ethanol had little to no impact from ILUC,” said Tom Buis, CEO of Growth Energy. “We must ask why California insists on going forward with a regulation that is based not just on controversial theory, but a theory that has been disproven.”

Coinciding with the Oak Ridge National Laboratory’s research, a paper published in Environmental Science & Technology and authored by Bruce Dale and other researchers at Michigan State University, “Biofuels Done Right: Land Efficient Animal Feeds Enable Large Environmental and Energy Benefits,” found that significantly larger volumes of biofuels can be produced without incurring ILUC.

“Using less than 30% of total U.S. cropland, pasture, and range, 400 billion liters (106 billion gallons) of ethanol can be produced annually without decreasing domestic food production or agricultural exports. This approach also reduces U.S. greenhouse gas emissions by 670 Tg CO2-equivalent per year, or over 10% of total U.S. annual emissions, while increasing soil fertility and promoting biodiversity. Thus we can replace a large fraction of U.S. petroleum consumption without indirect land use change,” the authors concluded in the paper.

There are rumors coming out of Washington, DC that several ethanol groups have come together to offer an alternative proposal to both VEETC, also known as the blender’s credit, as well as the ethanol tariff. DomesticFuel has confirmed that four groups, including the American Coalition for Ethanol (ACE), Growth Energy, National Corn Growers Association (NCGA), and the Renewable Fuels Association (RFA) have agreed upon a broad outline and framework that will be principles for a long-term policy road map for ethanol.

The goals of the road map are threefold and designed to overcome several major obstacles that if not addressed, could keep the country from meeting its renewable fuels goals as set out in the Renewable Fuels Standard (RFS2) that mandates the country use 36 billion gallons of biofuels by 2022.

Goal 1: Accelerate the deployment of blender pumps and flex-fuel vehicles (FFVs). Both of these actions will allow market access and a level playing field for biofuels.

Goal 2: Put into place long-term policy that will create a marketplace that investors feel confident in and one that will revive rural economies and create jobs.

Goal 3: Reward energy efficient technologies and practices that reduce greenhouse gas emissions at biorefineries creating a more sustainable future for ethanol.
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The Environmental Protection Agency (EPA) is considering equating biogenic carbon emissions with fossil fuel emissions under the Tailoring Rule, which requires the accounting and reporting of greenhouse gas emissions under the Renewable Fuels Standard (RFS2). Biogenic carbon emissions are those that are naturally created during the combustion and decay of woody biomass and up until now, have always been considered carbon neutral by the EPA. As such, the Renewable Fuels Association (RFA) is disputing this clause in the rule.

In a letter to the EPA, RFA wrote, “While RFA generally supports a national policy to address climate change, we believe biogenic emissions must be exempt from GHG accounting schemes and regulatory frameworks. Specifically, inclusion of biogenic GHG emissions in determinations of applicability of the Prevention of Significant Deterioration (“PSD”) or Title V Permitting Programs is not scientifically justified, runs afoul of accepted national and international GHG accounting methods, and is contrary to public policies enacted to encourage development of a robust renewable fuels industry in the United States.”

According the the RFA, it is “indisputable that CO2 emissions resulting from the combustion, fermentation, and decay of biomass, are by nature, carbon neutral in that those emissions are naturally offset when the biomass removes an equivalent amount of CO2 from the atmosphere via photosynthesis during growth.”

Therefore, RFA is calling for the EPA to reconfirm that the carbon neutrality convention for accounting of biogenic GHG emissions is both scientifically justified and appropriate for regulatory contexts.
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The Renewable Fuels Association (RFA) has sent another letter to the Environmental Protection Agency (EPA) regarding what they call errors in the calculations of biofuels’ carbon intensity under the Renewable Fuels Standard (RFS2). In the August 4th letter, RFA writes, “according to [EPA’s] own analysis, EPA grossly overestimated potential emissions from land use change (LUC) attributable to the [greenhouse gas] lifecycle of corn ethanol and other biofuels.”

The result of correcting this error, says RFA, is that it would greatly increase the greenhouse gas reduction benefits offered by ethanol under EPA’s calculations.

“Correcting this miscalculation reduces net LUC emissions (international and domestic) assigned to corn ethanol by 62% from 28.4 grams of CO2-equivalent/mega joule (g/MJ) to 10.8 g/MJ. Such a reduction in LUC emissions means overall lifecycle GHG emissions for 2022 average corn ethanol would be 38% less than baseline gasoline emissions, rather than the 21% estimate finalized by EPA.”

Regardless of RFA’s analysis, they still maintain that the inclusion of LUC impacts, particularly international impacts over which the U.S. has no control, is flawed policy and that EPA misinterpreted the intent of Congress when it passed the RFS.

In a recent blog post discussing their letter to EPA, Geoff Cooper, RFA’s Vice President of Research and Analysis, writes, “Despite the fact that real-world data and events have disputed the ILUC theory at every turn, EPA’s final rule for the RFS2 institutes a net LUC penalty (domestic and international) against corn ethanol of 30 kg CO2e/mmBTU (or 28.4 g CO2e/mega joule). This represents nearly 40% of the total GHG intensity of corn ethanol as estimated by EPA. When LUC emissions are excluded, EPA found corn ethanol from a natural gas dry mill reduces GHG emissions by 50% compared to gasoline. With LUC emissions, that benefit falls to around a 20% reduction.”

RFA says that this overestimation occurred as a result of the questionable methodological choice EPA made to isolate the LUC impacts of individual biofuels by increasing their production one at a time and holding all other biofuels at constant levels. More appropriately, the RFA notes, if EPA felt compelled by the statute to penalize biofuels for ILUC, it should have based those penalties on modeling that simultaneously increased production for all biofuels in accordance with the RFS requirements.

RFA notes that these problems are endemic of larger concerns regarding attempts to limit emissions from vehicles by unfairly penalizing biofuels.

You can read RFA’s letter to the EPA here and read Cooper’s comments regarding this issue here.

I conducted a number of interviews with presenters at the recent Corn Utilization and Technology Conference and many of them were about biofuels, especially ethanol. Here’s one I thought you’d be interested in.

The Land Use Conundrum . . . Corn, An Advanced Biofuel? That was the title of one of the sessions that was moderated by Jamey Cline, NCGA. One of his panelists was Adam Liska, University of Nebraska-Lincoln. His remarks were on “Uncertainty in Indirect Land Use Change Emissions from Biofuels.” Adam has focused his work on the life cycle efficiency of producing ethanol.

Adam says that there has been increased agricultural production worldwide due to increased demand and it seems like attributing some of that to increased biofuels production makes sense. However, he says that quantifying the emissions related to agricultural production due to biofuels use is very uncertain because it’s done “as a projection into the future.” The bottom line is we don’t know what will happen in the future. He says “it’s nearly impossible.” He says that there are estimates for corn ethanol but they get smaller and smaller with more research and information. He says that they’ve started to do some research on the indirect effects of gasoline production and figure they’re roughly equivalent to that of ethanol. He also points to the impact of changes in livestock production as a result of higher grain prices and says it may have more impact than land use changes. Seems like there is a huge amount of variability in how you look at the future when it comes to biofuels production and especially corn ethanol.

In a recent article, “Indirect Land Use: One Consideration Too Many in Biofuel Regulation,” authors David Zilberman, a professor in UC Berkeley’s Department of Agricultural and Resource Economics and assistant researcher Gal Hochman, along with Deepak Rajagopal, argue that indirect land use effects (ILUEs) should not be considered in current California and federal biofuels polices. The authors write, “…we will argue here against an indirect land use in biofuel regulations for the basic reason that its inclusion in LCAs (life cycle analysis) contradicts a basic principle of regulation – namely that individuals are responsible only for actions that they control. The indirect land uses are difficult to compute and vary over time.”

In a nutshell, the authors contend that American farmers, or farmers anywhere for that matter, should not, and cannot be held accountable for the decisions made by others in other countries, such as Brazil. “The differences in the treatment of technical and pecuniary externalities is that producers control their production and hence their pollution. But in a competitive market, they don’t control the prices. This reflects a basic principle: Individuals should be responsible for activities that they control and not for those they don’t. This basic message of accountability suggests that producers of biofuel shouldn’t be held responsible for indirect land-use decisions made by others.”

The authors continue by explaining that there is a related flaw in the use of indirect land use and in how it is applied to regulating biofuels. Basic principles of public economics dictates that all emitters of greenhouse gas emissions are held responsible for their own activities and thus their own emissions. However, ILUE suggests that farmers are responsible for possible emissions by other farmers elsewhere. Therefore, the authors contend, it makes more sense to strive to enact policies that will make countries like Brazil, responsible for their own GHG emissions related to indirect land use.

Ultimately, while the authors acknowledge that there are indirect land use changes inherent in biofuel development, these will be reduced over time as the technologies improve. Yet they caution that the technologies won’t improve, and we won’t move to next generation biofuels if the investment community continues to ignore the industry, in part driven by the flawed theory of indirect land use.