The economic and environmental costs and benefits of the renewable fuel standard

Abstract

Mandates, like the renewable fuel standard (RFS), for biofuels from corn and cellulosic feedstocks, impact the environment in multiple ways by affecting land use, nitrogen (N)-leakage, and greenhouse gas (GHG) emissions. We analyze the differing trade-offs these different types of biofuels offer among these multi-dimensional environmental effects and convert them to a monetized value of environmental damages (or benefits) that can be compared with the economic costs of extending these mandates over the 2016–2030 period. The discounted values of cumulative net benefits (or costs) are then compared to those with a counterfactual level of biofuels that would have been produced in the absence of the RFS over this period. We find that maintaining the corn ethanol mandate at 56 billion l till 2030 will lead to a discounted cumulative value of an economic cost of $199 billion over the 2016–2030 period compared to the counterfactual scenario; this includes $109 billion of economic costs and $85 billion of net monetized environmental damages. The additional implementation of a cellulosic biofuel mandate for 60 billion l by 2030 will increase this economic cost by $69 billion which will be partly offset by the net discounted monetized value of environmental benefits of $20 billion, resulting in a net cost of $49 billion over the 2016–2030 period. We explore the sensitivity of these net (economic and environmental) costs to alternative values of the social costs of carbon and nitrogen and other technological and market parameters. We find that, unlike corn ethanol, cellulosic biofuels can result in positive net benefits if the monetary benefits of GHG mitigation are valued high and those of N-damages are not very high.

Planting miscanthus instead of row crops may increase the productivity and economic performance of farmed potholes

“…As potholes have been found to cover between 7% and 12% of the area in the Des Moines Lobe Region of Iowa alone (McDeid et al, 2019; Van Meter & Basu, 2015), there is a considerable amount of land where the planting of miscanthus can be profitably applied if our results are accurate. The conversion of marginal land into the production of bioenergy crops is also actively being investigated to understand its environmental and economic impacts upon a broader scale (Chen et al, 2021; Khanna et al, 2021).…”

Redefining marginal land for bioenergy crop production

“…Such land use categories include land that has been abandoned from agriculture, idle/fallow land, and cropland that has been put into conservation easements such as the Conservation Reserve Program (CRP). These types of land could possibly be converted to perennial energy crops with relatively low environmental impacts, and, as these land use category names infer, without directly displacing food crops (Chen, Blanc-Betes, et al, 2021;Chen, Debnath, et al, 2021;Field et al, 2008). Vegetated buffer zones along roads and rivers have also been considered suitable for the cultivation of perennial energy crops due to positive ecosystem services, including preventing soil erosion and pollutant runoff (Gopalakrishnan et al, 2011).…”

“…SOC and N 2 O outcomes are also highly sensitive to management. Conservation management techniques such as reduced tillage intensity or winter cover cropping can improve SOC trajectories under annual crops (Liu et al, 2020;Minasny et al 2017;Paustian et al, 2019), whereas careful fertilizer and irrigation management, use of denitrification inhibitors, or application of biochar can help to control N 2 O (Akiyama et al, 2009;Borchard et al, 2019;Jin et al, 2019;Liu et al, 2020) Growing perennial bioenergy crops on lands that were previously row-cropped generally improves SOC accrual (Emery et al, 2017;Martinez-Feria & Basso, 2020b;Qin et al, 2016) and can create a large carbon sink with significant climate change mitigation value (Chen, Debnath, et al, 2021;Tilman et al 2006). Rates of SOC sequestration depend on site-level specifics (e.g., soil texture, land use history) and duration of time after establishment (Abraha et al, 2019;Chen, Blanc-Betes, et al, 2021).…”

Bioenergy for climate change mitigation: Scale and sustainability

“…Attribution is more challenging for iLUC because, by definition, it is not directly connected to a biomass producer, and there are many interacting drivers of land use change (Efroymson et al, 2016; Egeskog et al, 2016). Instead iLUC effects need to be quantified using modelling approaches, such as general equilibrium models, that consider second order factors such as prices, government policy, regulations, trade relationships and market expectations (Chen et al, 2021; Di Lucia et al, 2012, 2019; Hudiburg et al, 2016; Khanna & Crago, 2012; Khanna et al, 2017; Malins et al, 2014; Wicke et al, 2012). Global IAM modelling frameworks capture the land use/land cover and GHG impacts of iLUC, but only at a highly aggregate regional level.…”