Land Use Carbon Emissions Due to the US Ethanol Program. Wallace Tyner Farzad Taheripour Uris Baldos January 26, 2009

Transcription

1 Land Use Carbon Emissions Due to the US Ethanol Program Wallace Tyner Farzad Taheripour Uris Baldos January 26,

2 Presentation Outline Overview of presentation GTAP model structure and changes Handling of byproducts Estimated land use changes Woods Hole and IPCC emission factors Comparison of results with Searchinger Total emissions estimates Future issues and research 2

3 Renewable Fuel Standard 3

4 Land Use Changes Due to the US Ethanol Program: A General Equilibrium Framework An overview of GTAP, biofuels, byproducts and land use changes: A quick literature review, An overview of GTAP model structure, GTAP with biofuels, Handling of biofuel byproducts, Major assumptions, Estimated land use changes. 4

5 Economic and Environmental impacts of Biofuels Earlier papers which evaluated consequences of biofuels for agriculture and livestock industries ignored the importance of biofuel byproducts (Elobeid et al. 2006, Reilly and Paltsev 2007; Dixon, Osborne, and Rimmer 2007; and Banse et al. 2007). Importance of incorporating byproducts is well recognized by some PE models (Tokgoz et al. 2007, Tyner and Taheripour 2008, and Babcock (2008). Some papers have shown that biofuels byproducts can be used in livestock industry more extensively (Erin Daly 2007, Arora 2008 ) Taheripour et al. 2008, Birur et al. 2008, and Hertel et al have introduced biofuels and their byproducts into the GTAP model. 5

6 GTAP Model Structure: An Overview 6

7 GTAP-E Model Structure: A Production Function 7

8 Introducing Biofuels into the GTAP database GTAP Database Version 6: Original database represents 2001 world economy (87 regions and 57 commodities) New database, GTAP-BIOA (87 regions and 60 commodities) Ethanol 1 produced from coarse grains, Ethanol 2 produced from sugarcane, Biodiesel from oilseeds. New database, GTAP-BIOB (87 regions, 62 commodities, and 60 industries) DDGS - byproduct of ethanol 1, Meals - byproduct of biodiesel. Data on production, consumption and trade of biofuels are obtained from International Energy Agency (IEA) Aggregation scheme (18 regions, 22 commodities, and 20 industries) 8

9 Biofuels in GTAP: Household Demand 9

10 Biofuels in GTAP: Firm s Output Output 10

11 Land Cover in GTAP: By Region at AEZ Level Land Cover Accessible forest Cropland Grassland used by livestock Coarse grains Other grains Oilseeds Sugarcane Other agricultural commodities 11

12 Implications of Biofuels for Agriculture & Livestock Higher crop prices which lead to: Higher input costs, Higher land prices, Conversion of some pastureland and forest to crops, Lower demand for final products of processed livestock industries, Biofuels are produced in conjunction with valuable byproducts Distillers dried grains with solubles (DDGS) and oilseed meals are the main biofuel byproducts, These byproducts can be used in the livestock industry as animal feeds, Biofuel byproducts can help to offset some of the adverse cost implications of the biofuels boom for the livestock industry. 12

13 Biofuel Byproducts in GTAP: Production Side The model defines and endogenously determines an activity level, qz j, for industries with joint products using the following zero profit equation: pz = θ pf Input prices j i i ij Cost Shares Here pz j is a composite output price index for industry j, comprising both prices of the main and byproduct according to the following equations: pz j = Ω. ps k kj kj Output price of product k produced by j Revenue share of product k in total revenues of j The model also endogenously determines production of the main and byproducts according to the following equations: T qo = qz + ( pz ps σ CET between products kj j j kj ) j Output k in industry j 13

14 Biofuel Byproducts in GTAP: Demand Side Feed Combined DDGS & coarse grains Feeds from processed livestock Combined Oilseeds oilseed meals & other processed feeds Other grains Other agricultural feed Sugarcane DDGS Coarse grains Processed feed Oilseed meals 14

15 Sectors, Commodities, and Regions in GTAP Our earlier model covers 20 sectors, 22 commodities, and 18 Regions Three biofuel products: Ethanol from coarse grains: Mainly US, Ethanol from sugarcane: Mainly Brazil, Biodiesel from vegetable oils: Mainly EU. Two byproducts: DDGS, Biodiesel byproduct. Forest Livestock, Processed livestock, Food industry, 5 non-biofuel energy products, 3 other groups of commodities and services. Five agricultural products: Coarse grains, Other grains, Oilseeds, Sugarcane, Other agriculture products. Biofuel producing regions are: US, EU27, and Brazil, Non-biofuel producing regions are: 5 major economies: Canada, Japan, China and Hong Kong, India, and Russia, 10 aggregated regions which represent the rest of the world. 15

16 Impacts of the US & EU Biofuel Mandates Outputs of coarse grains Outputs of other grains % Change = 646 million bushels of corn % Change US EU Brazil US EU Brazil Without Byproducts With Byproducts Without Byproducts With Byproducts Outputs of oilseeds Outputs of sugarcane % Change % Change US EU Brazil Without Byproducts With Byproducts US EU Brazil 16 Without Byproducts With Byproducts

17 An Improvement in GTAP-BIO Model and Database The new model covers 28 sectors, 30 commodities, and 18 Regions Biofuel products are: Ethanol from coarse grains: Mainly US, Ethanol from sugarcane: Mainly Brazil, Biodiesel from vegetable oils: Mainly EU. Byproducts are: DDGS, Oil meals. Livestock industries are: Dairy Farms, Other Ruminant, Non-Ruminant. Processed livestock industries are: Processed dairy products, Processed ruminant products, Processed non-ruminant products. Agricultural products are: Coarse grains, Other grains, Oilseeds, Sugarcane, Other agriculture products. Other commodities: Forest products, Processed food, Beverages, tobacco, and., Processed feed, Crude vegetable oil, Edible vegetable oil, 5 non-biofuel energy commodities, 3 other commodities and services. 17

18 Impacts of the US and EU Mandates on Feed Rations Shares of coarse grains, DDGS, and oilseed meals in animal feed rations without and with biofuel mandates Dairy Farms Other Ruminants Non-Ruminant 18

19 Land Use Changes Due to the US Ethanol Program Main Assumptions US ethanol will reach to 15 BGs. The model is calibrated based on the 2006 biofuel economy. Six main scenarios: Ethanol production from 2001 to 2006, Ethanol production from 2006 to 7 BGs, Ethanol production from 7 B to 15 BGs by increments of 2 BGs. Yield price elasticity is Productivity of marginal land is 2/3 of average land. Elasticities of substitution: Description Coarse grain & Oilseed meals & feedstuffs at the high DDGS other processed feed level of demand nest Dairy Farms Other Ruminant Non-Ruminant

20 Land Use Changes Due to the US Ethanol Program Change in ethanol Change in Cropland (1000 Hectares) 2001 to to 7 BG 7 to 9 BG 9 to 11 BG 11 to 13 BG 13 to 15 BG 2001 to 15 BG Within US Other Regions Percent to to 7 BG 7 to 9 BG 9 to 11 BG 11 to 13 BG 13 to 15 BG 2001 to 15 BG 20

21 Land Use Changes Due to the US Ethanol Program 100 Shares of Forest and Grassland in Land Use Changes Percent to to 7 BG 7 to 9 BG 9 to 11 BG 11 to 13 BG 13 to 15 BG 2001 to 15 BG Forest Grassland Hectare per 1000 Gallon Ethanol Land Needed to Expand US Ethanol Output Marginal Average 2001 to to 7 BG 7 to 9 BG 9 to 11 BG 11 to 13 BG 13 to 15 BG 2001 to 15 BG 21

22 Land Use Emissions Due to the US Ethanol Program Datasets and Main Assumptions Datasets on land carbon profile Woods Hole (regional data) IPCC (aggregated for the whole globe) Major assumptions Carbon released at the time of land conversion o 25% of carbon stored in the soil will be released o 75% of carbon stored in forest vegetation will be released o 100% of carbon stored in grassland vegetation will be released Forgone carbon sequestration, i.e. the carbon that could have been stored by non-croplands if land conversion did not occur o Woods Hole for forest o IPCC for forest and grassland Duration of ethanol production: 30, 50, 80, and 100 years 22

23 Land Use Emissions Due to the US Ethanol Program Woods Hole data: An Example (Forest of Canada) Description Temperate Temperate Boreal Evergreen Deciduous Forest TOTAL Area (million hectares) Area by ecosystem (%) 7% 8% 85% 100% Carbon in vegetation (metric tons C/hectare) % of carbon in forest vegetation(metric tons C/hectare) Carbon in soil (metric tons C/hectare) % of carbon in soils (metric tons C/hectare) Direct carbon emissions (metric tons C/hectare) Re-growing forest area (million hectares) Gross uptake by re-growing forests (million metric tons C/yr) Gross uptake / forest area (metric tons C/hectare/yr) Foregone carbon sequestration (metric ton C/hectare /yr x duration of ethanol production) Weighted emissions for forest Metric tons C/ hectare Metric tons C02 equivalent/hectare

24 Land Use Emissions Due to the US Ethanol Program Annualized Forest Emissions Factors (Mt CO2/hectare) Based on Woods Hole Data Se et Regions 30 Years 50 Years 80 Years 100 Years Duration Duration Duration Duration United States Canada Sub Saharan Africa European Union 27 Rest of European Countries Russia Brazil Central and Caribbean Americas South and Other Americas Middle Eastern and North Africa East Asia, Oceania, and Japan China and Hong Kong India Rest of South East Asia Rest of South Asia Malaysia and Indonesia IPCC for the Whole world

25 Land Use Emissions Due to the US Ethanol Program Annualized Grassland Emissions Factors (Mt CO2/hectare) Based on Woods Hole Data Se et Regions 30 Years 50 Years 80 Years 100 Years Duration Duration Duration Duration United States Canada Sub Saharan Africa European Union 27 Rest of European Countries Russia Brazil Central and Caribbean Americas South and Other Americas Middle Eastern and North Africa East Asia, Oceania, and Japan China and Hong Kong India Rest of South East Asia Rest of South Asia Malaysia and Indonesia IPCC for the Whole world

26 Land Use Emissions Due to the US Ethanol Program GHGs Emissions - 30 Years Woods Hole 2500 Marginal Average Annualized Emissions (Grams/Gallon of Ethanol) to to 7 BG 7 to 9 BG 9 to 11 BG 11 to 13 BG 13 to 15 BG BG BG BG BG BG 26

27 Land Use Emissions Due to the US Ethanol Program GHGs Emissions - Several Durations of Production Annualized Emissions (Grams/Gallon of Ethanol) Marginal (13 to 15 BG) Average (2001 to 15 BG) 30 WH 50 WH 80 WH 100 WH 30 IPCC Duration of Ethanol Production Marginal Average 27

28 Land Use Emissions Due to the US Ethanol Program Searchinger et al vs GTAP Results Searchinger et al. (2008) GTAP Total Emissions for 30 years (million metric tons) 3801 Change in ethanol production (billion liters of ethanol) Total emissions for 30 years (grams per liter) Liters per gallon Total emissions for 30 years (grams per gallon of ethanol) One year emissions (grams per gallon of ethanol ) 8577 One year average emissions (grams per gallon of ethanol) 1931 One year marginal emissions (grams per gallon of ethanol) 2210 GTAP average 23% of Searchinger 28

29 Land Use and GREET Emissions For 30 year program life (grams per gallon): Land Use 1931 GREET 5300 Total 7231 We will be doing sensitivity in the future on both our land use and the GREET numbers. 29

30 Land Use Emissions Due to the US Ethanol Program Total Ethanol vs Gasoline Emissions per Mile Ethanol Emissions ove er Gasoline Emissions % Marginal (13 to 15 BG) Average (2001 to 15 BG) 30 WH 50 WH 80 WH 100 WH 30 IPCC Duration of Ethanol Production Marginal Average 30

31 Land Use Emissions Due to the US Ethanol Program Total Ethanol vs Gasoline Emissions per Mile With and Without Corrections in Databases Description Marginal Average Woods Hole Without Correction Woods Hole With Corrected IPCC Without Correction IPCC With Correction Corrections Removing grassland forgone emissions from IPCC Correcting Woods Hole forest forgone emissions 31

32 Comparison Basis As is clear from these results, there is a difference. between emissions calculated on an average basis and a marginal basis. The same would be true for the petroleum base case. Economics would argue for using a marginal comparison instead of the average we are now using. For petroleum, the marginal source likely would be Canadian tar sands or heavy Venezuelan crude both of which would have higher GHG emissions than the standard sources. This issue deserves more attention. 32

33 Future Work Yield growth, Land data base improvements, Additional data sources on land use change induced carbon emissions, More sensitivity analysis, Cellulosic resources, Residues, Dedicated energy crops. 33

34 Thanks very much! Questions and Comments For more information: