Tuesday, April 15, 2008

Is Cash the Only Thing Green about the Renewable Fuel Standard?

In December 2007, the United States adopted a renewable fuel standard (RFS), which mandated expanded use of biofuels, including ethanol, even though corn and soybean prices were already increasing. Rather than providing a well-reasoned approach to U.S. fuel concerns, the RFS appears to reflect Merton’s "imperious immediacy of interest" problem. That is, proponents of ethanol wanted it to succeed so badly, they were willing ignore to any unintended effects such as higher food and feedstock costs and the potential for lost rangelands and forestlands.

The initial appeal of ethanol and other biofuels seems reasonable. As a recent Time Magazine article notes, “It make intuitive sense: cars emit carbon no matter what fuel they burn, but the process of growing plants for fuel sucks some of that carbon out of the atmosphere.” So corn-based ethanol should be green, or at least greener, than oil, right? Seems like it, but that is not always the case.

The studies that led to calculations deeming ethanol greener than petroleum-based fuels were based on the added carbon sequestration that would that take place because of the crops planted for fuel. However, it seems those studies failed to consider whether the fuel crops would be replacing rangelands or forestlands that were already sequestering carbon, without concomitant carbon outputs (such as those from tractors and other farm equipment) related to crop growth.

There are some indications that cellulosic-source ethanol is a more environmentally friendly alternative to traditional fuels, but there is nothing requiring that the RFS be met with only ethanol from cellulosic sources. Despite some claims of “green” motivations, the current biofuel-promotion policies are predicated more on producing additional biofuel stores than addressing or even considering the environmental and human impacts of such policies.

A better ethanol policy would include requirements and incentives linked to new or emerging technologies that don’t create new competition for other already viable (e.g., corn) crops with established markets or lead to cleared tropical forests or savannas. Policies should instead promote only ethanol derived from growing high-diversity prairie hay grown on degraded lands, for instance, or from corn cobs. It would be more aggressive than current programs, but then, changing the status quo is never easy.


Anonymous Dan Owens said...

There are some requirements in the Renewable Fuels Standard passed last fall that are very interesting. The RFS gradually increases to a 36 billion gallon annual requirement of ethanol usage by 2022, and 21 billion of that has to be from cellulosic ethanol. That cellulosic ethanol must provide at least a 60% reduction in baseline greenhouse gas emissions compared to conventional gasoline.
In the next couple years, the EPA will be required to write regulations stating just exactly what "baseline greenhouse gas emissions" are for gasoline, corn-based ethanol, and ethanol from various other feedstocks. It will be very interesting to see how that process goes, and you can bet it will be a serious regulatory fight.
There are other provisions in the RFS that allow the EPA to waive or modify the RFS for various reasons, including environmental impacts, food prices, etc. You can readily imagine where various interests will end up in these discussions.
For the true policy wonk, this stuff is really quite interesting and the actual language in the RFS is pretty good from my perspective. It's in the "Energy Independence and Security Act of 2007" pages 1519-1531.

4/16/2008 10:55 AM  
Blogger Josh Fershee said...

Thanks for your comment. I still believe that the RFS and other ethanol promotion policies should promote only ethanol derived from sources other than those that can also be used as food. Cellulosic source requirements under the RFS don’t become significant (in my view) until 2016, when the RFS-mandated increases must all be accounted for by advanced biofuels, including cellulosic ethanol.

I agree that a lot of the definitions in the legislation look good, but the current plan still puts the initial incentives in the wrong place. Over the next five years, corn will be the ethanol source of choice, and that’s not the right plan. High corn and feedstock prices remain, and many ethanol plants are closing or struggling to stay open. Allowing corn-based ethanol to meet early RFS mandates only delays the development of viable cellulosic and other biomass sourced ethanol. Even if the amount of ethanol required under the RFS in the early stages were lower to allow technologies to develop, I would rather see corn-based ethanol excluded, or at least greatly minimized, from the process.

4/16/2008 12:08 PM  
Anonymous Dan Owens said...

Good points all, and I agree.

4/16/2008 2:18 PM  

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