Final Notes from BIO’s World Congress

On June 29 at BIO’s World Congress, Steen Riisgaard, CEO of Novozymes, and Stephen Tanda, Board Member of Royal DSM N.V., released a report from the World Economic Forum on The Future of Industrial Biorefineries. The report says that a biorefinery value chain could create revenue for agricultural inputs ($15 billion US), for biomass production ($89 billion), for biomass trading ($30 billion), for biorefining inputs ($10 billion), for biorefining fuels ($80 billion), for bioplastics ($6 billion) and for biomass power and heat ($65 billion) by 2020.

You can download and listen to the press conference Release of report on The Future of Industrial Biorefineries.

The highlight of the final day of the World Congress was a debate between Princeton Visiting Scholar Tim Searchinger and MSU Professor Bruce Dale, moderated by Univ. of Minnesota’s John Sheehan. Sheehan sought to explore both the strongest and weakest parts of the arguments for and against including an indirect land use penalty in the carbon lifecycle of biofuels and bioenergy. For him, the central question in the debate is whether or not the world is running out of land to use — for all purposes, not just agriculture — meaning that any new use, such as biofuels, inevitably causes a shift of use somewhere else.

For Searchinger, the central point is that the traditional lifecycle of biofuels and biomass energy accounts a credit for using carbon stored in crops and trees. Bioenergy, he argues, should only get credit for new sources of carbon that it creates or for using carbon that would have decayed and entered the atmosphere anyway, but never for carbon that is already stored.

Dale took an optimistic view that a switch to bioenergy — and away from petroleum — would spur the creation of additional carbon stores. This could be accomplished through increased productivity and yield on the same amount of land, for instance, and through regrowing of crops and biomass sources so that the credit given to bioenergy is repaid quickly.

Raining on Cellulosic Ethanol’s Parade

Writer Alyssa Danigelis posted an item of interest on Discovery News last month detailing the latest supposed “blow” to the biofuel industry. The writer highlights a new study in Agronomy Journal in which Kansas State University Assistant Professor Humberto Blanco-Canqui concludes, “Only a small fraction (about 25%) of residue might be available for removal, depending on soil type and climate. This small amount of crop residues is not economically feasible nor logistically possible.”

Matt Merritt of POET and Professor Bruce Dale of Michigan State University have posted responses to Blanco-Canqui’s conclusion. What they drive at is that the fraction of agricultural residue that can be removed from a field depends greatly on the geography and management of that field. Jim Hettenhaus of CEA Inc. has helped lead a study in Imperial, Neb., to determine optimum stover removal and storage practices based on local variables in soil type and weather, and he was kind enough to share preliminary results (See Stover Value Review). And several years ago, BIO published a study, Achieving Sustainable Production of Agricultural Biomass for Biorefinery Feedstock, that indicates the amount of residue removed from a field can be increased through adoption of no-till soil management.

The economic feasibility of harvesting crop residues for cellulosic biofuel production, of course, is highly dependent on the individual farmer. Aside from its value in managing organic carbon in tilled soil, crop residues are also currently used as animal bedding and other things. Individual farmers are thus faced with a decision whether the biofuel market for crop residues is attractive enought to induce them to change their field management practices, buy new harvesting equipment, and forego current uses of residues to instead transport them to a collection or storage facility. The same economic question faces any farmer who considers growing switchgrass or short-rotation woody crops, which are favored by Blanco-Canqui. And for the most part, biofuel production does not yet provide a compelling market for farmers, although POET and others have begun contracting directly with farmers to harvest and deliver small, easily harvested amounts of residues to pilot production plants.

Perhaps the most pernicious assumption behind many academic and press articles is that cellulosic ethanol “proposes turning waste into something useful.” Considering the costs of trash removal for most cities, even trash won’t be considered “waste” if it becomes a valuable feedstock for biofuels. Just as pernicious, perhaps, is the industry’s assumption that an apparently abundant resource is naturally a cheap resource. Inevitably, these assumptions have led everyone to search for the perfect energy source – one that doesn’t compete with food production, doesn’t require petroleum fertilizers, and doesn’t come with the dreaded “unintended consequences.” A far better plan would be to seek sources that best fit a local area, and then look for ways to manage them in economically and environmentally sound ways.

EPA Continues to Move Toward Calculation of Indirect GHGs

Dr. Bruce Dale of Michigan State University published a Commentary in the Washington Times on Nov. 26, calling for sound science in development of the EPA’s rule on the Renewable Fuel Standard.

Dr. Dale points out, “No actual data exist that connect U.S. domestic ethanol production with, to cite a widely quoted example, the clearing of the Amazon rain forest. Instead, the paper’s conclusions depend entirely on economic modeling and assumptions.” He then discusses his own recently completed research that shows that changes to the assumptions and different calculations for some of the variables can dramatically change the outcome of the lifecycle greenhouse gas equation. His research is to be published in a forthcoming edition of Environmental Science and Technology.

See Dale: Unexplored Variables and Dale: Unexplored Variables Supporting Information

The New Fuels Alliance on Oct. 23 sent a letter to the California Air Resources Board raising similar cautions about using estimates of indirect impacts in regulating biofuels. The letter notes:

CGE [computable general equilibrium] models like GTAP [Global Trade Analysis Project] provide estimates of land use change in distant locations, but at the price of severe limits in accuracy and at the expense of a realistic inclusion of complex causes of land use change.”

The NFA notes that CARB has not investigated the indirect effects of other fuels, particularly petroleum, an idea explored in previous posts to this blog. (See here and here.) The indirect effects of petroleum prices are vast, according to the letter. “If the rising price of agricultural commodities is a concern – as the catalyst for additional planting – it is now clear that oil prices have a profound effect on agricultural commodity markets.” In fact, researchers at FAPRI include oil prices as a significant cause of uncertainty in calculating the indirect effects of biofuels on land use.

In general, Dr. Dale’s conclusion is consistent with NFA’s statement, “The fundamental assumption of the current ILUC argument – that using an acre of land in the U.S. for fuel will require almost an acre of crop development somewhere else – produces questionable results when applied to ‘good’ public policy initiatives.”

The EPA’s Regulatory Impact Analysis from the 2005 version of the Renewable Fuel Standard makes clear that they do use this assumption in several places. The reason for accepting these assumptions, according to the EPA, is that existing life cycle models fail to take into account general equilibrium principles on market impacts.

The agricultural sector modeling results indicate that, compared to the 2012 Reference Case, approximately two and a half million acres will come out of CRP land as a result of increased renewable fuel production. Not all of these two million acres will go directly into corn production used to produce ethanol. However, the entire amount of CO2 emissions from the CRP land use change is attributable to the increased amount of ethanol produced, as without the increased demand for corn there would be no change in CRP land.”

And they indicated with the publication of the RIA that they will use the assumption in estimating indirect land use in future legislation:

Due to decreasing corn exports some changes to international land use may occur, for example, as more crops are planted in other regions to compensate for the decrease in crop exports from the U.S. While the emissions associated with domestic land use change are well understood and are included in our lifecycle analysis, we did not include the potential impact on international land use and any emissions that might directly result.”

EPA at the time also applied this assumption to oil production:

Under a full lifecycle assessment approach, the savings associated with reducing overseas crude oil extraction and refining are included here, as are the international emissions associated with producing imported ethanol. This assumes that for every gallon of gasoline that’s not imported into the US, the corresponding quantity of crude oil is not extracted or processed to make this gasoline regardless where the extraction or production takes place.”

A fuller exploration of the market impacts of biofuels and oil are warranted, particularly after this year’s food and gas price swings.

Environmental Groups Pressure EPA to Calculate Indirect Emissions

The latest salvos on the EPA’s rulemaking process for the Renewable Fuel Standard come from six major environmental groups – the Environmental Defense Fund, National Wildlife Federation, Natural Resources Defense Council, Friends of the Earth, Union of Concerned Scientists, and Environmental Working Group – and academics at the University of California Berkeley.

In their letter to EPA Administrator Stephen Johnson, the environmental groups argue that delaying conclusions about which biofuels make the grade under the RFS until after the EPA has solicited comments on the rule “would encourage ventures that increase global warming pollution and will fail once the lifecycle accounting accurately and completely addresses the impact of land use changes.”

I have to disagree. Deciding which biofuels make the grade and which don’t before lifecycle accounting accurately addresses land use change risks discouraging investment in projects that might eventually have a beneficial impact on climate change emissions.

The groups further say, “We think that the inclusion of indirect effects will illustrate which second-generation feedstocks incur the least indirect land use changes.” However, since there are few second-generation feedstocks actually in production, the analysis of lifecycle emissions will be based on small-scale data. The indirect land use change emissions, particularly on a worldwide scale, will be purely hypothetical, since no large-scale markets currently exist for second-generation feedstocks. In fact, one of the stumbling blocks for the industry is the need to create the markets for harvesting second-generation feedstocks.

To decide which of these feedstocks “incur the least indirect land use changes” and to try presumptively to “distinguish promising approaches from dead ends” before data is gathered or the model proposed by the EPA is fully developed will undercut investment in second generation biofuels before they get off the ground.

The EPA’s “rigorous rule-making process that has drawn on the best available science,” as these groups put it, runs a great risk of appearing arbitrary by announcing premature conclusions about the land use change emissions calculation for biofuels.

Arguments about the food price impact of biofuels, some put forward by noted academics using the best available science, have ultimately been contradicted by evidence throughout the past year. While crop prices that reached highs during the summer and food prices that spurred riots in some corners of the world seemed to bear out the worst scenario put forward by respected researchers such as C. Ford Runge, the collapse of food prices in the past few months tends to support others who said that the price of oil was the main driver. See an earlier post for other arguments.

In a separate letter to Johnson, the group of academic experts led by University of California Berkeley’s Michael O’Hare put forward a series of arguments to refute the original letter from Bruce Dale et al. The Berkeley et al. academics sum up their argument so:

That some land will be brought from natural conditions into cultivation, with accompanying rapid carbon emissions from the existing vegetation, when ethanol demand is added to whatever other corn the world market would otherwise use, is an inference from absolutely foundational and uncontroverted elementary principles of human behavior, such as the law of demand. Exactly how large the effect is requires sophisticated predictive models and will never be as precise as measuring the specific gravity of ethanol, but to act as though the effect is nil is simply obscurantist and unscientific. No principle of law or regulatory practice or common sense dictates that the state must regard any uncertain value as zero.”

The problem with this is that there are other influences on land being “brought from natural conditions into cultivation” besides the demand for corn to produce biofuels, and current predictive models are not sophisticated enough to either measure the effect or to separate the various influences. But there is a principle of regulatory practice to point out. The regulatory action must provide the relief sought. Regulation of biofuels in the way sought by environmental groups ought to reduce greenhouse gas emissions from native land brought into cultivation. Since the EPA is not regulating deforestation around the world, there is little chance that will happen.

Robert C. Brown, director of the Bioeconomy Institute at Iowa State University, has a very cogent dissection of the environmentalists’ arguments:

People in the developing world are finding it profitable to expand agriculture in their own countries rather than depend upon U.S. farmers to feed them. In some progressive circles, this might sound like a good thing – what we in the United States admiringly refer to as self-reliance.
“There is no scientific evidence indicating that deforestation is driven by biofuels production. Whereas the world has lost 500 million acres of rain forest in the past 10 years, the U.S. biofuels industry has diverted less than 20 million acres to ethanol production. Something else is responsible for the epidemic of deforestation.”

EPA Gets Input on Sustainable Biofuels

On Monday Oct. 27, the EPA’s Science Advisory Board held a workshop in Washington on “Looking to the Future.” The stated purpose of the workshop was “to stimulate SAB thinking about priorities for meeting critical environmental problems with an integrated approach to interdisciplinary science and research” and gather data on the net environmental implications of biofuels. A number of experts on biofuels and agriculture gave SAB presentations on land use change and other possible climate change emissions from biofuel production.
In their presentation, Dr. Bruce Dale of Michigan State University and Dr. Lee Lynd of Dartmouth noted that in calculating emissions from land use in a life cycle analysis, “a large range of outcomes is possible depending on whether or not land conversion is approached with the intent to minimize carbon debts.” In a study, they look at the variation in outcomes to an indirect land use change analysis such as Searchinger’s. If the timber from cleared rainforests is used for furniture or paper instead of burned, as Searchinger assumed, or if land is managed with conservation tillage practices rather than conventional plow tillage, then “‘carbon debt’ from forest conversion is greatly reduced and may well be negative for some real systems,” Lynd and Dale told the SAB. Further, “Production of biofuel from prairie grass on abandoned or marginal cropland repays the conversion carbon debt in less than a year with large carbon savings thereafter.”
This is a point that David Tilman of the University of Minnesota, who also testified at the SAB meeting, would agree on, since he said, “Whether or not a given biofuel offers carbon savings and other environmental benefits relative to a fossil fuel depends on how the biomass crop is produced.”
Outside of this official comment process, a number of groups have been petitioning EPA Administrator Johnson to take a different course on the rulemaking process. First, Bruce Dale and other academics sent a letter to Johnson asking him to delay inclusion of indirect land use in the rule for biofuels until better models could be constructed. Recently, the Clean Air Task Force, Environmental Working Group Action Fund, and Friends of the Earth sent a letter to Johnson responding to the Dale letter (See Environmental Groups Response Letter to EPA Administrator). Their argument: “Growing crops for energy in addition to food and feed requires the cultivation of additional land.” This is precisely what remains unproven in the analyses.
The Biotechnology Industry Organization also sent a letter to EPA Administrator Johnson proposing that the EPA reveal its methodology for including indirect land use change so that the proposed rule’s comment period could be used for refining the model before any conclusions are drawn about the impacts of specific biofuels (See BIO Letter to EPA Administrator Johnson).

What Do You Know, Oil Does Cause Land Use Change

In a recent post, I questioned the apparent assumption in the current debate over greenhouse gas emissions from biofuels that petroleum gasoline production does not have an effect on land use change. It turns out there is a well-developed literature on the direct land use change effects of oil exploration in the Amazon and South America.

Chris W. Baynard of the University of North Florida Department of Geology presented a study, “Venezuela’s Heavy Oil Belt: Monitoring Exploration and Production-Related Land Cover Changes,”, at the ESRI 2007 Southeast User Group Conference.

In it he says that most land use land cover change studies on deforestation in tropical regions points to two main drivers, agriculture and logging. The common thread is roads that provide access to these resources and deliver them to market. The same is true for petroleum exploration and production, though, according to Baynard:

Petroleum exploration and production also causes changes to land cover, but some practices create less disturbance than others. [There is a] lack of attention in land use and land cover change literature.”

His study finds that petroleum exploration, pushed by government policies to boost oil production in response to recent high prices (2001-2005), was the primary driver of observed land use change in connection with two large oil development projects in Venezuela’s heavy oil belt. “The extraction of natural resources produces marked impacts on the landscape,” he says.

Carlos F. Mena of the University of North Carolina, Chapel Hill, and Alisson F. Barbieri of the Universidade Federal de Minas Gerais, Brazil, also studied the direct land use change impacts of oil exploration and development in a paper titled “Pressure on the Cuyabeno Wildlife Reserve: Development and Land Use/Cover Change in the Northern Ecuadorian Amazon”:

We find that LULC patterns within and adjacent to the Reserve are influenced by (1) changes in land tenure regimes in newly classified Patrimony Forest, (2) petroleum exploration and production, (3) indigenous communities location, characteristics, and integration to the market economy, and (4) settlement patterns and household characteristics of colonists.”

In 2005, the U.S. imported 449 million barrels of oil from Venezuela (roughly 26% of imports from OPEC countries and 12% of total imports). It also imported 34 million barrels from Brazil, an increase from 19 million in 2004. In 2006, that number jumped to 49 million, according to U.S. Census data.

With global demand rising and supplies declining, evidence suggests that the price of oil will continue to be a driver of exploration and associated land use change in South America. Andy Coghlan of New Scientist recently found that “Unspoilt Amazonian rainforests covering an area almost as large as Texas have been provisionally earmarked for oil and gas exploration.”

Bruce Dale of Michigan State University made reference to this literature in his presentation during a webinar hosted by the North Central Bioeconomy Consortium: “Forest conversion is driven by combined forces: agricultural expansion + timber utilization + road access explain 96% of observed cases but any single factor explains less than 20%.” He correctly observes that so far, the discussion of land use change attributed to biofuels has not been balanced by a comparison to the land use change impacts of petroleum. In terms of regulatory policy being developed by the U.S. EPA, the examination would be relevant.