Are there carbon savings from U.S. biofuel policies? The critical importance of accounting for leakage in land and fuel markets

Antonio M. Bento, Richard Klotz, Joel R. Landry

Research output: Contribution to specialist publicationArticle

10 Citations (Scopus)

Abstract

We develop an analytical and numerical multi-market model that integrates land, fuel, and food markets, and link it with an emissions model to quantify the importance of carbon leakage relative to the intended emissions savings resulting from the Renewable Fuel Standard (RFS) for conventional biofuels. The expansion of biofuels mandated by the RFS can increase or decrease GHG emissions depending on the policy regime being evaluated. For example, replacing the Volumetric Ethanol Excise Tax Credit (VEETC) with the RFS, as occurred at the end of 2011 when the VEETC was allowed to expire, would reduce emissions by 2.0 tgCO2e in 2015 for an expansion of ethanol of 11.4 billion liters. A policy regime consisting of the RFS alone would increase emissions by at least 4.5 tgCO2e for the same expansion of ethanol. Our findings highlight an important tension between land and fuel market leakage. Policy regimes that result in less land market leakage tend to lead to more domestic fuel market leakage per liter of ethanol added.

Original languageEnglish (US)
Pages75-109
Number of pages35
Volume36
No3
Specialist publicationEnergy Journal
DOIs
StatePublished - Jan 1 2015

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Biofuels
Carbon
Ethanol
Taxation
Leakage
Savings

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics
  • Energy(all)

Cite this

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Are there carbon savings from U.S. biofuel policies? The critical importance of accounting for leakage in land and fuel markets. / Bento, Antonio M.; Klotz, Richard; Landry, Joel R.

In: Energy Journal, Vol. 36, No. 3, 01.01.2015, p. 75-109.

Research output: Contribution to specialist publicationArticle

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