I\’ve posted here and here on how many international organizations hate government subsidies for biofuels. Now it\’s time for the National Research Council to have a whack at this pinata. The Committee on Economic and Environmental Impacts of Increasing Biofuels Production of the National Research Council has published: \”Renewable Fuel Standard: Potential Economic and Environmental Effects of U.S. Biofuel Policy.\” The report was mostly written under the chairmanship of Lester Lave, but was completed after his death last May. As befits a report from the NRC, it is a sober-sided discussion that lays out evidence at great length without seeking to take a particular explicit policy stance. Here are the eight major findings of the study, with a few quick comments from me, as quoted from the \”prepublication copy\” that can be downloaded free of charge:
FINDING: Absent major technological innovation or policy changes, the RFS2-mandated consumption of 16 billion gallons of ethanol-equivalent cellulosic biofuels is unlikely to be met in 2022.
RSF2 is the committee\’s way of referring to the Renewable Fuels Standard passed into law in 2005 and revised in 2007. Cellulosic biofuel is not from corn or soybeans or animal fat, but instead from certain kinds of grasses or wood chips. Cellulosic biofuel has the theoretical advantage that the sources for such fuel are cheap and abundant; however, producing fuel from these sources is harder than producing it from corn or soybeans or sugar, and the technologies for converting cellolosic material to biofuels are far from cost-effective. Indeed, they write \”no commercially viable biorefineries exist for converting lignocellulosic biomass to fuels as of the writing of this report.\”
FINDING: Only in an economic environment characterized by high oil prices, technological breakthroughs, and a high implicit or actual carbon price would biofuels be cost-competitive with petroleum-based fuels.
Indeed, the case for biofuels probably comes down to either very high oil prices or technological breakthroughs that make is much cheaper, because as the next finding notes, it\’s not at all clear that biofuels reduce greenhouse gas emissions.
FINDING: RFS2 may be an ineffective policy for reducing global GHG emissions because the effect of biofuels on GHG emissions depends on how the biofuels are produced and what land-use or land-cover changes occur in the process.
Expanded production of biofuels will almost certainly involve clearing and planting additional land. Depending on how it is done, this process can release more carbon than biofuels save. In addition, it\’s important to remember that the biofuels and agricultural products operate in a global market, so it\’s not just an issue of how U.S. biofuels policies affect clearing and planting of U.S. land, but how it affects clearing and planting of land all around the world.
FINDING: Absent major increases in agricultural yields and improvement in the efficiency of converting biomass to fuels, additional cropland will be required for cellulosic feedstock production; thus, implementation of RFS2 is expected to create competition among different land uses, raise cropland prices, and increase the cost of food and feed production.
FINDING: Food-based biofuel is one of many factors that contributed to upward price pressure on agricultural commodities, food, and livestock feed since 2007; other factors affecting those prices included growing population overseas, crop failures in other countries, high oil prices, decline in the value of the U.S. dollar, and speculative activity in the marketplace.
Many U.S. households can find ways to adjust without too much pain to a slightly higher price of food. But food products are sold in global markets, and for many people around the world, higher food prices can have dire consequences for nutrition and health.
FINDING: Achieving RFS2 would increase the federal budget outlays mostly as a result of increased spending on payments, grants, loans, and loan guarantees to support the development of cellulosic biofuels and forgone revenue as a result of biofuel tax credits.
Even if explicit subsidies for biofuels are allowed to expire, as they are scheduled to do at the end of 2012, the mandates for consuming biofuels will remain in place, which will raise costs for consumers. Also, gasoline is taxed and biofuels are subsidized, so a movement from gasoline to biofuels will reduce government tax revenues.
FINDING: The environmental effects of increasing biofuels production largely depend on feedstock type, site-specific factors (such as soil and climate), management practices used in feedstock production, land condition prior to feedstock production, and conversion yield. Some effects are local and others are regional or global. A systems approach that considers various environmental effects simultaneously and across spatial and temporal scales is necessary to provide an assessment of the overall environmental outcome of increasing biofuels production.
Biofuels are commonly sold on their environmental merits. The committee is saying here, in a very polite way, that when different feedstocks are considered, along with their effects on air, soil, and water, these purported environmental gains have not yet been convincingly demonstrated.
FINDING: Key barriers to achieving RFS2 are the high cost of producing cellulosic biofuels compared to petroleum-based fuels and uncertainties in future biofuel markets.
I\’m a supporter of expanded energy R&D efforts. Maybe some scientists will find a way to make biofuels that are both cost-effective and clearly an environmental gain, in a way that doesn\’t drive up food prices around the world. But at this stage, subsidizing production of biofuels or mandating that they be used in certain quantities–especially for technologies like cellolosic biofuels that don\’t exist on a commercial basis–is putting the cart way in front of the horse.