Biofuel impacts on climate change, the environment and food - Report to the Renewable Fuels Agency

May 2008

The belief that biofuels can mitigate climate change has driven governments around the world to promote the production of ethanol and biodiesel through policies that guarantee markets and offer incentives to producers and consumers. The total cost of these policies is measured in billions of dollars per year. Biofuels are also promoted for their potential to benefit the rural poor by increasing farm income and to serve national security interests that require domestic energy protection. With the world entering a global food crisis the likes of which have not been seen in more than three decades and with the greenhouse gas savings of biofuels now disputed, policy makers have begun to question their promotion of a technology that takes land away from its two predominant uses—food production and environmental preservation—and has not historically competed with oil.
Governments that seek to develop or revise policies related to alternative fuels do so in an environment with uncertainty about impacts and disagreement among experts in the field. In part, the lack of a consensus on the value of biofuels is the result of limited empirical data to substantiate general conclusions. In part it is because the measure by which biofuels are judged is evolving. In part it is because the impacts can be predicted only through complex economic models that are described by their creators as “black boxes,” impenetrable to those who didn’t have a hand in their formation and based on numerous assumptions any one of which could be contested and call into question the validity of the predictions. Furthermore, the impact of biofuels on climate change, food prices, deforestation and energy security are heterogeneous across feedstock, location, and production method. Such variation makes general conclusions difficult and complicates the development of policy, as we will discuss.
This report summarizes the knowledge of biofuels and their wide-ranging impacts presented by expert agronomists, microbiologists, and economists at the “Sustainable Biofuels” workshop at the University of Illinois, Urbana-Champaign on May 12 and 13.
This report begins by discussing the motivation for biofuel policy, i.e. the perceived benefits of biofuels. It then considers, in section 2, the negative impacts of biofuels. The factors influencing the costs and benefits of biofuels are discussed in section 3. Section 4 describes the methodologies used for judging biofuel technologies, including life-cycle analysis and traditional economic welfare analysis. Section 5 discusses policy prescriptions and concludes.

By: S. E. Sexton, D. Zilberman (University of California)

 
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