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[en] To explore the effect of CO2 price on the effective cost of ethanol production we have developed a model that integrates financial and emissions accounting for dry-mill corn ethanol plants. Three policy options are modeled: (1) a charge per unit of life cycle CO2 emissions, (2) a charge per unit of direct biorefinery emissions only, and (3) a low carbon fuel standard (LCFS). A CO2 charge on life cycle emissions increases production costs by between $0.005 and $0.008 l-1 per $10 Mg-1 CO2 price increment, across all modeled plant energy systems, with increases under direct emissions somewhat lower in all cases. In contrast, a LCFS increases the cost of production for selected plant energy systems only: a LCFS requiring reductions in average fuel global warming intensity (GWI) with a target of 10% below the 2005 baseline increases the production costs for coal-fired plants only. For all other plant types, the LCFS operates as a subsidy. The findings depend strongly on the magnitude of a land use change adder. Some land use change adders currently discussed in the literature will push the GWI of all modeled production systems above the LCFS target, flipping the CO2 price from a subsidy to a tax
[en] The global warming intensities of crop-based biofuels and fossil fuels differ not only in amount but also in their discharge patterns over time. Early discharges, for example, from market-mediated land use change, will have created more global warming by any time in the future than later discharges, owing to the slow decay of atmospheric CO2. A spreadsheet model of this process, BTIME, captures this important time pattern effect using the Bern CO2 decay model to allow fuels to be compared for policy decisions on the basis of their real warming effects with a variety of user-supplied parameter values. The model also allows economic discounting of climate effects extended far into the future. Compared to approaches that simply sum greenhouse gas emissions over time, recognizing the physics of atmospheric CO2 decay significantly increases the deficit relative to fossil fuel of any biofuel causing land use change.
[en] We compare two types of fuel market regulations — a renewable fuel mandate and a fuel emission standard — that could be employed to simultaneously achieve multiple outcomes such as reduction in fuel prices, fuel imports and greenhouse gas (GHG) emissions. We compare these two types of regulations in a global context taking into account heterogeneity in carbon content of both fossil fuels and renewable fuels. We find that although neither the ethanol mandate nor the emission standard is certain to reduce emissions relative to a business-as-usual baseline, at any given level of biofuel consumption in the policy region, a mandate, relative to an emission standard, results in higher GHG emissions, smaller expenditure on fuel imports, lower price of ethanol-blended gasoline and higher domestic fuel market surplus. This result holds over a wide range of values of model parameters. We also discuss the implications of this result to a regulation such as the US Renewable Fuel Standard given recent developments within the US such as increase in shale and tight oil production and large increase in average vehicle fuel economy of the automotive fleet. - Highlights: • Biofuel mandates and fuel GHG emission standards are analyzed from a multiple criteria perspective • An emission-standard always results in lower global emissions while requiring less biofuel relative to a biofuel mandate • An emission-standard results in higher fuel price in the home region relative to a biofuel mandate • Emission standards lead to more shuffling of both fossil fuels and biofuels between home and abroad • The relative impact of the policies on fuel imports depends on the relative cost-effectiveness of domestic & imported biofuel • Recent developments oil production and fuel economy increase the net benefits of an LCFS approach relative to RFS