Abstract
PurposeThe aim of this study was to evaluate the cost-effectiveness of bioethanol as regards to its carbon dioxide emissions. The production of the raw material accounts for more than 50 % of the total cost as well as having a significant part of greenhouse gases emitted during the entire process. For this reason, special emphasis is given to a change in agricultural land usage influenced by the demand of biofuel. Therefore, we have estimated the extent of policy influence according to its bioethanol cost-effectiveness. A case study on bioethanol production in an ex-sugar factory in the region of Thessaly, Greece, illustrates the above ideas.MethodsA partial equilibrium micro-economic model of regional supply in the arable farming system of Thessaly was coupled to industrial processing sub-models of bioethanol production from beets and grains. The maximisation of total welfare determines the most suitable crop mix for farmers as well as the lowest cost configurations for industry and, eventually, the minimal level of support by the government for biofuel activity to take off. The environmental performance is assessed under the life cycle assessment (LCA) framework following three interrelated phases: data inventory, data analysis and interpretation. The economic burden to society to support the activity divided by avoided CO2 eq. emissions indicates the bioethanol cost-effectiveness, in other words, the cost of greenhouse gases emissions savings.ResultsThe integrated agro-industry model has been parametrically run for a range of biofuel capacities. A change in direct land use results in lower emissions in the agricultural phase, since energy crops are a substitute for intensive cultivations, such as cotton and corn. A change in indirect land use moderates these estimations, as it takes in account imported food crops that are replaced by energy crops in the region. The savings in cost vary around 160 euros per ton of CO2 eq. for the basic agricultural policy scenario. The current policy that supports cotton production by means of increased coupled area payment has increased up to 30 % the cost of greenhouse gas savings due to bioethanol production.ConclusionsAn integrated model, articulating the agricultural supply of biomass with ethanol processing, maximises the total surplus that is under constraints in order to determine the cost-effectiveness for different production levels. Results demonstrate that economic performances, as well as the environmental cost-effectiveness of bioethanol, are clearly affected by the parameters of agricultural policies. Therefore, bioenergy, environmental and economic performances, when based on LCA and the conceptual change in land usage, are context dependent. Agricultural policies for decoupling subsidies from production are in favour of cultivation in biomass for energy purposes.
Highlights
Changes in European policies, concerning the sugar and biofuel sectors that completed the Common Agricultural Policy (CAP) reform in 2003, have created favourable environment conditions for ethanol production by European ex-sugar factories, in countries that had not participated in the first wave of biofuel production in the 1990s
The main crops cultivated by those farms are: soft wheat, durum wheat, maize, tobacco, cotton, dry cotton, sugar beet, tomato, potato, alfalfa, fodder maize and intercropped vetch to conform with the cross-compliance term of the new Common Agricultural Policy
This paper attempts an evaluation of bioethanol production in the context of the ex-sugar industry in Thessaly, taking into consideration recent changes in the Common Market Organisation for sugar in the European Union (EU)
Summary
Changes in European policies, concerning the sugar and biofuel sectors that completed the Common Agricultural Policy (CAP) reform in 2003, have created favourable environment conditions for ethanol production by European ex-sugar factories, in countries that had not participated in the first wave of biofuel production in the 1990s. Complete or partial decoupling of subsidies from production, the basic feature of the 2003 CAP reform has been implemented since the cultivation period 2005–2006.1 As a result, gross margins that were earmarked for particular crops have been drastically reduced (i.e. previously heavily subsidised arable crops), decreasing the opportunity cost for the introduction of energy or alternative crops in the cropping plan. According to legislative changes for sugar production in the European Union (EU) and the World Trade Organisation, the Common Market Organisation in the EU has excluded the sugar quota restriction (EC 2005) on sugar beet production for non-food use (chemical and pharmaceutical industries and for energy purposes).
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