Understanding the revised CARB estimates of the land use changes and greenhouse gas emissions induced by biofuels

Abstract

The estimations of land use changes and greenhouse gas emissions induced by biofuels remain highly controversial. After some first estimates in 2009, the California Air Resource Board releases new estimates in 2014. This paper explains two striking new results. First, the absolute reduction in the estimate of average US soya biodiesel is much greater than the reduction in the estimate of average US corn ethanol (by respectively 33 and 10g CO2eq/MJ). According to the new estimates, these two biofuels now induce more similar greenhouse gas emissions. Second, the newly reported EU and US canola biodiesel estimates are very different (respectively greater than 35 and 10g CO2eq/MJ).Using the public and transparent methodologies developed by the California Air Resource Board, we find that these two striking results are mostly explained by some weak initial economic data. In both cases, the undervaluation of the initial oilmeal productions generates upward bias in the land use changes and carbon emission estimates by reducing the co-product effects. We find that the new closer estimates reported for the US soya biodiesel and corn ethanol are explained by an appropriate revision of the world production of oilmeal and the inclusion of oilmeal trade flows. We also find that the reported significant difference between the EU and US canola biodiesel estimates nearly disappears when the initial data on European land values, oilmeal production and trade values are improved.We then emphasize that any economic analysis is only as valuable as the quality of the supporting data allows. The current focus in academic and policy circles on unobserved elasticity values to assess biofuel impacts is not sufficient.