It should come as no surprise that the ethanol industry remains opposed to the inclusion of highly uncertain and prescriptive emissions from indirect land use change (ILUC) in the lifecycle GHG analysis of crop-based biofuels. This is particularly true when results from those lifecycle GHG analyses serve as the very foundation for state and federal regulations governing the production and use of biofuels (à la the California LCFS and Federal Renewable Fuels Standard, or RFS2). After all, there still isn’t a shred of indisputable empirical evidence that positively links increased use of grain for ethanol in the United States to conversions of grassland or forest here or in other parts of the world. But whether you believe in ILUC or not is largely irrelevant at this point—the concept has been codified and implemented as part of the RFS2 regulation and our industry is in fact being regulated today on land use decisions that might or might not be made in nations halfway around the world over the course of the next 12 years and might or might not be related to U.S. biofuels policy.
Despite the fact that real-world data and events have disputed the ILUC theory at every turn (e.g., grain and oilseed exports haven’t fallen off, soybean acreage hasn’t decreased, total U.S. cropland hasn’t increased, global cropland hasn’t increased at rates dissimilar to those before the biofuels boom, livestock feed use remains steady, CRP acreage remains at historically normal levels, Amazon deforestation is decreasing, etc., etc.), EPA’s final rule for the RFS2 institutes a net LUC penalty (domestic and international) against corn ethanol of 30 kg CO2e/mmBTU (or 28.4 g CO2e/mega joule). This represents nearly 40% of the total GHG intensity of corn ethanol as estimated by EPA. When LUC emissions are excluded, EPA found corn ethanol from a natural gas dry mill reduces GHG emissions by 50% compared to gasoline. With LUC emissions, that benefit falls to around a 20% reduction.
In an attempt to better understand how EPA came up with its LUC numbers, we have been dissecting the agency’s LUC analysis ever since the final rule (and the thousands of pages of supporting material) was released in March. While we have encountered many disputable assumptions, questionable methodological choices and likely errors in EPA’s analysis, one oversight in particular sticks out like a sore thumb. In essence, EPA based its LUC penalties for crop-based biofuels on modeling scenarios where each individual biofuel was isolated and volumes of that biofuel were increased while other biofuel volumes were held constant. Of course, that’s not how the RFS2 works—the regulation requires simultaneous increases of several types of biofuels. Attempting to isolate the potential land impacts of individual biofuels, one at a time, results in significantly exaggerated estimates of the overall lifecycle GHG intensity of corn ethanol and other biofuels. English Economist Alfred Marshall, considered the founder of neoclassical economics, recognized that this type of isolation analysis often exaggerates impacts. He wrote that the more a particular economic event is narrowed (isolated), the more exactly it may be handled (in the context of economic analysis), “but also the less closely does it correspond to real life.”
EPA itself acknowledged the weakness of its approach. In the Regulatory Impact Analysis, EPA writes, “Several of the lifecycle emission impacts for one fuel are interrelated with those of another fuel, in particular the land-use changes (emphasis added). For our analysis of the overall GHG impacts of the program, we modeled all of the fuel changes simultaneously to determine the land-use impact. However, from that analysis it is not possible to differentiate the contribution of the land-use change to one fuel vs. another. As a result, for this analysis we had to model the impacts of just one fuel change at a time (emphasis added).”
We obviously disagree with the agency that “it is not possible to differentiate the contribution of the land-use change to one fuel vs. another” and we believe their own analysis provides them with the tools to determine each biofuels possible contribution. When EPA modeled a scenario in which all biofuels volumes were increased simultaneously in accordance with RFS2 requirements, the amount of land use change was half of what it was in the cases where EPA isolated individual biofuels. If EPA had used this modeling case to develop its LUC penalties, the hit to corn ethanol would have been 10.8 g CO2e/MJ, rather than EPA’s estimate of 28.4 g/MJ. Such a reduction in LUC emissions means overall lifecycle GHG emissions for 2022 average corn ethanol would be 38% less than baseline gasoline emissions, rather than the 21% estimate finalized by EPA. We sent a letter to EPA yesterday detailing the problem:
“EPA’s overestimation of LUC emissions stems from the fact that the agency’s analysis attempts to isolate the potential land use impacts of increasing the production of only one biofuel at a time while holding other biofuel volumes constant, rather than examining the land use impacts of simultaneously increasing production of all biofuels as required by the Energy Independence and Security Act (EISA). Attempting to isolate the potential impacts of individual biofuels results in significantly exaggerated estimates of the overall lifecycle GHG intensity of corn ethanol and other biofuels. Because the EISA requires increasing volumes of various biofuels simultaneously, EPA should have based its LUC estimates on the scenario results that simulated concomitant increases in the various biofuels required by the Act,” the letter said.
We’re hopeful EPA will revisit this issue. If the agency’s true intent was to model the GHG impacts of the RFS2 program, it definitely should have used the results from the modeling case where all biofuels were increased simultaneously. Using the isolation cases to determine the LUC penalties grossly overstates possible LUC emissions and misrepresents the carbon benefits of biofuels.