Study: Another example of how California bollixes carbon regulation through biofuels


Regulating the indirect land use carbon emissions imposes high hidden costs on fuel

Farmers earn more profits when there is demand for corn for biofuel instead of for food only. This can lead some to convert grasslands and forests to cropland. This conversion, also called indirect land use change, can have large-scale environmental consequences, including releasing stored carbon into the atmosphere.

To penalize the carbon emissions from this so-called indirect land use change, the USEPA and California Air Resources Board include an indirect land use change factor when considering the carbon savings with biofuels for their compliance with the federal Renewable Fuel Standard or California’s Low-Carbon Fuel Standard.

“Biofuel policies like the Low-Carbon Fuel Standard in California are trying to minimize the indirect land use change related emissions by accounting for the indirect land use change factor as part of the carbon emissions per gallon of biofuels. We examine the costs and benefits of using this approach at a national level,” says University of Illinois agricultural economist Madhu Khanna.

A research paper on the subject by Khanna and her colleagues appears today in Nature Communications in which they ask: By how much would carbon emissions be reduced as a result of regulating indirect land use change like they are attempting to do in California? At what cost? And, who bears those costs?

Khanna says a low-carbon fuel standard creates incentives to switch to low-carbon advanced biofuels, but including the indirect effect makes compliance more costly and fuel more expensive for consumers.

Evan DeLucia, a U of I professor of plant biology and a co-author on the study, explains that biofuels differ in the carbon emissions they generate per gallon and their effect on use of land. Cellulosic biofuels, particularly from crop residues, or energy crops, like miscanthus and switchgrass, produced on low-quality marginal land lead to lower indirect land use change than corn ethanol.

“Inclusion of the indirect land use change factor makes it much more costly to achieve the Low Carbon Fuel Standard,” Khanna says. “It penalizes all biofuels and increases their carbon emissions per gallon. It imposes a hidden tax on all fuels that is borne by fuel consumers and blenders.”

“What we find is the inclusion of this indirect land use change factor leads to a relatively small reduction in emissions and this reduction comes at a very large cost to fuel consumers and fuel blenders,” Khanna says. “The economic cost of reducing these carbon emissions is much higher than the value of the damages caused by those emissions, as measured by the social cost of carbon. What our findings suggest is that it’s not optimal to regulate indirect land use change in the manner that it is currently done in California and of extending that to other parts of the country.”

The social cost of carbon, Khanna says, is $50 per ton of carbon dioxide on average. The economic cost of reducing carbon emissions by including California’s indirect land use change factor at a national level is $61 per ton of carbon dioxide.

The use of California’s indirect land use change factors applied nationally would imply that the cost of reducing a ton of carbon is 20 percent higher than the avoided damages from those emissions.

“We find that it is just not worth reducing these indirect land use emissions using California’s approach. It imposes a cost that is passed on to the consumer in the form of a higher cost for fuel,” Khanna says. “These costs for fuel consumers could range from $15 billion to $131 billion nationally over a decade, depending on the indirect land use change factors applied.”

“We need to think of better ways to prevent indirect land use change that would be more cost-effective,” Khanna says.

Currently, there is no national low-carbon fuel standard. California has one, Oregon recently established a low-carbon fuel standard, and other states are considering it. Khanna says this study provides useful information as states move forward to determine whether or not they should continue this policy of including an indirect land use change factor when they implement a low-carbon fuel standard.

“A lot of effort has been made and continues to be made to calculate the indirect land use change factor so they can be included in implementing low-carbon fuel policies,” Khanna says. “The presence of indirect land use change due to biofuels has in fact dominated the whole debate about the climate benefits of biofuels. We may be more productive if we focus more on the direct carbon saving with biofuels and incorporating those in trying to encourage the move toward lower carbon biofuels rather than regulating the indirect effects. Estimates of the indirect effects of biofuels have also become much smaller over time and it’s time to re-evaluate the benefits of continuing the policy of regulating indirect emissions,” Khanna says.


The paper, “The social inefficiency of regulating indirect land use change due to biofuels,” is written by Madhu Khanna, Weiwei Wang, Tara W. Hudiburg, and Evan H. DeLucia and is published in Nature Communications. Funding for the work was provided by the Energy Foundation, the Energy Biosciences Institute, University of California, Berkeley, and the Department of Energy Sun Grant.

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June 28, 2017 5:34 am

I’m astounded that anyone could even claim to be able to calculate the “social cost of carbon.” Note what happens should CO2 levels are reduced to the point that crop production is reduced to the point that malnutrition, high prices and even starvation occur. Now what do these folks calculate the cost of carbon under those circumstances? And yet, their goal is to actually acheive those levels. There is no plan to
maintain a healthy level of atmospheric carbon. Tunnel vision.

Thomas Homer
Reply to  arthur4563
June 28, 2017 6:35 am

Seems the ‘Social cost’ of no Carbon is society itself …
[ Biosphere 2 suffered from CO2 levels that “fluctuated wildly,” and most of the vertebrate species and all of the pollinating insects died. ]

Reply to  Thomas Homer
June 28, 2017 8:07 am

What is the “Social cost of stupid”? (I posit it’s quite high and growing)

Reply to  arthur4563
June 28, 2017 8:00 am

There really is no cogent means of calculating the “social cost of carbon.” It mainly reflects one’s opinion of CO2. The warmists have a very negative opinion and gauge the SCC as the $xx that will force people to change allow policies that will their habits; nothing but social engineering. They would like to see the $51 SCC go up to $250.
Those who recognize CO2’s benefits as well as its impotence in warming the climate see that the SCC is a benefit not a cost. The Benefits of Carbon (BC) should be $51. They should pay us to release the carbon that is greening the planet and making more food. If it did warm the climate, it would be a win-win, but it does not.

Michael C. Roberts
Reply to  higley7
June 28, 2017 8:52 am

One of many papers found on the internet regarding ‘The Social Benefits of Carbon’. Many will balk at the paper, as it was ‘Prepared for the American Coalition for Clean Coal Electricity’:
Still, valid points regarding the benefits of the carbon cycle are included.
Juxtaposed with the past-POTUS-Administration’s production of the SCC via the EPA, I wonder where the true ‘cost of carbon’ released as CO2 into our atmosphere is, from a monetary calculation?
Just fiddling with ‘cost per ton’ numbers swings the calculations wildly…
The other side of the equation:
The pendulum appears to be swinging back at least to center on this issue.

Reply to  higley7
June 28, 2017 2:00 pm

It sure sounds to me that these researchers have found, and are telling us out loud, that ethanol from corn (for fuel) ‘costs’ more in terms of CO2 released compared to CO2 saved.
But, rather than say, “Gee, alcohol from corn is a bad idea for the environment,” they suggest hiding these costs. These people are so intellectually dishonest that even I’m amazed!

D. J. Hawkins
June 28, 2017 5:46 am

Hoist by their own petard. I love how the conclusion is to ignore the negative impacts.

What our findings suggest is that it’s not optimal to regulate indirect land use change in the manner that it is currently done in California and of extending that to other parts of the country.

Just pretend they don’t happen and we can all continue our virtue signaling with a clean conscience. /sarc

Steve Case
June 28, 2017 5:47 am

The social cost of carbon, Khanna says, is $50 per ton of carbon dioxide on average.
CO2 is not a problem. There is no “Social Cost”. The “Global Warming/Climate Change” band wagon has been on the road for over thirty years and in all that time, Extreme tornadoes are fewer, the polar bears are doing fine, winters are warmer and summer afternoons are cooler. Sea level rise and hurricanes are about the same. It’s not happening like they have claimed it would by now.

Ben of Houston
June 28, 2017 5:55 am

Don’t you love how they refer to “advanced biofuels” as if they were an existing and functional source that’s readily available instead of a few glorified pilot plants with a tiny fraction of their legally mandated capacity

Reply to  Ben of Houston
June 28, 2017 7:53 am

Are advanced biofuels the same stuff as see-through corn whiskey?

June 28, 2017 5:57 am

What is the social cost of the “carbon” scare?

June 28, 2017 6:14 am


Writing Observer
Reply to  dudleyhorscroft
June 28, 2017 10:57 am

Time to clean the keyboard…

June 28, 2017 6:20 am

The social cost of carbon, Khanna says, is $50 per ton of carbon dioxide on average.

The world we are living in is as close to paradise as we have had since Adam and Eve were booted out of the Garden of Eden. The reason is that we have improved our lives with fossil fuels. Prosperity is good. Prosperous places also have the cleanest most healthy environments. The social benefit of carbon far outweighs the social cost of carbon. link, link

Reply to  commieBob
June 28, 2017 7:57 am

And furthermore, there were no ‘free’ lunches even in the Garden of Eden. Except for maybe those that were offered to Eve by the serpent? But in the end, that was a damnably expensive little snack it seems to me.

June 28, 2017 6:21 am

I love the word “bollix.” It can be a verb, noun, adverb or even an adjective and can fill in suitably for several American cuss words.

Phil Rae
Reply to  David Middleton
June 28, 2017 7:23 am

Yes! A useful word but I think better in its original form – bollocks! It has a very long and distinguished history in the vernacular mainly in the UK. However, it is a very pertinent word to describe most aspects of the warmist alarmism! : ]

Reply to  David Middleton
June 28, 2017 7:45 am

Sadly, I had to look up the word, because I had not heard it before.

Reply to  Robert Kernodle
June 28, 2017 8:46 am

You and me both.

June 28, 2017 6:55 am

The social cost of carbon, Khanna says, is $50 per ton of carbon dioxide on average

Stopped there due to the fake fact. There is in fact a very large social benefit of CO2.

June 28, 2017 7:26 am

The social cost of carbon is defined as the amount of tax governments hope to tack onto fuel over and above the already huge fuel taxes.

Reply to  ferdberple
June 28, 2017 7:53 am

The “social cost of carbon” is denial of the benefits of carbon.

June 28, 2017 7:47 am

For some people, the social benefit of carbon is having as many people as possible believe in the “social cost of carbon”.

June 28, 2017 8:04 am

The hypocrisy is directly obvious with the acknowledgement that a proper accounting of ALL the pro/con arguments unfairly drives up the cost of biofuels and greatly effects the poor. [FACEPALM]
This is exactly the same factor that has been propping up every one of these dysfunctional pie-in-the-sky energy schemes. To a one they benefit from wrongly inflated price of electricity caused by overburdening the most cost effective sources.
But..but…but… you can’t impose restrictions on “green” energy!

Tom Halla
June 28, 2017 9:31 am

The Social Cost of Carbon is one of the great POOMA exhibit numbers for the greens. There are enough assumptions blended into the number, it allows the green blob to argue almost anything, as long as no one challenges their semi-imaginary costs of “carbon”.
Such eye-glazing factors as what discount rate, that is, how rapidly one writes off costs, can make a “cost” a benefit. There is also the strong preference to ignore any good effects from carbon, such as improved plant growth, and exaggerate any bad effects.

The Original Mike M
June 28, 2017 10:15 am

They’re so fast to hang a social cost of carbon in regard to CO2 but never mention the social cost of the other component, oxygen. After all, isn’t it the real culprit here? With no oxygen no one could burn the fossil fuel in the first place and there wouldn’t be any wildfires or food shortages or ….. oh wait ….

Peta from Cumbria, now Newark
June 28, 2017 10:21 am

They are counting faeries, admiring the emperor’s clothes and fighting & squabbling over money tokens while they oversee the destruction of the soil.
Someone quoted ‘Garden of Eden’ – now meaning those 100’s and 100’s of miles of dusty sandy wasteland desert we all saw televised during the Gulf War.
That’s where we’re headed with these sorts in charge.
its just so very sad

Ancient Mariner
June 28, 2017 12:55 pm

I think we’re talking abot the social cost of socialism.

June 28, 2017 1:05 pm

Short version. We don’t know what we are doing but it sounds good

June 28, 2017 1:25 pm

The Social Cost of Climate Alarmism is at trillions of US Dollars and climbing.

June 28, 2017 2:30 pm

A low carbon fuel standard is nothing more than creating a pedigree for hydrocarbons. The hydrocarbons a exactly the same. What that means is ethanol from sugarcane grown in Brazil is often preferred because it takes less energy to convert to ethanol making it more valuable. What this means is the Brazilians can ship their ethanol to California to get a premium while the Brazilians can import corn base ethanol from the Midwest at a cheaper price. Alternatively, sugar beets in the Pacific Northwest can be fermented and distilled to ethanol using cheap power from hydroelectric plants and shipped to California. The down side is that same hydroelectric plant is often supplementing California’s low carbon wind and solar electric generation and competition for this power will drive up prices for low carbon power sources. So this essentially is one massive shell game to satisfy rules of the California Air Resources Board.

June 28, 2017 3:40 pm

The price of corn in the stores here in CA has quadrupled this year.

June 28, 2017 3:55 pm

The ‘social cost’ of CO2 is not a problem, it is a benefit to agriculture and life. The ‘social cost’ of being stupid is absolutely colossal.

June 28, 2017 6:23 pm

The social cost of carbon is just another device to rip off the taxpayers of the world.
Biofuels should be discontinued.
Look at all the crazy, very expensive hoops the alarmists want us to jump through.

June 28, 2017 9:25 pm

..How about we talk about the “Social Cost” of liberal Green ideology ? (AKA stupidity)

Reply to  Butch
June 29, 2017 3:49 am

The sublime irony of that stupidity is as Mr Scherer states-
“We process about 10,000 tonnes of plastic waste [and] that’s now currently turned off, so South Australia won’t be recycling 10,000 tonnes [of plastic],” he said.
“To scope 10,000 tonnes for you, 10,000 tonnes is 15 per cent of the Australian market [of low-grade recycled plastic] … so Australia has lost 15 per cent of its supply.
“I assume that opens up a whole lot of opportunities for our neighbours in Asia.”
Well if it’s not to go to landfill then it will most likely be packed off in empty containers heading back to Green ports in China where the locals have been busy building them carbon neutrally to cope with it all-

No doubt that’s why we have to give these people well earned carbon credits.

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