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One Step Forward, Two Steps Back

Posted by jab12004 on May 5, 2009

Today was a curious day in biofuels land, where it seems that the corn ethanol industry both lost and won on the same day.  Here’s some background and what happened.
The Energy Independence and Security Act of 2007 stipulated that 15 billion gallons of conventional biofuels must be produced in 2015 under the Renewable Fuel Standards.  These 15 billion gallons need to have 20 percent less lifecycle emissions than gasoline, as judged by the EPA.  When the bill was written, the conventional biofuel was assumed to be corn ethanol.  However, a proposed ruling released today shocked many people by declaring that currently corn ethanol was only 16% better.
Much of this low estimate results from indirect land use statistics.  These account for previously uncultivated land being brought into production to produce biofuels (or displaced food).  This is a good development since these effects have the potential to be sizeable.
This could be a giant thwack on the head for the already ailing biofuels industry.  If strictly enforced, this means that all current corn ethanol production does not satisfy the 10.5 billion gallon ethanol requirement for 2009.  However, a statement from Lisa Jackson, the EPA administrator, illustrates how this will most likely play out
“There are things that could be done to make corn-based ethanol more sustainable” (http://www.eenews.net/Greenwire/2009/05/05/2 sub required)
Basically, the ethanol industry just needs to clean up their act…a little bit.  This most likely can be accomplished by using more sustainable land management (conservation tillage techniques) or switching to cleaner fuels (natural gas instead of coal) for the distillation process.
If the corn ethanol industry is able to clean up its act (and I would bet my corn futures on them being able to without much work) then this ruling might actually be of little consequence.    The flip side of the coin is that ruling also included a nice juicy carrot to the ethanol industry.  The new “Biofuels Interagency Working Group” will provide around billion for ethanol companies with difficulties.
So in the end, it seems that a potential attack on the corn ethanol industry might just end up as a way to hand them a fat wad of cash.  This isn’t how Environmental Capital sees it, in their post   Out of LUC: Team Obama Prepares Ethanol Smackdown. [http://blogs.wsj.com/environmentalcapital/2009/05/05/out-of-luc-team-obama-prepares-ethanol-smackdown/]  I agree with what they are saying about how this highlights how dependent the ethanol industry is on the government.  However, at the end of the day, today’s biofuels news seems more like a stealthy way to provide a handout.

Today was a curious day in biofuels land.  It seems that the corn ethanol industry both lost and won on the same day, potentially coming out on top.  Here’s some background and what happened.

The Energy Independence and Security Act of 2007 stipulates that 15 billion gallons of conventional biofuels must be produced in 2015 under the Renewable Fuel Standards.  These 15 billion gallons need to have 20 percent less lifecycle emissions than gasoline, as judged by the EPA.  When the bill was written, the conventional biofuel was assumed to be corn ethanol.  However, a proposed ruling released today shocked many people by declaring that currently corn ethanol was only 16% better.

Much of this low estimate results from indirect land use statistics.  These account for previously uncultivated land being brought into production to produce biofuels (or displaced food).  This land, when left unused serves as a carbon sink which releases a sizable amount of carbon when cultivated.

This could be a giant thwack on the head for the already ailing biofuels industry.  If strictly enforced, this means that all current corn ethanol production does not satisfy the 10.5 billion gallon ethanol requirement for 2009.  However, a statement from Lisa Jackson, the EPA administrator, illustrates how this will most likely play out

“There are things that could be done to make corn-based ethanol more sustainable” (sub required)

Basically, the ethanol industry just needs to clean up their act…a little bit.  My guess is that this can be accomplished by using more sustainable land management (conservation tillage techniques) or switching to cleaner fuels (natural gas instead of coal) for the distillation process.

If the corn ethanol industry is able to clean up its act (and I would bet my corn futures on them being able to without too much work) then this ruling might actually be of little consequence.    The flip side of the coin is that Obama included a nice juicy carrot to the ethanol industry.  The new “Biofuels Interagency Working Group” will provide around $1.8 billion for ethanol companies.

So in the end, it seems that a potential attack on the corn ethanol industry might just end up as a way to hand them a fat wad of cash.   Environmental Capital takes a different perspective it in their post   Out of LUC: Team Obama Prepares Ethanol Smackdown.  I agree with what they are saying about how this highlights how dependent the ethanol industry is on the government.  However, at the end of the day, today’s biofuels news seems more like a stealthy way to provide a handout than a smackdown.

Posted in Biofuels, Climate Change, Ethanol, Land Use | Leave a Comment »

Greenpeace takes on biodiesel

Posted by Evan Herrnstadt on May 29, 2008

So I’m in week two of a three-week trip through Argentina, which is why I haven’t been posting.  Basically, I’ve had limited internet access, and frankly have been more focused on eating steaks and goat than on economics. 

But last night I was half-watching TV at the café, and in between skits centered on the hilarity of men wearing wigs and news segments alternately worshipping and subtly mocking Diego Maradona, there was an advertisement from Greenpeace Argentina (in conjunction with GP Germany) blasting soy biodiesel production.  Basically, it pointed out how the nation is literally burning through its land to plant energy crops.  Over 2 million hectares of forest have been converted into energy croplands in the past nine years — much of this goes to fuel German diesel vehicles that are widespread in Europe.  Diesel vehicles are indeed often longer-lasting and more efficient than the US’s gas-fueled fleet, but as with ethanol we must be careful about leaping too enthusiastically on the biofuel bandwagon.  Not this is that new to anyone; it’s just becoming more and more apparent to me that the solution to our transport emissions has to involve a move away from liquid fuels through a combination of efficiency and the tricky electric car. 

Anyway, I’ll be back around June 10th or so, with (hopefully) better thought-out posts not hastily written in an internet café.

Posted in Biofuels, International, Land Use | 2 Comments »

Path dependency

Posted by Daniel Hall on May 4, 2008

Geoffrey Styles makes a great observation about the recent run-up in gas prices:

A big part of our problem is that most Americans are still driving cars that were purchased when gasoline was under $1.50/gal., to commute between work and home locations that were chosen when fuel was even cheaper.

He also makes a nice comparison:

As of this week, nominal US retail gasoline prices have gone up by 25% in the last year and by 130% in the last five years. How does that compare to other countries? Well, motorists in the UK are experiencing prices that are now 25% higher than the average of last year, and 42% higher than five years ago, but gas hasn’t been cheap in Europe for more than a generation. Buffered by the strong Euro, gasoline in Germany has increased by a smaller percentage, 19% vs. the 2007 average and 29% over five years.

Hear that? Gas hasn’t been cheap in Europe for more than a generation. Europe’s development path — decisions about land use and urban planning and transit decisions — was determined in an environment with much higher gas prices. Not only are current price increases in Europe smaller in relative terms, but consumers there live within a system that makes it easier absorb the absolute increases as well.*

America could do its future self a big favor by realizing that expensive gas is very likely here to stay. Pricing carbon — a near inevitability in the near future — will make gas prices higher. Consumers can switch to more fuel-efficient cars but the big changes — in how we plan our communities or develop our transportation infrastructure — are going to require some policy changes. And these policy changes should include the recognition that gas will — and should — be much more expensive in the future.

You can read great arguments for these types of policies — more density in development, more investment in mass transit, etc. — almost every day over at Ryan Avent’s superb blog. Or to grab a great suggestion from Matt Yglesias,

if we were to raise the gas tax, then rebate half the revenues to citizens on some kind of flat per person basis, and make the other half available to fund transit projects, there’d be no net burden on the population, you’d create an incentive to use alternative forms of transportation where they exist, and you’d have a pool of revenue available to create alternative forms of transportation.

*Of course I realize there is an endogeneity problem here: higher gas taxes in Europe were politically tractable in the first place because Europe was already more dense and less car-based. But it doesn’t alter the fact that a counterfactual Europe with much lower gas taxes for the last 25 years would look very different.

Posted in Land Use, Transportation | 2 Comments »

Assorted links

Posted by Daniel Hall on April 10, 2008

1. Agricultural Subsidies: Still a Bad Idea. Felix Salmon explains why removing ag subsides and taxing carbon are similar, and why they both make sense. Free Exchange squares the circle with a discussion of biofuels.

2. Who Pays a Tax? Tim Haab’s two-part series is here and here.

3. 6 Cities That Were Caught Shortening Yellow Light Times For Profit. What happens when your city stands to make money off of lawbreaking? Yep, that’s right, they make it harder to avoid breaking the law.

4. Malaria and the politics of disease. Efforts to fight malaria seem to be ramping up quickly. But even if near-term success can be achieved, will many be left worse off in the long run?

5. Congestion pricing works. Evidence from California.

6. Location, location, location. The premium for urban living.

7. The cost of siting transmission lines.  This came up yesterday in the seminar on curbing electricity demand at RFF as one of the key uncertainties in the future of electricity, given the political or economic forces that will bring new types of resources onto the grid in the coming years.  (Video from the event should be up in the next few days.)

Posted in Agriculture, Economics, Electricity, Land Use, Public Health, Random, Transportation | Leave a Comment »

Assorted links

Posted by Daniel Hall on February 20, 2008

1. British Columbia is implementing a revenue-neutral carbon tax. Mike Moffatt is a fan.

2. Oil closed above $100 per barrel for the first time ever yesterday (in nominal terms). The WSJ Environmental Capital guys immediately called it speculation rather than fundamentals.

3. In the face of high fuel prices, residents in the Northeast U.S. are switching back to wood-burning stoves, but this move carries its own costs, particularly to local air quality.

4. Cameroon wants to rent a forest — preferably to conservationists — but doesn’t seem to have any takers. The article points out that they may be above the market-clearing price.

5. Ezra Klein praises density.

6. George Monbiot, writing about climate change policy, is offended that economists place a monetary value on human life, and that hence there is a chance “we would then find that it makes economic sense to kill people.” One of the Free Exchange bloggers defends the use of benefit-cost analysis, while Tim Haab provides a straightforward explanation and able defense of why economists place a value on life. (Hint: it’s because we all do — they’re called trade-offs.)

Posted in Carbon Tax, Climate Change, Forestry, Land Use, Oil | Leave a Comment »

The value of smart land management: pollinators edition

Posted by Daniel Hall on November 10, 2007

The CS Monitor had a recent article that followed up on the collapse of honeybee colonies. It turned out to be a smaller problem than many feared:

Last fall, honeybee hives began showing up mysteriously vacant. Entire adult bee populations seemingly vanished without a trace, often leaving the queen, juveniles, and honey behind.

By spring, what beekeepers had called “autumn collapse” or “fall dwindle dis­­ease” had a new name: Colony Collapse Disorder (CCD). CCD hit nearly one-quarter of commercial beekeeping operations in the United States. Affected operations lost between 50 and 90 percent of their hives. …

Ultimately, pollination went smoothly this year. Imported bees replenished domestic stocks, and good weather aided weak hives.

What I found most interesting about the article, however, is that natural wild pollinator species could be doing a lot more of the pollinating for U.S. agriculture if there were smarter land management practices and less reliance on monocultures:

…honeybees’ predicament has brought long-sought attention to the usefulness – and plight – of natural pollinators. …in a forthcoming study in Ecology Letters, Rachael Winfree, a postdoctoral research associate at the University of California, Berkeley, finds that, when present, wild pollinators can do much of the pollinating.

In the New Jersey watermelon farms she studied, they did 90 percent. As compared with the vast monocultural fields of California’s Central Valley or the Great Plains, the eastern agricultural landscape is dominated by many small farms interspersed with patches of natural habitat.

Check the article out, there’s plenty of interesting info, including this tidbit:

Dry conditions also contributed to a record low honey harvest – 150 million pounds compared with the usual 200 million to 250 million…

Expect to pay more for honey this year.

Posted in Agriculture, Land Use | Leave a Comment »

Feeling the heat?

Posted by Daniel Hall on October 25, 2007

I have several friends who live in Southern California. From the inbox:

The Santiago Fire was a couple blocks from my place in Lake Forest. Here are some photos.

California wildfire.  Photo by Chris Jones.

SoCal is a great place to live, but I wonder if we have the optimal number of people living there given the risks of fires and mudslides. Clearly we want to have effective emergency response to disasters in order to save lives and property, but at a certain level of effectiveness should we start worrying about moral hazard? As Matthew Kahn says,

…if the firemen were less good at putting out fires and risking their own lives, would fewer people live in the fire zone?

If it’s just state and local agencies that are involved in emergency response it may not be as big an issue: Californians all over the state choose to subsidize those who live in fire-prone regions. But if the federal government steps in with disaster-assistance — essentially serving as insurer of last resort — are we just encouraging too many people to live in paradise (or hell, this week)?

Photo credit: Chris Jones.

Posted in Government Policy, Land Use, Natural Resources | 5 Comments »

Your land is my land

Posted by Daniel Hall on October 23, 2007

I went apple picking with a group of friends out in the Montgomery County countryside this weekend, about 35 miles outside of the heart of DC. It was a gorgeous day: crisp fall weather, rolling pastures, and a half-bushel of Fuji-flavored joy. It was also an excellent chance to reflect on how we as a society make land use choices.

I noticed on the drive out how immediately the scenery shifts from suburban residential development to farmland. It’s nearly instantaneous. This is because Montgomery County has created a large agricultural reserve in the northwest portion of the county to preserve farmland. Or, as a friend quipped, “That’s what zoning will do for you.”

Later that day I got to have an extended conversation with this friend, who works on farmland preservation issues in the county, working to keep farms as farms, rather than being sold off and sub-divided for development. This turns out not to make you universally popular. “It’s tough being bitched out by some farmer that you’ve worked two years to try to develop a relationship with, having them tell you they won’t talk to you anymore because you’re destroying the value of their land,” my friend confessed.

This conversation put a human face on the book I’ve been reading and finished up this weekend, Boyd Gibbons’ Wye Island: Insiders, Outsiders, and Change in a Chesapeake Community. Originally written in the mid-70s, Gibbons’ book still rings true, with profound insights about how local communities make land use decisions, why achieving smart growth has proved so hard, and how we as a society negotiate the compromise between self-interest and public good.

Read the rest of this entry »

Posted in Land Use | Leave a Comment »

This land is my land

Posted by Daniel Hall on October 16, 2007

I think this statement is a powerful insight into the American psyche:

For reasons good or ill, owning land is the most effective way in which people keep their distance from others.  Land is the ultimate means of exclusion.

This is from Boyd Gibbons’ 1979 book Wye Island: Insiders, Outsiders, and Change in a Chesapeake Community, reprinted in a new edition recently.  It’s a fascinating read, a document of a bygone era.  It’s also a somber reminder of how long ideas about smart growth have been with us, and a case study in why achieving smart growth has proved so difficult.

Posted in Land Use | Leave a Comment »

Seeing the forests for the trees

Posted by Daniel Hall on October 4, 2007

I went to an interesting seminar today at Resources for the Future, given by Brent Sohngen from Ohio State, on the role that forests could play in climate stabilization. He’s done some modeling that tries to get a handle on how much carbon sequestration you could get from forests globally through two means: 1) reforesting some areas of the world (called afforestation), and 2) preventing deforestation that would otherwise occur in other areas. Here’s my summary from hearing his talk and participating in the interesting discussion that followed:

1) His results showed that in theory forest sequestration could significantly contribute to global reductions in carbon emissions, accounting for around 20% of the total reductions over the next century.

2) Effectively incorporating forest sequestration into a global climate policy could reduce global costs significantly.

3) The biggest portion of available sequestration is in the developing world, and is avoided deforestation that will happen in a business-as-usual world. In fact, avoided deforestation in South America and Africa could potentially account for more than half of near-term — in the next 30 years — global emissions reductions. A much smaller portion of available sequestration is afforestation, mostly in developed countries.

4) Monitoring these reductions would have to be both local and global in scale: local because you have to account for all the trees, and global because it does the climate no good to protect one stand of trees here if someone else comes along and cuts down another strand over there. Literally every tree — globally — would have to be monitored to make this work. Project-based activities like those that many offset programs have used thus far won’t be effective because the more you specifically protect some forests the more other forests will come under pressure.

My impressions from the talk? There is a big payoff for the world in cheap reductions if we can get the rules and institutions right; however, that’s a huge if. I am somewhat — but not too — worried about the local/global scale of an effective global forest registry; I think remote-sensing satellite data can help address this. I am very skeptical, however, that in countries like Brazil or [insert any African country here] that good institutions — effective governance, private property rights, etc. — can be implemented within the next few years in order to avoid the massive amounts of deforestation that are projected to occur over the next couple decades. Basically, I think that there are too many very real but hard-to-measure transaction costs in these countries that will prevent a carbon price — even a relatively high carbon price — from translating into substantive forest sequestration.

Posted in Climate Change, Forestry, Land Use, Research | Leave a Comment »

The (parking) spaces in between

Posted by Daniel Hall on September 25, 2007

I ran across a few interesting articles today about the illogic of parking space policy.

First, Tim Haab at Env-Econ points us to Donald Shoup’s book The High Cost of Free Parking, which argues that where parking is scarce, we should be charging people for it. I think this is straightforward point: if a resource is subject to congestion, appropriately charging for access will efficiently allocate the resource to its highest value use.

Then, the CS Monitor has an article on the opposite problem: the externalities from having too many parking spaces.

…Bryan Pijanowski, a land-use scientist at Purdue University… is busy counting the nation’s parking spaces. … If Pijanowski can finish his count, then researchers will finally determine whether the United States is suffering a parking surplus. …

“We’ve had a big interest in this area for a while now, but it’s not been well studied,” says an official with the US Environmental Protection Agency (EPA) who requested anonymity because he did not have permission to speak to the press. “It’s the amount of water, the speed and temperature of it pouring off these oceans of asphalt we have in this country, that concern us. And that’s not even talking about the contamination washing off all that asphalt.”

Early indications point to a lot of asphalt out there. … [A] key finding in Pijanowski’s research is the ratio of parking spaces to vehicles. In Tippecanoe County, at least, there are three times as many spaces as registered passenger vehicles. And there are 11 times as many spaces as families, his yet-to-be-published study found.

This case is a bit more complicated. More discussion below the fold:

Read the rest of this entry »

Posted in Land Use, Transportation | 2 Comments »

Congestion charges, anyone?

Posted by Daniel Hall on September 18, 2007

The average American commute takes 20% more time than it did in 2000. Is this the current equilibrium because modern amenities — cell phones, iPods — improve the commuting experience? Because current patterns of development favor sprawl? If it is patterns of development, are residents voting (with their feet) for bigger houses with bigger yards that they’ll enjoy on the weekend? Or are planning commissions failing to properly consider the costs of dispersed development?

The article notes that cities are trying to use technology to help ease their congestion:

[Atlanta is] adding $16 million worth of “ramp meters” that spread out rush hour by controlling on-ramp flow.

Using tolls or other road charges to encourage car-pooling and alternative transport would help too.

In the meantime, drivers can work on being smarter commuters:

If you have to cut someone off, make sure to target a person driving a Mercedes S-class, who will cede the road.

Posted in Land Use | 2 Comments »

 
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