GHG Trading Framework for the U.S. Biofuels Sector
Proceedings of Farm Foundation/USDA Conference, St. Louis, Missouri, October 15-16, 2008
22 Pages Posted: 2 Mar 2009 Last revised: 22 Mar 2015
Date Written: February 20, 2009
Substitution of petroleum fuels with biofuels such as ethanol and biodiesel has been shown to reduce greenhouse gas (GHG) emissions. These GHG reductions can be traded in the emerging carbon markets, and methodologies for quantifying and trading are still being developed. The main challenges in developing such GHG trading framework are analyzed. An outline of such a framework is presented that depends on the life cycle assessment of GHG reductions, along with a combination of project specific and regional standard performance measures. The advantages of assigning GHG property and trading rights to biofuel producers are discussed. At carbon prices of $10 per metric ton, estimated additional revenues to biofuel producers range from $17 to 64 million dollars per billion gallons of corn ethanol and cellulosic ethanol respectively.
Keywords: Biofuels, ethanol, biodiesel, carbon trading, GHG emissions trading, carbon, methodology, CCX, CDM, maize, lignocellulosics, well to wheel
JEL Classification: K32, N5, O13, Q2, L71, N7, Q4, Q42
Suggested Citation: Suggested Citation