Cost-Benefit Tests for GHG Emissions from Biofuel Production
Posted: 4 Jun 2010
Biofuel greenhouse gas (GHG)-reduction standards calculated via life-cycle assessment are shown to be biased, even when indirect land-use change is included, because they are based on physical GHG emissions and uptakes and on simple aggregates of balances. We offer a GHG-reduction standard for biofuel production free of these biases, expressed for a range of discount rates and an upper bound on the GHG payback period. A numerical example, based on previously used data, reveals that converting two land types into ethanol in Brazil satisfies our biofuel emissions test, whereas in the United States no land type satisfies our criterion.
Keywords: biofuel, cost-benefit, greenhouse gas, social discount rate, carbon price
JEL Classification: Q18, Q42, Q54, Q56
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