By ANN HINCH
Assistant Editor

CHAMPAIGN, Ill. — Farm groups were not happy with the U.S. Environmental Protection Agency’s (EPA) decision to include speculative calculations about indirect land use in its final rule on the renewable fuel standard (RFS) earlier this year, worrying it will tack additional costs onto the ag industry.

Their concerns might be put down to personal financial interest, but at least some academics also question the wisdom of letting indirect land use factor into the RFS. Two spoke at last week’s Biofuels Law and Regulation Conference at the University of Illinois in Champaign-Urbana.

Dr. David Zilberman, the Robinson Chair in the Department of Agriculture and Resource Economics at the University of California-Berkeley, said like any mandate, the RFS is helping build an industry, in this case with “indirect taxation” of food and fuel. But if the RFS is inflexible to change, it could lead to severe implications.
For one, he said it does not reward efforts to reduce greenhouse gas (GHG) lifecycle emissions for a biofuel below the legal threshold required to classify it as clean enough. Corn ethanol, for example, must help reduce emissions over petroleum gas by at least 20 percent, but Zilberman said there is no incentive for that industry to get the figure any higher.

Second, the RFS uses as its benchmark the GHG emissions calculated from clean Saudi oil in 2005, so a biofuel has to beat that by a certain amount, depending on what kind it is. Any biofuel classified as “renewable” (such as corn ethanol) has to reduce lifecycle emissions by 20 percent over oil; advanced biofuel and biomass-based diesel must reduce them by 50 percent, and cellulosic biofuel, by 60.

But, Zilberman pointed out, perhaps clean Saudi oil shouldn’t remain the petroleum standard to live by until 2022 (the current RFS lifetime). What if oil companies turn to tar sand oil? Or other “marginal” fossil fuels?

Also, if biofuel deserves credit for reducing emissions even more than originally calculated, should its producers be held responsible for indirect land use concerns?

“The final seller is responsible for everything,” Zilberman said of the RFS.

Generally, he explained, pollution regulations hold every entity along an emissions lifecycle responsible for the emissions it actually generates. But the EPA’s indirect land use guideline, he said, is holding U.S. farmers responsible for emissions caused by farmers in other countries – if Brazilian farmers clear forestland for more crops or cattle, the American biofuel industry and growers may be charged for it.

This affects our farmers’ well-being, he said. “It is impractical to assume that by modifying the biofuels policies in the U.S., one can forever protect the rainforests in Brazil or elsewhere,” Zilberman added.

If the EPA insists on making policy that includes one indirect effect of biofuel, he said, why not include other indirect effects? For example, if domestic biofuel does reduce foreign oil dependence enough to lower prices at the pump, that could actually lead to people driving more and creating extra GHG emissions.

Or, why not include the indirect effects that might be caused by biofuel making it less profitable for companies to invest in tar sand oil extraction? After all, Zilberman said, in theory the less drilling and oil burning would reduce carbon emissions.

His position is that it is better for government to establish policies and regulations based on directly observed effects, and at the same time, work with other nations to develop a better set of complete global policies that will lead to changes in other activities that lead to global warming.

“Well-intentioned unilateral activities in controlling one aspect of the problem may be counterproductive,” Zilberman observed.
“If society is concerned about deforestation or mismanagement of land in developing countries, it should be addressed directly by land use regulations and other policies, rather than indirectly.”

Factoring uncertainty

Dan Farber, also at UC-Berkeley, is its Sho Sato Professor of Law and chair of the Energy and Resources Group. He is not necessarily against indirect land use calculations in the RFS.

“What I want to focus on,” he said of his talk, though, “is the question of how regulators should take into account the uncertainty that is associated with these land use changes.”

The EPA’s job here, he explained, is to consider lifecycle emissions for different kinds of biofuel, since it has been mandated by Congress.

He noted that “significant indirect emissions such as significant emissions from land use changes” is an important RFS element – but asked, legally, what should be done with it?

According to EPA-commissioned models, he said there are indications some of the indirect land use numbers could be “quite big,” maybe bigger than some direct emissions numbers. Specifically, he addressed corn ethanol.

Various models have showed corn ethanol’s emissions – including potential indirect land use – fall in a range of anywhere from 27 grams of carbon dioxide per megajoule, up as high as 104.
Farber said biofuel lifetime emissions are difficult to figure compared to those of petroleum gasoline, because gas has been used for a long time and is simpler to calculate.

The early proposed RFS found that corn ethanol did not qualify as a renewable fuel (recall “renewables” allows for the highest GHG emissions of the four biofuel categories) because it did not meet the 20 percent reduction requirement. The final rule, however, does clear it for inclusion – but just barely, at 21 percent.

“Just by some miracle of calculation,” Farber said, with a smile. “It had nothing to do with corn-state senators meeting with the president, or anything.”

He said he does not know how much of a role political pressure may have played in corn ethanol’s inclusion in the RFS. He did question if the government should qualify a biofuel under the standard now in the hopes it will meet requirements by 2022.
Ideally, Farber said, the EPA could have erred on the side of restricting a questionable biofuel at the outset; he explained a restriction can always be lifted in the future, but it is difficult to stop something that has already been allowed.

“Once you approve things, you may have trouble un-approving them later,” he said. “It takes only a few years for a subsidy (tax credits) to become an inalienable human right, in which you can’t possibly take it away.”