Using Cellulosic Ethanol to ‘Go Green’: What Price for Carbon?

The revised Renewable Fuels Standard (RFS2) mandates that cellulosic biofuels be part of the liquid transportation fuel mix and contribute to reducing our carbon footprint. Unfortunately, since no commercial cellulosic biorefinery exists and cellulosic biomass production is typically smaller scale than conventional crop production, limited knowledge exists of the actual costs of producing cellulosic biomass and converting it to cellulosic ethanol. Understanding of the implications of RFS2 requires a better understanding of the economics of producing cellulosic ethanol. We use the Biofuel Breakeven model (BIOBREAK), a simple long run breakeven model that represents the feedstock supply system and biofuel refining process, along with estimates of the potential reduction in carbon emissions from biofuels relative to conventional fuels, to derive the implicit carbon price (or carbon credit) needed to sustain a biomass market and cellulosic ethanol industry. We evaluate BIOBREAK under different oil prices, the RFS2 mandate, and with and without other biofuel incentives.

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Conference Paper/ Presentation
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JEL Codes:
Biofuels; Biomass; Cellulosic Ethanol; RFS2; Carbon
Series Statement:
Selected Paper

 Record created 2017-04-01, last modified 2018-01-22

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