Economic Insights Required for Using Lifecycle Analysis for Policy Decisions

We develop an analytic and numerical model that integrates land, food and fuel markets and is linked with a sectoral emissions model to examine how the amount of biofuel in the economy impacts the lifecycle emissions of a biofuel under different policies. Our central finding is that the change in GHG emissions due to a unit expansion in biofuel will vary dramatically in the amount of biofuel in the economy and with the policy driving the expansion. The emissions from a unit expansion in corn ethanol due to a blend mandate fall from 12 gCO2e/MJ to 3 gCO2e/MJ, as the quantity of ethanol in the economy increases from 6 to 15 billion gallons. For an input subsidy, emissions due to a unit of ethanol increase from 15 gCO2e/MJ to 26 gCO2e/MJ over the same increase in ethanol. We discuss the implications of these results for lifecycle analysis.