John Kruse of international forecasting company Global Insight told ACE conference attendees he's concerned that regulations are getting ahead of the science in measuring greenhouse gas emissions and the resulting indirect land use changes. Kruse is the Managing Director of Agriculture Services for the firm.
A Low Carbon Fuels Standard has been adopted in California to develop a comprehensive strategy for reducing GHG emissions. California may become the model for the rest of the nation, and Kruse said that under their proposed modeling, ethanol may run in to some problems and not be able to qualify as a low-carbon fuel.
The California methodology hypothesizes that increased ethanol use will lead to higher corn prices, which will lead to more corn acreage at the expense of other crops, which will lead to lower production and lower exports, which will lead to other countries changing their land use - often, they say, putting rain forest or other sensitive land into crop production.
But Kruse says that, looking at the actual data on ethanol production and crop exports, it's tough to make the case that ethanol is driving major crop area changes. Also, he notes that some of the studies on the topic have error margins as high as 55 percent. "And yet we're ready to make regulations based on these," Kruse said.
In the California model, ethanol is compared to gasoline from conventional sources, which ignores the fact that as world energy demand increases, oil from new sources like the Canadian tar sands will be used. GHG emissions from tar sands oil are 2 to 3 times higher than that of conventional oil.
"There's not a very well established system. The science is not there, and the regulation is ahead of the science on the measure of indirect greenhouse gas emissions," Kruse said.
Kruse's firm is completing a study soon for the American Coalition for Ethanol on the subject of how a Low Carbon Fuels Standard might impact biofuels.