Dr. Wallace Tyner of Purdue University’s Department of Agricultural Economics made his second appearance at an American Coalition for Ethanol conference, his presentation this year a follow up to 2009 where he discussed his department’s new GTAP (Global Trade Analysis Project) modeling for biofuels and land use change.
“We are at the blend wall,” Tyner said. “It is literally a wall. You cannot technically go beyond that wall.”
Because corn-based ethanol has now filled the allowable marketplace, the break-even price is now based on corn instead of being linked with gasoline as it has been in the past, he explained.
Dr. Tyner also explained that the U.S. Environmental Protection Agency made a fundamental change in the Renewable Fuels Standard (RFS) in its February 2010 final ruling. The agency changed the metric on the rule, effectively converting the RFS from a volumetric basis to an energy basis. The RFS now calls for 36 billion gallons of “ethanol equivalent.” All possible biofuels – bio-gasoline, algae, etc. – are all given an “ethanol equivalent” rating – bio-gasoline is given a 1.5 gallon rating, for example. This could actually lower the total amount of biofuel being used in the U.S. under the RFS>
Regarding the E10 Blend Wall, Tyner said that it is firmly standing in the way of cellulosic ethanol development.
“There’s no room at the inn for cellulose-based ethanol,” he said. “If we stay at E10, you can forget about cellulose-based ethanol.”
Even if EPA regulations are changed to allow E15, it might only increase the ethanol blending limit to 19 billion gallons. If corn ethanol is limited at 15 billion gallons and “other advanced” biofuels are given 4 billion gallons, as stated in the RFS, there is still no room for the growth of cellulosic ethanol.
“Even if we go to E15, there’s no room at the inn for cellulose,” Tyner said. “The implications of the blend wall are much farther than just corn ethanol alone.”
Dr. Tyner has been working on the issue of land-use change for about three years, a timeframe he says isn’t actually very long given the complexity of the issue. He has developed the Global Trade Analysis Project (GTAP) model to study how biofuels impact land use, and this year they have made updates to the model based on some new information.
Changes to the Purdue GTAP model include:
- Three major biofuels have been incorporated into the model: corn ethanol, sugarcane ethanol, and biodiesel.
- Cropland pasture and Conservation Reserve Program (CRP) land have been added, not accounted for in previous work.
- Energy sector demand and supply have been re-estimated and calibrated to 2006.
- Distillers grain has been added to the model, including its treatment, production, consumption, and trade – Tyner called this a “significant improvement”
- The structure of the livestock sector has been modified to better reflect its actual functioning
- A corn yield response to higher prices has been built into the model.
- A change has been made to the way the model treats new land brought into production, better reflecting the actual productivity of the new land.
“All of these changes in the model and improvements in the database have led us to conclude that the land-use implications are much smaller than we had estimated recently,” Tyner said.
He pointed out that the Purdue estimate is substantially less than Tim Searchinger’s much-publicized research on land-use change. Searchinger’s results found that .75 hectares of land are needed, compared to Purdue’s .13 hectares.
“In terms of land use change based on greenhouse gas emissions, the results that we’re getting today are fourteen percent of the results Tim Searchinger got in his original work,” Tyner said.
Dr. Tyner said he is a proponent of changing the way the emissions of gasoline and biofuels are compared. Currently the law in California and at the U.S. EPA compares averages, not marginals. He believes it’s more fair to compare the most recent ethanol plant built with the most recent oil extracted, which is likely oil from the Canadian tar sands. Using averages ignores the fact that ethanol is increasingly efficient while oil is increasingly damaging to the environment as it becomes harder and more costly to extract.
Dr. Tyner acknowledged that land use change is a controversial topic. Some say it’s not even possible to measure these things, but he believes that with one-third of the corn crop going to ethanol, it is important to use the best science available to try to accurately measure any land use change.
“What we’ve tried to do to the best of our ability, and to the best data available, is to estimate these,” Tyner said. “They are still highly uncertain. I do this work all the time, and I’m the first to tell you that these estimates are highly uncertain.”
Dr. Tyner said that, in terms of public policy, this GTAP modeling work can be helpful in how the EPA is implementing the Energy Independence and Security Act (EISA) and the threshold tests for greenhouse gas emissions. However, what the California Air Resources Board is doing with its Low Carbon Fuel Standard is an entirely different story, he said, because they are using the measure in the value of implementing the policy. Every tenth of a percent of carbon under the CARB rules can make a huge difference.
“We cannot measure it accurately enough to withstand almost any court case test,” Tyner said. “It depends on how you use the information, in my view, whether or not it’s something that’s useful in the debate.”