Good news from Brazil, bad science from RFA
Posted December 7, 2010 in Moving Beyond Oil, Solving Global Warming
Recently, exciting new data has come out from Brazil showing reduced rates of deforestation. This is good news for everyone who likes clean air, fresh water, places for wildlife to thrive and wants to avoid extreme and erratic storms that destroy homes, jobs, and lives. Slowing and stopping deforestation around the world should continue to be a top priority in our efforts to mitigate global warming and preserve valuable biodiversity, and Brazil’s domestic efforts in this regard should be applauded.
Unfortunately, in the weird world of the Washington spin cycle, the corn ethanol lobbyists (RFA, specifically) have latched onto this good news and are trying to use it in their increasingly desperate efforts to win a 5 year, $30 billion extension of the main corn ethanol tax credit. They’re waiving the info around as evidence that diverting cropland to making corn ethanol doesn't put pressure on the supply of cropland and thus on wild places around the world and therefore isn’t more polluting than gasoline.
Their argument amounts to saying "here's a bit of good news, therefore nothing can be wrong with our industry no matter how much land we use." But did Brazil's efforts come at a higher cost because of the rapid, policy-driven expansion in U.S. corn ethanol production? Will it now be harder for the Brazilian government to maintain its hard-won rainforest protections because of rising costs of land? These are the issues we should be grappling with.
RFA's Geoff Cooper sarcastically dismisses the idea of basing analysis of the land use change impacts of corn ethanol production on an informed counterfactual scenario—i.e. a rigorous estimate of what might have happened in the marketplace absent U.S. biofuels polices—as “theoretical baselines”. But we’re not just in the business of chronicling history and describing trends here; comparing real world data to a baseline is how analysis of the impacts of any policy is done in the real world. For instance, Iowa State researchers have modeled the markets with and without the main corn ethanol tax credit—the Volumetric Ethanol Excise Tax Credit or “VEETC” —and concluded that eliminating it would have little impact on domestic corn ethanol production or ethanol prices. RFA seems to believe that the industry is so wildly uncompetitive and will immediately fail without the tax credit.
RFA is also trying to spin to the California Air Resources Board’s (CARB) recent ILUC analysis as a vindication for its "don't worry--be happy" approach to land use, but CARB is continuing to follow the science, modeling baselines and rejecting RFA’s efforts to force them to ignore emissions from land use change. We may disagree on some of the choices CARB has made (for example, choosing the lowest ILUC emissions estimate from the three scenarios Wallace Tyner modeled in his April, 2010 paper), but as long as agencies like CARB and the EPA continue to follow the science, even if ILUC emissions estimates decrease, that’s better than RFA’s preferred approach of waving their hands at market shifts and trends as definitive proof of anything about corn ethanol's impact on land use change.
I've tried to explain to RFA that in markets as complicated as international agriculture and as influenced by public policy as land use, looking at simple trends doesn't show anything. But as they say, it's hard to get people to understand something when their salaries depend upon not understanding.
Nevertheless, since RFA appears to have already lost the fight for a 5 year VEETC extension and will probably lose 20% if not all of the value (a victory for the rest of us worth between $1.25 and $6 billion dollars next year alone), I thought of a little test we could do to see if they believe their own theory that a little good news means that corn ethanol doesn't compete for any land: let’s entirely eliminate the corn ethanol tax credit and tariff for three years and see if the trend line of domestic corn ethanol production continues to go up at all. If it does, we'll "know" that the VEETC has been entirely wasteful and just lined the pockets of Big Oil and Old Ethanol.
I know it’s been a bad year for “king corn” and the ethanol lobby (heck, they couldn’t even strong arm EPA into approving 15% blends for the entire fleet or get Congress to prohibit EPA from measuring ILUC), but I wonder if that's a challenge RFA is willing to accept?
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Comments
Tom Koehler — Dec 9 2010 01:30 PM
Nathanael - Some personality types have to be the smartest in the room and are never wrong. After reading your posts over the year perhaps you fit into that? How can we solve our energy problems with such rancor and divisiveness? Sadly NRDC wears the same stripes and spots as special interest driven politics in DC. Your words are childlike. No serious environmental or energy person would think that Corn ethanol is as bad as you say. In fact all of the major local environmental groups far away from DC here in the NW understand the link between current and advanced technologies, the important role corn ethanol is playing creating the market and infrastructure for an even more aggressive displacement of oil. Instead of applauding new science that suggests corn ethanol is even better than we though on reducing CO2 you castigate it. But it seems you like to follow the money and let the Junk Food and Meat and oil industry determine your actions. I hope NRDC feels its worth tainting its reputation so severely. Excuse me if i am off base but for so long i have been trying to figure out why NRDC just ignores the facts and is so polarizing. The corruptive influence of money is the only the answer i can come up with. Sad. Hope it changes.
Marcus — Dec 9 2010 04:34 PM
Nathan--
CARB is not proposing to use the "lowest ILUC emissions estimate from the three scenarios Wallace Tyner modeled" as you say. They are proposing to use the "Group 2" results, which are 17 grams of CO2/megajoule. "Group 1" was lower at 14.4 grams. You should at least "do your homework" before making statements like that.
Also, I do not believe the CARB iLUC modeling uses the kind of baseline you say. There really is no baseline scenario in the CARB work as far as I can tell. They simply "shock" the model to simulate maize ethanol growth from 2001 to 2015 and see what happens. There is no reference case without maize ethanol growth. So, what do you mean when you say CARB is "continuing to model baselines"? Thank you.
Nathanael Greene — Dec 10 2010 12:29 PM
Marcus, thanks for joining the conversation. You're right about the CARB report. That'll teach me to rely on an article. But it doesn't really change my point that CARB hasn't been cowed by the ethanol lobby's lawsuit or political bullying. (See Tom's comment if you need an example. Tom gets his money by trying to sell corn ethanol.)
On your point about the modeling, they first run a baseline and then the shock. The impact of the shock is measured as the difference between the shocked scenario and the baseline.
Geoff Cooper — Dec 11 2010 05:20 PM
Marcus,
You had it right the first time and Nathanael is wrong (again).
There is no forward-looking baseline scenario or reference case in CARB's ILUC analysis--at least not the type of baseline that Nathanael describes in his response to you (i.e. CARB didn't "run a baseline"). It's really quite ironic, too, that CARB's analysis has no reference case because Nathanael has basically argued for the past two years that any ILUC anlaysis without a reference case is no good (yet NRDC blindly and aggressively supported CARB's analysis). CARB DID NOT run a forward-looking baseline scenario to see what the world would look like in the absence of the LCFS (or even in the absence of biofuels) and then compare it to a policy case or biofuels case. Nathanael is flat-out wrong about that.
Part of the reason for this is that you can't really run the type of scenario analysis with GTAP (the model used by CARB) that EPA ran for the RFS2 because GTAP is a static model that has no time dimension.
The version of GTAP that CARB used for the LCFS was populated with 2001 global economic data. So, what they do to simulate biofuels growth to 2015 is to cram 13.25 billion gallons of corn ethanol into a one-time shock (synonymous to increasing ethanol production by 13.25 bg in one year! Gosh, do you think some land will get converted when you try to drop 13+ bg onto the ag markets all at once?!). Then they see how the global economy and ag market respond to that shock and compare it to the 2001 data to determine changes. That's much different than EPA's approach of establishing a reference case (world without the RFS through 2022) and comparing it to a control case (world with RFS through 2022).
Because of these limitations, EPA passed on using the version of GTAP that CARB used. EPA said, "...the version of GTAP used for biofuels is a static model that does not currently capture changes over time."
...and they said, "Due to its static nature, the GTAP biofuels model is not able to project the time path of the global economy through 2022, which is the timeframe of primary interest for this rulemaking."
It's also worth noting that the CA LCFS ILUC modeling effort doesn't even model the impacts of the LCFS itself!! Rather, it attempts to model the impacts of moving to 15 bgy of corn ethanol, which was going to happen under the Federal RFS2 anyway! Most often, the point of doing this type of modeling for regulatory purposes is to estimate what type of impacts a particular regulation or policy would have on the economy or certain sectors--but that's not what CARB looked at in its ILUC analysis. Rather, they were more interested in putting the screws to ethanol and trumping up some numbers that would make ethanol unattractive for compliance in CA...
Anyway Marcus, don't let Nathanael fool you. Once the modeling (including some work that Nathanael himself was doing with Dr. Sheehan from U of MN) started showing that ILUC is approaching insignifcance, he lost interest. Indeed, the work he was doing with Sheehan showed that future crop yields DO matter (what a concept) and that ILUC can be mitigated entirely through yield growth (i.e. demand growth can be entirely offset or more than offset by yield growth)...gee, that work sure got swept under the rug didn' t it?!
Tom Koehler — Dec 11 2010 11:28 PM
Hey Nat, What i call telling it like is see it; you call bulling? Yes - I am a proud co-founder of Pacific Ethanol in California. The California Air Resources Board has certified our corn ethanol to be the LOWEST CARBON fuel produced in the nation . Much better than gasoline. Our CEO has been a member of the Green Party his whole adult life. We are environmentalists on the front lines of business. These facts about us and what we do is why i am so upset with NRDC as they ignore the facts and demagogue the issue. And I know you are receiving support and are totally coordinated with the very well financed and coordinated campaign by the Junk Food and Processed Meat Industries. Open your books. I did not fall off a turnip truck yesterday.
Now i wouldn't really care who funds you if you didn't ignore the facts so much and be so polarizing in your approach. We can and should work together. But that takes a true willingness and give and take to make our world better. Your rhetoric and desire to kill corn ethanol is the real pollution here.
Russ Finley — Dec 12 2010 12:48 PM
Too late, Tom. Once you take your hand off the chess piece you are committed i.e. you have to disclose "before" you are outed.
Let's use just a smidgen of common sense.
A) There's nary an environmental or wildlife conservation organization on the planet that supports corn ethanol. Are they all in the pocket of big [your favorite conspiracy]?
B) Picture in your mind roughly 30 thousand square miles of flat, rich, arable land that was used to make a fuel that taxpayers are forced to subsidize and then consume via government mandate. Welcome to the USSR comrades.
Magic and miracles aside, how was that hole in the human food chain filled unless some impoverished person is eating less or someone has put more land under the plow to capture the higher price (and you can't deny that both have been happening)?
Spare me the increased crop yield argument. It isn't enough, in part because population growth rates nullify much of it.
C) Look at a graph of the price of corn from 1990 through 2010. Note that the price quickly doubled (a 100% increase) after the fuel standards legislation was put in place in 2005.
The doubling of the price of corn in perfect sync with increasing ethanol production is either an unfortunate coincidence for corn ethanol proponents or the result of supply not meeting demand.
D) Multiply that $2 times the number of bushels grown and you get about $25 billion in increased costs to corn users--annually, never mind the bribe to oil companies to blend it.