EMISSIONS FROM INDIRECT LAND USE CHANGE: DO THEY MATTER WITH FUEL MARKET LEAKAGES?

Abstract

Indirect land use change, an agricultural market leakage, has been a major controversy over the Environmental Protection Agency’s (EPA) requirement for corn-ethanol to reduce greenhouse gas (GHG) emissions by 20 percent relative to gasoline it is assumed to replace. This paper shows that corn-ethanol policies generate far greater carbon leakage in the fuel market itself. Hence, corn-ethanol does not meet EPA’s threshold, regardless of ethanol policy and whether one includes emissions from land use change.

Keywords

• biofuels
• ethanol
• carbon leakage
• emissions savings
• tax credit
• mandate