Energy & Technology
By: Jessica Shipley, Solutions Fellow, Pew Center on Global Climate Change
Any climate and energy legislation will impact U.S. farmers and ranchers, and this paper examines the many legitimate concerns the agriculture sector has with such legislation. There have been a large number of economic analyses, modeling exercises, and reports published in the past several months based on an array of climate policy assumptions, and the resulting scenarios have ranged from realistic to doomsday. The results of these efforts have often been skewed or cherry-picked to support particular arguments. This brief tries to objectively assess the impacts of climate legislation and identify ways that such legislation could be shaped to provide greater opportunities for the sector. U.S. farmers have long exhibited adaptability and entrepreneurship in the face of changing circumstances, and they will be presented with a host of new markets and opportunities with the advent of climate and energy legislation.
Farmers have many reasons to be engaged participants in the climate and energy policymaking process. It is imperative that the United States take constructive action on climate and energy to maintain a leading role in the new energy economy. In shaping those actions, productive engagement by American farmers can help ensure that U.S. policy addresses their concerns and embodies their ideas. America’s farmers will be the best advocates of both the principles of a robust offset market and the creation of other market and renewable energy opportunities.
Key takeaways from this brief are:
- American farmers and industry will face greenhouse gas limitations regardless of what happens in the legislative and regulatory process. Market-driven requirements from the private sector (e.g. Walmart), regulation by the U.S. Environmental Protection Agency (EPA), state or regional programs, and nuisance lawsuits will continue to require greenhouse gas (GHG) emissions to be reduced going forward. Legislation can simplify requirements on business, provide incentives and new markets for farmers, and provide mechanisms to lower the risks and costs to all sectors of the economy. In fact, without legislation, the piecemeal nature of GHG limitations will likely result in a worse outcome for farmers.
- Costs to farmers from GHG legislation can be substantially mitigated by cost-containment mechanisms. Though there is potential for increased costs (namely energy and fertilizer input costs) to farmers, mechanisms potentially available in legislation can significantly minimize price volatility and cost impacts to farmers and the economy as a whole, even though not all these can be adequately reflected in economic modeling.
- The opportunities for farmers to realize a net economic gain from climate legislation are significant. Offsets, biofuel and biopower, renewable power, and the ability to receive payments for multiple environmental benefits from well-managed working farmlands are among the new potential opportunities. The key to making this a reality is climate and energy policy that is shaped by the agriculture sector and farmers themselves.
- Climate change and resulting weather patterns pose numerous risk management concerns for agriculture. The strong scientific evidence behind climate change should concern farmers because of the significant new risks climate change poses to farmland and the rate at which those risks are increasing.
The Midwest Governors Association (MGA) recently held a briefing in Washington for congressional and federal agency staff to highlight key regional developments in clean energy job creation. As the Senate prepares to take up energy legislation this summer, state government officials and representatives from business groups and environmental organizations in the Midwest described the progress they have made promoting renewable energy in order to create jobs, benefit the environment, and increase energy security.
- Transportation-related activity – including the movement of people and goods as well as the purchase of transportation-related products and services – accounted for over 10 percent of Gross Domestic Product (GDP) in the United States in 2002 with a value of over $1 trillion. That same year, over 19 billion tons of freight, with a value of $13.3 trillion, was carried over 4.4 trillion ton-miles in the United States.
- Inefficiencies and poor maintenance throughout the transportation sector hurt the economy. According to the Federal Highway Administration (FHWA), bottlenecks for trucks on America’s highways caused 226 million hours of delay and cost $7.3 billion in 2006. Almost half of the locks on inland waterways maintained by the Army Corps of Engineers are more than 60 years old, even though the planned design life of these locks was 50 years.
- Trucks transport 70 percent of all goods by weight in the United States and emit 75 percent of greenhouse gas (GHG) emissions from freight transportation. GHG emissions from freight trucks increased by 80 percent from 1980 to 2007 while the amount of freight shipped in trucks measured in ton-miles has grown by over 100 percent in that same period.
Freight transportation is a critical component of the American economy. According to the U.S. Department of Transportation, the movement of goods played a significant role in U.S. economic growth in the past two decades. The relative importance of international merchandise trade, and thus the movement of goods, to the overall U.S. economy increased from 12 percent in 1990 to 23 percent in 2008.
Public policy that affects freight transportation must reflect the sensitivity of the national economy to these policies’ effects on freight. The players in freight transportation span the full spectrum of private enterprise from sole proprietors to very large international corporations. The relative importance of freight transportation within the overall U.S. economy is likely to continue growing, given current transportation trends and the policies of the Obama Administration. For example, President Obama hopes to double exports by 2015 though his Administration’s National Export Initiative (NEI).
Freight transportation is a complex mix of publicly and privately managed systems – the roads and rivers used by trucks and barges, respectively, are almost entirely managed by the government while the railroads are managed by the private sector. Trucks must share the road with passenger vehicles, and freight rail companies sublease their tracks to passenger rail companies to offset maintenance costs.
This overview will focus mostly on truck and rail transport, as they account for nearly 60 percent of freight transport in ton-miles and 80 percent of the sector’s greenhouse gas (GHG) emissions. For more details about aviation and marine, see the Climate TechBook sections on Aviation Emissions Mitigation Strategies and Marine Shipping Emissions Mitigation.
Freight Travel by Mode
There are many modes of transportation for the movement of goods including truck, rail, water, air, and pipeline. By weight and value, most goods are moved on trucks, but the amount of freight moved by rail is comparable when one considers the amount multiplied by distance as measured in ton-miles (see Figure 1).
Because the freight transportation industry is highly competitive, the private sector chooses the most cost-effective mode for transportation. For instance, intermodal transport (using more than one mode) handled less than 11 percent of goods by value in 2008, likely due to the cost of transferring goods between modes. There is evidence that some of the transfer costs are offset by low-cost, long-distance hauls. The Federal Highway Administration (FHWA) estimates intermodal transport’s share of goods will increase to over 21 percent by 2035.
Each mode of freight transportation offers advantages and disadvantages. Some useful metrics to compare and contrast freight transportation modes are energy efficiency, convenience, and cost.
Energy Efficiency by Mode
When measuring the movement of goods in units of energy consumed per ton-mile, rail is the most energy- efficient form of freight transportation (see Table 1). Using this metric, rail is twelve times more efficient than trucks and almost twice as efficient as ships. According to the Association of American Railroads (AAR), trains transported a ton of freight 457 miles on one gallon of diesel fuel on average in 2008, a 94 percent increase since 1980. However, fuel efficiency is not a comprehensive metric. For instance, the road infrastructure within the United States is so extensive that in many cases goods delivered by trucks can travel fewer miles than goods moved by competing modes.
Table 1: Energy intensity of domestic transportation modes in the U.S. from 1980 to 2006.
Percent Change from 1980-2006
Trucks (Btu per vehicle mile)
Trucks (Btu per ton mile)
Rail (Class I) (Btu per freight car mile)
Rail (Class I) (Btu per ton mile)
Ships (Btu per ton mile)
Note: Class I railroads are the largest freight railroad companies based on operation revenue
Source: U.S. Department of Energy, Transportation Energy Data Book. 2008. U.S. Department of Transportation, National Transportation Statistics, 2009.
Figure 1: Freight distribution among modes by ton-miles, tons, and value in 2007.
Note that the Commodity Flow Survey is for domestic shipments only; it does not include movements such as ship-to-land imported intermodal transfers.
(1) Multimodal includes the traditional intermodal combination of truck and rail plus truck and water; rail and water; parcel, postal, and courier service; and other multiple modes for the same shipment.
Source: U.S. Department of Transportation, 2007 Commodity Flow Survey, 2009.
Convenience by Mode
Which transportation mode is most convenient for moving a good depends on the good itself and the good’s source, destination, and time requirements for delivery. Industrial goods like coal as well as other large and heavy goods tend to be moved by rail and ships. Coal is the good moved second most by weight and the good moved the most by ton-miles, and more than 70 percent of coal is moved by rail.
Rail’s share of freight increases as trip length increases; goods travel 691 miles on average with rail. This explains why rail’s share of freight transport is almost equal to truck’s when the metric is ton-miles, while it carries less than 12 percent of the total tons moved.
Infrastructure constraints limit both ship and rail freight volume. It is simply not possible for many trips to be accommodated solely by rail or ship and the cost of transferring goods from one mode to another is often prohibitive. For many short trips (known as short haul), trucks are the only mode available. Furthermore, in many cases trucks must also be used for the last mile of freight distribution. This helps explain why trucks have such a dominant share of the tons of goods moved (nearly 70 percent in 2007).
One of the most significant advantages for trucks over other modes is the extensiveness of the highway system. The Dwight D. Eisenhower System of Interstate and Defense Highways is an engineering feat that was recognized as one of the “Seven Wonders of the United States” by the American Society of Civil Engineers (ASCE) in 1994. The nation’s rail and water freight transportation networks are much less extensive geographically than the network of highways and roads, making trucks a faster and more convenient delivery mode for most short- and many long-distance freight trips than these other modes or intermodal options. In fact, the miles of infrastructure for rail actually decreased by 24 percent between 1980 and 2007, while the road infrastructure increased by 5 percent.
Another factor affecting each mode’s convenience is a recently developed inventory strategy known as Just-In Time (JIT). JIT attempts to minimize the amount of goods businesses hold at any given time. Holding goods can entail substantial costs, including the cost of storage. Thus JIT helps the bottom line for many companies, and frees up more capital to spend on other business needs. This strategy puts increased time pressure on freight transportation, however. There is less tolerance for shipping delays because the receiver’s on-site inventory of goods is not as large. As a result, goods must arrive on time, when expected, and reliably.
Figure 2: Average freight revenue per ton-mile (2006 $)
Source: U.S. Department of Transportation, National Transportation Statistics, 2009.
Cost by Mode
The cost of freight transportation varies greatly by mode and is an important factor in determining which mode is appropriate. Figure 2shows the revenue per ton-mile by mode. The cost of moving goods by airplane and truck is significantly more expensive than by rail or ship.
As mentioned previously, the two most competitive modes are truck and rail, both of which spend most of their revenue on fuel and labor (Figure 3). Rail must pay the complete costs of maintaining the railroad tracks while trucks share road maintenance cost with other vehicles, principally through fuel excise taxes.
Estimating costs for both rail and truck is very complex. Figure 3is provided for illustrative purposes and should not be treated as a definitive breakdown of the costs for either mode. The costs for any movement of goods depend on the current fuel prices, the distance traveled, the level of congestion, and other factors. These cost shares may all vary considerably and thus the cost breakdown by mode is difficult to quantify in the general case.
Figure 3: The cost of shipping goods by truck and rail in 2008.
Note that truck costs are based on a survey conducted by the American Transportation Research Institute while rail costs are calculated using data from Schedules 410 and 210 of the R-1 annual report filed with the Surface Transportation Board by the Class I railroads.
Source: American Association of Railroads, Rail Cost Adjustment Factor, 2009. American Transportation Research Institute, An Analysis of the Operational Costs of Trucking, 2008.
Greenhouse Gas Emissions from Freight
Freight contributed 27.9 percent of the U.S. GHG emissions from transportation, or 7.8 percent of total GHG emissions in 2007. This share has grown from 23 percent of transportation GHG emissions in 1990 due to the increased emissions from trucking (see Figure 4).
It is clear from Figure 4that the key challenge to reducing GHG emissions from freight transportation is to reduce the amount of emissions from truck transport. At a high level, there are two ways to accomplish this goal: reduce GHG emissions from trucks or shift more freight transport to less GHG-intensive forms of transport such as rail. The latter option is referred to as modal shift.
Figure 4: GHG Emissions from Transportation from 1990 to 2007 in Million Metric Tons of CO2e.
(1) Fluctuations in emissions estimates reflect data collection problems. (2) Includes only CO2 emissions from natural gas used to power pipelines.
Source: U.S. Environmental Protection Agency,Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 – 2007, 2008.
Reducing Emissions from Trucks
The U.S. Environmental Protection Agency (EPA) is taking the lead in reducing GHG emissions from transportation through its rulemaking authority. In April of 2010, the EPA in partnership with the National Highway Traffic Safety Administration (NHTSA) promulgated the first federal GHG standard for passenger vehicles and light trucks, which together accounted for over 60 percent of GHG emissions from transportation in 2007. The agency is currently working on a similar standard for heavy-duty trucks; the EPA expects to issue a notice of proposed rulemaking by October of 2010. In May of 2010, President Obama issued a Presidential Memorandum indicating the standards should consider the recommendations in a report released by the National Research Council’s report detailed below. It is unclear how stringent the EPA’s standard will be.
As mentioned above, convenience and cost determine which mode of transportation is appropriate for the distribution of goods. At least one of these factors must be addressed in order to cause a modal shift – i.e., to change which mode is used to transport a good.
The market for freight transportation is highly competitive in the United States, so most changes will likely come from the private sector. The optimizations or enhancements necessary to cause any modal shift would require significant increases in fuel prices to send a strong signal to freight shippers. Another necessary condition for modal shift is the further containerization of freight; this enables quick transport from one mode to another, encouraging intermodal transport such as truck-to-rail or truck-to-ship movements.
National Research Council Report on Medium- and Heavy-Duty Trucks
The Energy Independence and Security Act of 2007 required the U.S. DOT to enact a first-ever fuel economy standard for medium- and heavy-duty vehicles (MHDV). In order to assist in developing this new standard, the National Research Council (NRC) assembled a committee to assess fuel economy technologies for MHDVs.
The final report, released in April of 2010, recommends that a load-specific fuel consumption standard be adopted for medium- and heavy-duty trucks instead of an absolute fuel efficiency standard, as has been done in the past by the EPA with passenger vehicles and light-duty trucks. Such a standard would acknowledge that trucks are designed as load-carrying vehicles. Thus, the standard would measure the performance of the vehicle against its intended purpose. The following are other recommendations from the report:
Trends in Freight Transportation
From 1993-2007, freight transportation grew by over 35 percent (see Figure 5). Much of this growth came from trucks, which now lead other modes of transportation in the three main measures of goods movement: tons, ton-miles, and value.
These trends can be explained by cost competitiveness and the advent of just-in-time (JIT) inventory management. Low fuel prices throughout the 1990s and much of the 2000s made modes of transportation most dependent on fuel prices (i.e., trucks) more attractive. The rise in popularity of JIT inventory management made businesses more reliant on timely delivery, favoring trucks since they have access to an expansive network of roads and can move product quickly. As a result, trucks gained more and more market share throughout the 1990s and into the 2000s.
Figure 5: Percent change in ton-miles from 1993-2007.
(1) CFS plus out-of-scope estimates. (2) Multimodal includes the traditional intermodal combination of truck and rail plus truck and water; rail and water; parcel, postal, and courier service; and other multiple modes for the same shipment.
Source: U.S. Department of Transportation, Freight Shipments in America, 2006.
Current trends will likely continue into the future. Figure 6shows an estimate of the goods by weight and value from 2002-2035. The U.S. DOT estimates that trucks will continue to increase their share of freight transportation.
Both the private and public sectors play a role in the effort to reduce GHG emission from freight transportation. As mentioned in above, reducing emissions from trucks and encouraging modal shift are the two most effective strategies. Since freight is a highly competitive market, incentives to improve technology and the efficiency of freight transportation already exist and play a major role in both approaches to reduce GHG emissions. However, the government can also influence the market by pricing GHG emissions.
Figure 6: Trends for freight transportation by weight and value.
(1) Intermodal includes U.S. Postal Service and courier shipments and all intermodal combinations, except air and truck. Intermodal also includes oceangoing exports and imports that move between ports and interior domestic locations by modes other than water. (2) Pipeline and unknown shipments are combined because data on region-to-region flows by pipeline are statistically uncertain.
Source: U.S. Department of Transportation, Freight Facts and Figures 2009, 2009.
The following are a list of some policy options that will reduce GHG emissions from freight transportation:
- Government support: funding research and development, providing financial assistance for environmentally friendly logistics practices such as freight containerization, and EPA’s SmartWay program.
- Trucks: engine standards, speed limit reduction, increasing size constraints, anti-idling policies including the electrification of rest stops, eco-driving to optimize fuel consumption, the advanced technologies such as use of hybrid electric engines or waste heat recovery, and alternative fuel support, such as support for biodiesel.
- Logistics: support for a more efficient organization of supply-chain networks, including optimal location of trans-shipment points and freight consolidation and distribution centers.
Related Business Environmental Leadership Council (BELC) Company Activities
Related C2ES Resources
Climate TechBook. Transportation Overview
Climate TechBook.Aviation Emissions Mitigation Strategies
Climate TechBook. Marine Shipping Emissions Mitigation
Greene, D. L., & Schafer, A. (2003). Reducing Greenhouse Gas Emissions From U.S. Transportation.
McCollum, D., Gould, G., & Greene, D. L. (2009). Aviation and Marine Transportation: GHG Mitigation Potential and Challenges.
Further Reading / Additional Resources
National Research Council. (2010). Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-Duty Vehicles.Washington: The National Academies Press.
U.S. Department of Transportation. (2009). Freight Facts and Figures 2009.Washington: U.S. Department of Transportation.
U.S. Department of Energy. (2008). Transportation Energy Data Book.Washington: U.S. Department of Energy.
 U.S. Department of Transportation, Freight In America, 2006.
 Cambridge Systematics, Inc., Estimated Cost of Freight Involved in Highway Bottlenecks, 2008.
 American Society of Civil Engineers. Statement Of The American Society of Civil Engineers Before the Subcommittee on Energy and Water Development On the Budget for The U.S. Army Corps of Engineers and Bureau of Reclamation For the Fiscal Year 2010. Washington: American Society of Civil Engineers, 2009.
 U.S. Department of Transportation, 2007 Commodity Flow Survey, 2009. U.S. Environmental Protection Agency, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 – 2007, 2009.
 U.S. Environmental Protection Agency, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 – 2007, 2009. U.S. Department of Transportation, National Transportation Statistics, 2009.
 U.S. Department of Transportation, America’s Freight Transportation Gateway, 2009.
 U.S. Department of Commerce, Department of Commerce - Press Releases, Fact Sheets and Opinion Editorials- Commerce Secretary Gary Locke Unveils Details of the National Export Initiative, 2010, http://www.commerce.gov/NewsRoom/PressReleases_FactSheets/PROD01_008895
 U.S. Department of Transportation, Freight Facts and Figures 2009, 2009.
 Association of American Railroads, Railroads: Green From the Start, 2009.
 Government Accountability Office, Freight Railroads: Industry Health Has Improved, but Concerns about Competition & Capacity Should Be Addressed, 2006. U.S. Department of Transportation, 2007 Commodity Flow Survey, 2009.
 Margreta, M., Ford, C., & Dipo, M. A., U.S. Freight on the Move: Highlights from the 2007 Commodity Flow Survey Preliminary Data, 2009.
 U.S. Department of Transportation, Freight Facts and Figures 2009, 2009.
 U.S. Environmental Protection Agency, EPA and NHTSA Finalize Historic National Program to Reduce Greenhouse Gases and Improve Fuel Economy for Cars and Trucks | Transportation and Climate | US EPA, 2010, http://www.epa.gov/otaq/climate/regulations/420f10014.htm
 U.S. Environmental Protection Agency, Control of Greenhouse Gas Emissions from Heavy-Duty Vehicles - Rulemaking Gateway | Laws Regulations | US EPA., 2009, http://yosemite.epa.gov/opei/RuleGate.nsf/byRIN/2060-AP61
 Office of the Press Secretary. Presidential Memorandum Regarding Fuel Efficiency Standards | The White House. May 21, 2010. http://www.whitehouse.gov/the-press-office/presidential-memorandum-regar... (accessed May 27, 2010).
 Containerization is the use of standard intermodal containers as defined by the International Organization for Standardization (ISO).
 National Research Council, Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-Duty Vehicles, 2010.
 Load-specific fuel consumption (LSFC) is measured in gallons of fuel per payload tons per 100 miles. This metric includes the extra weight of a truck when it is carrying a payload; the lower the fuel consumption of the vehicle and the higher the payload the vehicle carries, the lower the LSFC.
Provisions in any legislation can be confusing. Trying to compare similar provisions across different bills can compound the confusion. To help make things more clear, we have two side-by-side comparison charts, one on energy-efficiency provisions, and the other on electric plug-in vehicle provisions, of this Congress’ energy and climate legislation.
This post was written with Cynthia J. Burbank, National Planning and Environment Practice Leader at Parsons Brinckerhoff. It first appeared in the National Journal Transportation Experts Blog in response to the question: What should transportation departments do for electric cars?
The call for the government to act to promote plug-in electric vehicles (PEVs), and all clean alternative fuels for that matter, is to correct the clear market failures that exist in today’s petroleum-based transportation sector.
Historically, petroleum has been a key driver in the growth of the economy and development of nations worldwide. Gasoline and diesel fuel’s impressive energy density, portability, and low production cost made it the fuel of choice for nearly a century. All the while there have been costs, although they haven’t always been obvious. Petroleum’s impact on climate change and U.S. energy security, and the risks of drilling, result in real and significant costs to society, and currently the price of petroleum does not include those externalities.
- Plants, soils, and organic matter contain nearly three times the amount of carbon currently stored in the atmosphere.
- Biosequestration has the potential to make a significant impact by absorbing annual human-caused carbon emissions through changes in land management practices.
- Increasing rates of biosequestration can support other environmental outcomes such as improved wildlife habitat, water quality, reduced run-off, and better recreational opportunities.
- Biosequestration may someday be profitable for private landowners who adopt certain land management practices and participate in a carbon market.
- Biosequestration decreases atmospheric CO2 until the carbon that is in the plant, soil, or end product is released back to the atmosphere.
Addressing the risk of dangerous climate change requires the combined efforts of both greenhouse gas (GHG) emission reductions and sequestration. The purpose of this document is to discuss briefly the technology of biotic sequestration (or "biosequestration"): the absorption and storage of carbon in organic matter.
Biosequestration refers to a category of biological processes that absorb carbon dioxide (CO2), the primary GHG, from the atmosphere and contain it in living organic matter, soil, or aquatic ecosystems. The opportunities for expanding biosequestration by changing management and land-use practices are generating debate among landowners, policymakers, and the media. Other avenues of enhancing natural carbon capturing processes may exist, but more study is needed to determine their potential for climate change mitigation.1
Biosequestration occurs naturally in the global carbon cycle (Figure 1). It is estimated that the atmosphere contains about 2,750 billion metric tons of CO2 (2,750 gigatons of carbon, GtCO2).2 Terrestrial vegetation, soils, and organic matter contain the equivalent of up to 8,030 GtCO2 or just under 3 times the amount contained in the atmosphere.3 It is estimated that in the 1990s, 5.8 GtCO2 per year were released into the atmosphere as a result of global land-use change and deforestation, though some forests expanded in temperate and boreal zones.4 For comparison, the United States emitted on average about 7 GtCO2 per year from land-use change between 2003 and 2007, or about 0.25 percent of the entire atmospheric CO2 each year.5 Enhancing the capacity for carbon storage or the rate that CO2 is biosequestered is an important strategy for mitigating climate change.
|Figure 1: The Global Carbon Cycle (in GtC)|
Technology, Environmental Benefits, and Emission Reduction Potential
Although biosequestration occurs naturally every day, actions preventing the loss of carbon stocks and increasing the rate of biosequestration can also be intentional. Some biosequestration methods have a greater carbon impact than others depending on the rate of carbon absorption and storage. For example, fast-growing tree species can be used in afforestation and reach sequestration rates of 5 metric tons CO2 (tCO2) per acre per year, while planting prairie grass in place of an annual agricultural crop could sequester an additional 1.5 tCO2 per acre per year depending on local climate and weather variability.6,7 A range of carbon sequestration rates from selected land-use practices is presented below (Table 1).8,9,10
Although carbon stocks in forests, agricultural lands, and wetlands have been reduced over time, and thus offer opportunities for carbon storage through restoration, they are not pools where unlimited amounts of CO2 can be stored. All biosequestration practices will reach a saturation point at which a new carbon equilibrium is reached.11
Like other GHG mitigation options, different quantities of biosequestration are achievable at different costs. Under the cap-and-trade program passed by the U.S. House of Representatives in 2009 (H.R.2454), domestic biosequestration (in the form of cap-and-trade offsets) was projected to provide between 292 and 676 million metric tCO2 of annual abatement in the year 2030. (For comparison, GHG emissions from sources covered under the cap were projected to be between 926 and 2586 million metric tCO2 below the "business-as-usual" projected emissions level in 2030.)12,13
|Table 1: Estimated Sequestration Potential by Practice in the United States (Metric Tons CO2 per Acre per Year): Selected Land Use and Production Practice Changes|
Biosequestration is a biogeochemical process, meaning that it occurs at the interface of living organisms and geological processes. For example, when CO2 from the atmosphere is taken in by a plant, newly formed molecules (usually sugars and other carbohydrates that contain the carbon) end up in all parts of the plant including the leaves, stems and roots (Figure 2). The carbon is considered sequestered until the organic matter decomposes or burns, at which point it returns to the atmosphere as CO2. After plants die and fall to the ground, some carbon is incorporated into the soil when roots or dead leaves become soil organic carbon (SOC). Land that has been afforested or planted in perennial crops may have the greatest potential for accumulating soil organic carbon.14
|Figure 2: Biosequestration at the Level of an Organism|
Not only may biosequestration help to mitigate climate change, but certain methods can also contribute other significant environmental benefits. For example, changes in forest management can provide benefits beyond storing carbon by reducing soil-erosion and run-off, reducing flooding, protecting fisheries, and enhancing wildlife habitat and biodiversity.15 Similar benefits could also accompany changes in the management of farmlands and rangelands, and the restoration of wetlands. Environmental benefits will not happen automatically in biosequestration projects but must be planned for if they are preferred.
The cost of biosequestration varies widely depending on the practice, the land-owner, and the location of the biosequestration project. Much agricultural and forested land in the United States is privately-owned. Biosequestration would likely have to be financially favorable compared with current management practices for land managers to consider a change.16 Therefore, increasing carbon sequestration on these lands probably requires some form of payment for the carbon service provided or the practice implemented. Carbon markets and other pricing policies are discussed in more detail below.
A review of 11 cost analyses focusing on U.S.-based forest sequestration programs that varied broadly in their estimated costs of carbon sequestration estimated that 300 million metric tons CO2-equivalent (tCO2e) of annual carbon sequestration could occur in forest ecosystems at a cost of $7.50 to $22.50 per tCO2e.17 A separate study of the costs of sequestering carbon on agricultural land yielded an estimate of up to 77 million tCO2e per year when carbon is priced in a similar range (~$13 per tCO2/acre/year).18 For comparison, total U.S. GHG emissions are about 7 billion metric tons of CO2e per year. The estimate of agricultural carbon sequestration is about 1 percent of the total annual U.S. GHG emissions. The aforementioned estimate of forest biosequestration projects is equivalent to about 4 percent of annual U.S. GHG emissions.
Studies of global biosequestration estimate that a carbon price of $23.54 could induce 744 million tCO2e per year of forest carbon sequestration by the year 2010.19 Again, total annual biosequestration would vary considerably depending on the region, ranging from 20 million tCO2e in Oceania to 280 million tCO2e per year in North America. The difference between the North American estimate and the U.S. estimate above illustrates that biosequestration estimates vary.
Carbon prices and markets to trade carbon will help considerably in supporting biosequestration practices. However, reputable markets will require measurement and verification that also add to the cost of these practices. It is also reasonable to expect that credit aggregators will act as facilitators between biosequestration project owners and the credit exchanges. This facilitation will also come with a cost. In the end, transaction costs such as these could be significant.20
A global system of recognized practices and credits for biosequestration does not currently exist. Policies and programs that are effective in increasing the adoption of biosequestration practices are fragmentary, especially in the United States.
The Kyoto Protocol – an international agreement governing GHG emissions – comes nearest to establishing a global system of biosequestration initiatives.21 Nations that are party to the Kyoto Protocol have agreed to country-specific GHG emissions reductions by 2012. Articles 3.3 and 3.4 of the protocol outline the ways in which nations can account for afforestation, reforestation, deforestation, and certain other land-use activities in their particular emission reduction goals. Countries are also allowed to reach part of their goal through investments in flexible GHG offsets guided by United Nations programs called the Clean Development Mechanism and Joint Implementation (CDM/JI).22 Biosequestration projects in CDM/JI are mostly afforestation projects sponsored by countries with carbon reduction targets in countries without reduction targets (typically, countries that are considered non-industrialized).
The European Union Emission Trading Scheme (EU ETS) is currently the largest mandatory carbon market in the world. However, offsets from biosequestration are not currently allowed in the EU ETS.23
Current U.S. drivers of biosequestration include voluntary offset programs like the Chicago Climate Exchange and the Climate Action Reserve, and regional GHG reduction programs like the Regional Greenhouse Gas Initiative (RGGI). Each of these programs defines how biosequestration projects can be measured in slightly different ways.24,25,26
It bears repeating that biosequestration practices depend on living systems that are not easily quantified in a direct way. This lack of established measurement protocols leads to uncertainties in actual carbon sequestered compounded by the uncertain storage time. Measurement is made even more challenging by seasonal variations in weather and precipitation, differences between plant species, and the variation in the quality of soils and lands where these practices could be used. Land managers know a lot about growing trees, perennial crops, managing rangeland for carbon, and even restoring wetlands, but those practices need better measuring techniques for their legitimacy to be widely accepted.
Obstacles to Further Development or Deployment
A number of challenges have emerged to the further development of biosequestration practices:27
- Lack of a price on GHG emissions
Currently, in the United States there is no comprehensive policy that values biosequestration. A policy, such as cap and trade (see Climate Change 101: Cap and Trade), that puts a price on GHG emissions and limits total emissions, could create a market for offsets from biosequestration.
- Carbon storage easily reversed and re-emitted to the atmosphere
Living systems are subject to natural variation including unforeseeable climatic, weather, and destructive events. If a biosequestration project is destroyed by wildfire or heavy storms, the carbon stored there will be rapidly released back to the atmosphere. Without clear ownership or contracts, the liability of restoring this carbon remains uncertain.
- Establishing "baseline" measurements
The significance of choosing a baseline year against which sequestered emissions will be measured and compared is often understated or overlooked. A baseline will determine how much carbon is sequestered or emitted from a particular practice or project compared to a given year, usually in the past. This often serves as an anchor to measure how well a certain practice is performing relative to a certain emission reduction effort.
- Measurement of real carbon sequestered
Measurement, monitoring, and verification have been mentioned above. Biosequestration is difficult to quantify quickly or cheaply due to the constant flow of CO2 into and out of these living systems. This makes trading metric tons of biosequestered carbon difficult without accurate tracking and certification.
- Transaction costs
Transaction costs are projected to be significant in carbon markets. For example, in the voluntary Chicago Climate Exchange (CCX), some aggregators already in operation charge 8-10 percent of the value of the carbon credits in addition to a common listing fee of $0.20 per metric ton. Costs to implement biosequestration practices will need to be minimized in order to most cost-effectively utilize biosequestration for GHG abatement.
- Property rights and decision-making
Land-use decisions are often complicated by government regulation and property-owner preferences and traditions. Any successful implementation of biosequestration practices will depend on the legitimate involvement of all stakeholders including landowners, policymakers, community members, private enterprise, and other affected parties.
Each of these challenges must be addressed appropriately for biosequestration to be implemented at a climatically significant scale.28
Policy Options to Help Promote Biosequestration
There are two primary policy strategies that could help promote biosequestration:29
- Practice-based incentives
Practice-based incentive programs are already common for farmers using conservation practices on their land. Some U.S. farm programs - for example the Conservation Reserve Program - explicitly recognize carbon sequestration as a benefit. Farmers implementing a land-use change for the primary purpose of increasing biosequestration on their land could be supported through cost-sharing of the practice establishment, for example. Supporting a practice but not performance leaves little room for rewarding actual carbon benefits aside from the shift in management.
- Performance-based incentives
Performance-based incentives reward actions that have higher rates of carbon sequestration.30 Performance-based incentive programs are compatible with a carbon market, which would be created by a cap-and-trade program (see Climate Change 101: Cap and Trade).
Many cap-and-trade proposals allow biosequestration projects to generate offset credits that can be used by covered entities to comply with the emission limit. Offsets from biosequestration can be thought of as reducing carbon emissions in place of actions taken by a covered entity to reduce emissions directly at the source through energy efficiency measures and other activities. For example, an electric generator faced with a need to reduce its emissions could do so via a combination of increasing its non-emitting generation (e.g., from nuclear, wind, or solar power), decreasing its traditional fossil fueled generation, and paying a forest landowner to increase biosequestration on her land. If biosequestration offsets are adequately verified, then offsets could be a cost-effective way of reducing net GHG emissions over time.
Other helpful policies that would foster higher biosequestration penetration in performance-based markets would include risk reduction strategies for uncontrollable events (wildfires and weather), transaction cost reduction, and increased certainty in carbon measurement.
Related Business Environmental Leadership Council (BELC) Company Activities
Related C2ES Resources
Agriculture's Role in Greenhouse Gas Mitigation, 2006
Biological Sequestration through Greenhouse Gas Offsets: Identifying the Challenges and Evaluating Potential Solutions, April 2009 Workshop co-sponsored by the Center.
Briefing on Domestic Offsets in a Greenhouse Gas (GHG) Cap-and-Trade System, 6 March 2009.
The Cost of U.S. Forest-Based Carbon Sequestration, 2005.
Greenhouse Gas Offsets in a Domestic Cap-and-Trade Program, Congressional Policy Brief, 2008.
Issue Overview: Role of Offsets in Cap and Trade, U.S. Climate Action Partnership (USCAP), 2009.
Offset Quality Initiative (OQI).
Further Reading/Additional Resources
Baker JM, Ochsner TE, Venter RT, Griffis TJ (2007). Tillage and soil carbon- what do we really know? Agriculture, Ecosystems and Environment 118: 1–5.
Birdsey R (2004). Data Gaps for Monitoring Forest Carbon in the United States: An Inventory Perspective. Environmental Management 33. Supplement 1: S1–S8.
United States Department of Energy (2008). Carbon Cycling and Biosequestration Workshop Report: Publication No. DOE/SC-108.
European Union Memo (2008). Questions and answers on deforestation and forest degradation. Reference: MEMO/08/632.
Hansen EA (1993). Soil carbon sequestration beneath hybrid poplar plantations in the north central United States. Biomass and Bioenergy 5: 431-436.
Johnson R (2009). Climate Change: The Role of the U.S. Agriculture Sector and Congressional Action. Congressional Research Service. Publication No. RL33898.
Johnson R, Gorte RW (2009). Estimates of Carbon Mitigation Potential from Agricultural and Forestry Activities. Congressional Research Service. Publication No. R40236.
Johnson KS, Karl DM (2002). Is Ocean Fertilization Credible and Creditable? Science 296: 467-468.
Kopp RJ, Pizer WA et al. (2007). Assessing US Climate Policy Options. Report briefings on climate policy options including Biosequestration, among many others.
Lal R (2008). Sequestration of atmospheric CO2 in global carbon pools. Energy & Environmental Science 1: 86–100.
Lewandroski J, Peters M, et al. (2004). Economics of Sequestering Carbon in the U.S. Agricultural Sector. Technical Bulletin No. (TB-1909).
McLauchlan KK, Hobbie SE, Post WM (2006). Conversion of agriculture to grassland builds soil organic matter on decadal timescales. Ecological Applications 16: 143-153.
Murray BC, Sohngen B, et al. (2005). Greenhouse Gas Mitigation Potential in U.S. Forestry and Agriculture. Publication No. EPA 430-R-05-006.
Nabuurs GJ, Masera O, et al. (2007). Chapter 9: Forestry. Climate Change 2007: Mitigation. Assessment Report 4 of the IPCC. Cambridge University Press.
Parrotta JA (2002). Restoration and management of degraded tropical forest landscapes. In Modern Trends in Applied Terrestrial Ecology. R.S. Ambasht and N.K. Ambasht (eds.), Kluwer Academic/Plenum Press, New York, pp. 135-148 (Chapter 7).
Parry IWH, Pizer W (2007). Backgrounder: Emissions Trading versus CO2 Taxes versus Standards. Resources for the Future.
Schlamadinger B, Johns T et al. (2007). Options for including land use in a climate agreement post-2012: improving the Kyoto Protocol approach. Environmental Science and Policy 10: 295-305.
Sedjo RA, Amano M (2006). The Role of Forest Sinks in a Post-Kyoto World. Resources for the Future.
Shrestha R, Lal R (2008). Offsetting carbon dioxide emissions through minesoil reclamation. Encyclopedia of Earth.
Smith P, Martino D, et al. (2007). Chapter 8: Agriculture. Climate Change 2007: Mitigation. Assessment Report 4 of the IPCC. Cambridge University Press.
United States Department of State (2000). United States Submission on Land-Use, Land-Use Change, and Forestry to the Kyoto Conference of Parties. Accessed August 1, 2009.
Wise, A (2008). The US Carbon Market. Renewable Energy World News.
NETL Regional Carbon Sequestration Partnerships
DOE Terrestrial Sequestration Research
1 See, for example, Johnson KS, Karl DM, "Is Ocean Fertilization Credible and Creditable?" Science 296: 467-468, 2002.
2 The difference between tons of carbon (tC) and tons of carbon dioxide (tCO2) is often confused. It is confusing because CO2 is 3.67 times more massive than C alone due to the added molecular weight of oxygen (O2). Therefore 1 tC is equivalent to 3.67 tCO2.
3 Stavins R, Richards K, The Cost of U.S. Forest-Based Carbon Sequestration, 2005
4 Nabuurs GJ, Masera O, et al., "Chapter 9: Forestry" in Contribution of Working Group III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, 2007.
5 Johnson R. Climate Change: The Role of the U.S. Agriculture Sector and Congressional Action, Congressional Research Service, 2009. Report RL33898.
6 Hansen EA, "Soil Carbon Sequestration beneath Hybrid Poplar Plantations in the North Central United States," Biomass and Bioenergy 5: 431-436, 1993.
7 McLauchlan KK, Hobbie SE, Post WM, "Conversion of Agriculture to Grassland Builds Soil Organic Matter on Decadal Timescales," Ecological Applications 16: 143-153, 2006.
8 Johnson R, Gorte RW, Estimates of Carbon Mitigation Potential from Agricultural and Forestry Activities, Congressional Research Service, 2009. Report R40236.
9 Lewandroski J, Peters M, et al., Economics of Sequestering Carbon in the U.S. Agricultural Sector, U.S. Department of Agriculture Technical Bulletin Number1909, 2004.
10 Murray BC, Sohngen B, et al., Greenhouse Gas Mitigation Potential in U.S. Forestry and Agriculture, U.S. Environmental Protection Agency (EPA) Publication No. 430-R-05-006, 2005.
11 U.S. EPA , "Representative Carbon Sequestration Rates and Saturation Periods for Key Agricultural & Forestry Practices," 2006.
12 Energy Information Administration (EIA), Energy Market and Economic Impacts of H.R. 2454, the American Clean Energy and Security Act of 2009, 2009. See Table ES-1.
13 For more information on H.R.2454, the American Climate and Energy Security Act of 2009 (ACESA), see /acesa.
14 Degryze S, Six J et al., "Soil Organic Carbon Pool Changes Following Land-Use Conversions," Global Change Biology 10: 1120–1132, 2004.
15 Parrotta JA, "Restoration and Management of Degraded Tropical Forest Landscapes," in Modern Trends in Applied Terrestrial Ecology, R.S. Ambasht and N.K. Ambasht (eds.), Kluwer Academic/Plenum Press, New York, 2002.
16 Richards K, Sampson RN, and Brown S, Agricultural & Forestlands: U.S. Carbon Policy Strategies, 2006.
17 Stavins, 2005.
18 Paustian K and Antle JM, Agriculture's Role in Greenhouse Gas Mitigation, 2006.
19 Sohngen B and Mendelsohn R, Optimal Forest Carbon Sequestration, Department of Agricultural, Environmental, and Development Economics, Ohio State University. Working Paper AEDE-WP-0009-01, 2001.
20 Nabuurs et al., 2007.
21 Schlamadinger B, Johns T et al., "Options for Including Land Use in a Climate Agreement Post-2012: Improving the Kyoto Protocol Approach," Environmental Science and Policy 10: 295-305, 2007.
23 European Union, "Questions and Answers on Deforestation and Forest Degradation," MEMO/08/632, 2008.
24 Chicago Climate Exchange, "CCX Exchange Offsets and Exchange Early Action Credits" in CCX Confidential, 2004.
25 California Climate Action Registry, Forest Project Protocol, 2009.
26 Regional Greenhouse Gas Initiative (RGGI), "Offset Project Categories: Afforestation."
27 Smith P, Martino D, et al., "Chapter 8: Agriculture," in Contribution of Working Group III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, 2007.
29 Richards et al., 2006.
It will probably take some time to fully understand what went wrong in the Deepwater Horizon oil spill, and what ought to be done to make sure it doesn’t happen again. But at least one thing is already perfectly clear: recent technological advances in extracting oil in deep water offshore have been dramatic, whereas unfortunately the same cannot be said for technological advances in spill prevention and cleanup techniques.
Why is this the case? Innovation is complicated, but we do know something about it. In the private sector, the profit motive is a primary driver of innovation. Because of the world’s seemingly insatiable demand for petroleum products (mainly gasoline and diesel), oil companies have invested hundreds of millions of dollars in offshore drilling technology (just one company, GE Oil & Gas, reported offshore oil and gas drilling-related R&D spending of $150 million from 2009-2011) in order to reap tens of billions in proceeds from fuel sales (for fiscal year 2009, MMS reported oil production worth $20.2 billion from the Gulf of Mexico federal outer continental shelf). According to the U.S. Energy Information Administration (EIA), oil production from federal offshore areas accounted for 29 percent of total domestic oil production in 2009. In 2009, ultra-deepwater offshore drilling (drilling in more than 5,000 feet of water) accounted for about a third of total federal offshore oil production, and ultra-deepwater production tripled from 2005 to 2009. Until recently there has been no comparable incentive for spill prevention and cleanup techniques: the pre-Deepwater Horizon spill record had been excellent, lulling both regulators and oil companies into complacency.
The free market by itself cannot motivate investment in spill prevention and cleanup technology, because spills themselves yield public damage, not private profits. Our government, on behalf of the public interest, could have put rules in place that would have motivated the private sector to make such investments – such as requiring oil companies to actually demonstrate that spill prevention technology works as a condition for obtaining drilling rights.
We have an analogous situation with respect to energy security and climate change. The free market by itself is driving innovation, but in the wrong things: in energy investments that are warming the climate and making us ever more dependent on foreign oil. We need our government to intervene on behalf of the public interest to motivate private investment and innovation in clean energy, through comprehensive energy and climate legislation.
The catastrophe in the Gulf is still unfolding, and will ultimately provide many lessons relevant to our energy and environmental future. But one lesson we can take to heart and act on right away is that there is a profound public interest in spurring innovation in clean and safe energy and that the private market on its own will not adequately provide it. It is our job as the public to demand it, and it is our government’s job to use all the tools at its disposal – from regulations to incentives to penalties – to make it happen.
Judi Greenwald is Vice President for Innovative Solutions
Through a recently signed Presidential Memorandum, Barack Obama is continuing the push to regulate greenhouse gas emissions from the transportation sector using its authorities under the Clean Air Act (CAA) and the Energy Independence and Security Act of 2007 (EISA). While the memorandum includes provisions for passenger cars, light-duty trucks, and support of an electric vehicle charging infrastructure, the most notable component involves vehicles that have eluded fuel efficiency regulators.
When it comes to GHG emissions and the transportation sector, the elephant in the room has been medium- and heavy-duty vehicles (freight trucks). The recently released memorandum will bring these vehicles under the regulatory umbrella and increase the likelihood that the transportation sector will contribute its share to economy-wide GHG emission reductions.
- Advanced biohydrocarbons – as defined in this fact sheet – are derived from lignocellulosic biomass (e.g., trees, grasses, wastes, and agricultural or forest residues) or algae and do not compete with the production of feed or food crops.
- Depending on technology advancement and capital investment in biorefineries, some estimates have advanced biohydrocarbons displacing as much as 30 percent of the amount of petroleum consumed in the United States by 2050.
Advanced biohydrocarbons are similar to conventional hydrocarbon fuels such as gasoline or diesel but are produced from biomass feedstocks, such as woody biomass or algae, through a variety of biological and chemical processes. Advanced biohydrocarbons are considered a ‘drop-in’ fuel; in other words, their use does not require significant modifications to existing fuel distribution infrastructure or vehicle engine modifications (for gasoline or diesel powered vehicles), unlike ethanol as it is used today. Similarly, the energy content of advanced biohydrocarbons is equivalent to that of their petroleum-based counterparts (i.e., gasoline and diesel).
Manufacturers can produce advanced biohydrocarbons by four primary pathways:
- Fermentation: In this case, manufacturers pre-treat the biomass with heat, enzymes, or acids to make the cellulose easier to break down into simple sugars using a chemical reaction called hydrolysis. The sugars from the biomass are subsequently fermented using genetically engineered microorganisms. This process is similar to the one used to produce corn or sugarcane ethanol (see Climate Techbook: Ethanol). However, these microorganisms are engineered to break down the biomass to produce hydrocarbons rather than alcohols. This is an important distinction in the genetic modification of the microorganisms because alcohol formation generally would create a poisonous environment, thereby reducing the efficacy of the catalyst. With the modified microorganisms, however, hydrocarbons immediately form an organic layer separate from the microorganisms.
- Gasification: In this pathway, solid woody biomass is leftuntreatedand then converted at very high temperatures into a combination of carbon monoxide (CO) and hydrogen (H2), a mixture termed syngas. Syngas is the starting material for catalytic chemical reactions, such as Fischer-Tropsch synthesis, which convert the syngas into a liquid fuel.
- Pyrolysis: Similar to gasification, untreated woody biomass is heated quickly at high temperatures, but in the absence of oxygen. The high heating leads to the breakdown of the complex structure of the lignin to produce an intermediate bio-oil. Typically, this bio-oil is subsequently refined to a liquid fuel via a catalytic reaction called hydrotreating.
- Algal conversion: There are currently three main pathways to produce a fuel from algae: 1) algae is genetically engineered to secrete bio-oils efficiently; 2) a bio-oil extract from algae is chemically treated to produce a bio-oil; or 3) algae cultures are converted in their entirety via pyrolysis (see above). In any case, the algae can be genetically modified to thrive in otherwise harsh conditions (e.g., high salinity or nonpotable water). In all cases, the bio-oil product derived from algae is subsequently upgraded via hydrotreating and becomes a liquid fuel similar to diesel or gasoline.
Figure 1: Production Pathways for Advanced Biohydrocarbon Fuels
This figure illustrates a) chemical (black), b) biological (green), and c) thermal (red) production pathways for advanced biohydrocarbons derived from i) woody biomass and ii) algae. The production of gasoline or diesel equivalents is dependent on the technology and pathway. Note that while jet fuel can also be produced, it is not discussed further in this summary.
- Biological and Chemical Catalysts: In each of these four pathways, liquid biofuels are formed as the result of biological and chemical catalysis. Catalysis is a process in which a material (the catalyst) is added to a reactive environment to increase the rate of reaction without being consumed by the reaction. As shown in Figure 1, most of these pathways are processes that are characterized as chemical catalysis. Chemical catalysts have a number of advantages over biological catalysts. The advantages of chemical catalysts include: broader range of reaction conditions, lower residence time (i.e., faster reactions), potential for lower cost fuel production, and the elimination of a sterilization step. However, compared to biological catalysis, chemical catalysis, as it relates to the complex structures of the compounds that make up biomass, is a relatively new field. Developing these processes is a challenge.
Environmental Benefit / Emission Reduction Potential
The environmental benefits of advanced biohydrocarbons are significant. For instance, they have the potential to overcome obstacles related to the use of ethanol: land use changes; transportation and distribution of finished fuel; impacts on other agricultural commodities; and the need for vehicle modification.
The primary feedstocks for advanced biohydrocarbons are woody biomass (primarily food and agricultural waste) and algae — neither of which have the same land requirements as biofuels derived from traditional food or feed crops (such as corn or sugarcane). While there will inevitably be some pressure on agricultural lands and forestry resources, the impacts are less than first generation biofuels.
The development of heterogeneous chemical catalysts, used in combination with biological catalysts to produce advanced biohydrocarbons, has the potential to improve biofuel production efficiency and reduce costs. Furthermore, advanced biohydrocarbon fuels are chemically equivalent to the fuels derived from petroleum, which may make it possible to link biorefining processes to existing petroleum refineries. This has the potential to reduce the environmental impact of construction of new refineries and distribution networks (e.g., pipelines), and other fueling infrastructure.
Advanced biohydrocarbons have the potential to reduce significantly the amount of water used in feedstock production and in fuel processing compared to the crops for “first generation” biofuels and the processing using dilute sugar solutions for ethanol production.
The greenhouse gas emissions reduction potential of advanced biohydrocarbons is significant. However, there are no reliable estimates of the GHG emissions (reported as grams per megajoule, g/MJ) of advanced biohydrocarbons because there are no commercial scale processes that can be used to develop the appropriate energy balance equations.
The Department of Energy (DOE) has estimated that the availability of domestic biomass streams, with “relatively modest changes in land use and agricultural and forest practices,” could yield advanced biohydrocarbons at a volume equivalent to approximately 30 percent of petroleum used in the United States by 2050. The oil yield of algal-based diesels is predicted to be as much as an order of magnitude higher than other biodiesel crops. Assuming a lower limit for the oil yield of algal-based biodiesel (30 percent by weight), only 2.5 percent of existing U.S. cropping area would be required to displace 50 percent of petroleum based diesel use in the United States.
The current cost of large-scale production of advanced biohydrocarbons is unknown, as only bench-scale production has been conducted thus far. As such, only estimates of cost are available at this time.
There are four primary factors that determine the cost of the finished product: the feedstock, chemical processing (e.g., pyrolysis), refining and finishing the crude product, and the transportation and distribution of finished fuel.
Feedstock: The cost of woody biomass feedstocks is dependent on a number of factors including, but not limited to: crop yield, land availability, harvesting, storage and handling, and transportation costs. Huber estimates a cost of $34 to $70 per dry ton, or $5 to $15 per barrel of oil energy equivalent. This is generally consistent with the BRDI review of the literature. They report costs for a number of advanced biofuel feedstock types, including agricultural residues (e.g., corn stover), forest biomass, urban woody wastes and secondary mill residues, herbaceous energy crops (e.g., switchgrass), and short rotation woody crops.
Catalyst: The long-term potential of advanced biohydrocarbons is linked to the ability of producers to produce liquid fuels using cost-effective catalysts. Looking at existing catalytic processes, the DOE has a projected cost of cellulase enzymes for the production of ethanol between $0.30–0.50 per gallon of ethanol. In contrast, the chemical catalysts in the petroleum industry are estimated to cost about $0.01 per gallon of gasoline.
Refining and Upgrading: Estimates for refining and upgrading the bio-oil produced from pyrolysis or hydrolysis suggest that these steps account for about 33–39 percent of the capital costs of producing the finished product. The range varies due to the variable amount of refining and upgrading required based on the pathway.
Transportation: The cost of transporting biomass feedstocks can increase production costs considerably. The savings derived from economies of scale at centralized facilities are often offset by the increased transportation costs of the raw material(s). Developing a distribution system that is built on local and distributed production facilities rather than large centralized facilities will help reduce transportation costs.
In terms of net production, various start-up companies have claimed that they anticipate that in the long term, advanced biohydrocarbons will be competitive with conventional petroleum products at oil prices of about $40–60 per barrel.
Advanced biohydrocarbons are currently in the development and demonstration stage. A variety of processes have been demonstrated using bench-scale reactors to produce liquid fuels and liquid fuel components (e.g., aromatic compounds). Most estimates suggest that commercial scale production of advanced biohydrocarbons will begin within the next five to ten years.
Most recently, the DOE’s ARPA-E awarded seven projects (out of 37) a total of $37.2 million (out of $151 million) in areas related to advanced biohydrocarbons as part of their solicitation for Transformational Energy Research Projects.
The DOE awarded $78 million for the development of ‘drop-in’ renewable hydrocarbon biofuels such as advanced biohydrocarbons and associated fueling infrastructure.
Within the past year alone, five major oil companies – BP, Chevron, ExxonMobil, Royal Dutch Shell, and Total – announced joint ventures with biofuel companies to work on the development of advanced biohydrocarbons.
Obstacles to Further Development or Deployment
Currently, there are no low-cost technologies to convert the large fraction of energy in biomass or the bio-oils derived from algae into liquid fuels efficiently. Production costs must be reduced considerably, and the production volumes necessary for widespread use still need to be demonstrated. The lower limit benchmark for commercial scale processing of biomass is about 150,000 metric tons per year.
Ultimately, the optimization of advanced biohydrocarbon production processes is an essential step to allow biorefineries to produce up to commercial volumes. These barriers exist in processes such as selective thermal processing, liquid-phase catalytic processing of sugars and bio-oils, and catalytic conversion of bio-gas.
- Selective thermal processing via pyrolysis
- The production of bio-oil using fast pyrolysis results in a product that is high in oxygen content. This bio-oil is not compatible with the existing fueling infrastructure, so the oxygen needs to be removed, typically via hydrotreatment or hydrocracking. This process can be expensive and requires large quantities of hydrogen.
- Another concern is that bio-oils tend to be acidic and can cause corrosion in standard refinery units. Furthermore, they are toxic and require careful handling.
- Liquid-phase catalytic processing of sugars and bio-oils
- There is a need to increase our understanding of the intermediate processes during liquid-phase catalytic processes, namely the composition of the intermediate components, to help researchers tailor the finished product.
- Catalyst development for biohydrocarbon production is difficult because of the aqueous (i.e., water-based) environment. The catalysts developed in the petroleum and petrochemical refining industries are unstable under aqueous conditions as they operate in the gas phase or in organic solvents.
- There are also limitations related to the stability of the catalyst. For instance, a catalyst that works on bench scale may break down when applied to biomass feeds because of the various impurities present in the feedstock.
- Catalytic conversion of bio-gas
- Cost-effective production of bio-gas is challenging because the quantity of biomass required for commercial production is either not readily accessible or is currently being used for other purposes. Currently, gasification is done on a small scale (10,000-20,000 barrels per day of oil equivalent) at the local level which increases the costs of fuel distribution.
- The clean-up of bio-gas is an important step to streamline the processing of advanced biohydrocarbons. Bio-gas can contain impurities due to the various biomass feedstocks used in its production, which may require the development of feedstock-dependent catalysts.
- In addition to the conversion to bio-gas and the clean-up, the final step of conversion of bio-gas to liquid fuel requires considerable advancement in areas including the Fischer-Tropsch Synthesis, reactor technologies, and the integration of catalysts and reactors.
Policy Options to Help Promote Advanced Biohydrocarbon Fuels
Federal, state, county, and local governments support advanced biohydrocarbons in a variety of ways. Although current policies are aimed at alcohol transportation fuels, recent debate over the potential environmental and societal impacts of using feed and food crops for energy production has bolstered interest in biofuels produced from non-food feedstocks. Current support for advanced biohydrocarbons generally falls into three categories: 1) policies that mandate levels of use of biofuels, 2) policies that offer subsidies or tax credits for fuel production and/or use, and 3) and research initiatives.
- The Energy Independence and Security Act (EISA) of 2007 established a Renewable Fuel Standard that requires the production of 100 million gallons of cellulosic biofuel in 2010 and increasing over time to 16 billion gallons of cellulosic fuel in 2022.
- The Low Carbon Fuel Standard in California requires a 10 percent reduction in the carbon intensity of transportation fuels sold in California by 2020. In order to meet these requirements, one of the strategies that can be pursued is the introduction of advanced biohydrocarbons. The credit towards the LCFS is ultimately a function of the volume sold and the reduction in lifecycle emissions of the fuel as compared to the baseline fuel, i.e. gasoline or diesel.
Existing taxes and subsidies
- Registered cellulosic biofuel providers are eligible to receive a tax incentive up to $1.01 per gallon of biofuel that is sold and used by the purchaser in the purchaser's trade or business to produce a cellulosic biofuel mixture; sold and used by the purchaser as a fuel in a trade or business; sold at retail for use as a motor vehicle fuel; used by the producer in a trade or business to produce a cellulosic biofuel mixture; or used by the producer as a fuel in a trade or business. Biodiesel blenders can claim a tax credit of $1 per gallon. Note that only blenders that have produced and sold or used the qualified biodiesel mixture as a fuel in their trade or business are eligible for the tax credit.
Other tax and subsidy policies that may be considered:
- Promote additional tax incentives for processes and biorefineries that use biomass feedstocks from non-food sources.
- Support distribution and transportation infrastructure, including tax incentives to attract the required capital investments.
- Promotion of public-private partnerships for interdisciplinary research for the entire supply chain of advanced biohydrocarbons. For example, the recent DOE awards for $78 million of funding for advanced biofuels research are matched by $19 million in private and non-federal cost share funds.
- Support for research on non-food feedstock production in areas such as increased crop yields.
- Continued and focused support for the research and demonstration of conversion technologies in biohydrocarbon processing. The National Advanced Biofuels Consortia, led by NREL, received about $34 million of the recent DOE award for research to develop “infrastructure compatible, biomass-based hydrocarbon fuels.”
- Continued and increased support of bench- and pilot-scale research into the production of advanced biohydrocarbons.
Related Business Environmental Leadership Council (BELC) Company Activities
Related C2ES Resources
Further Reading / Additional Resources
Biomass Energy Data Book, 2008.
Green Car Congress, Bio-Hydrocarbons.
National Biofuels Action Plan, October 2008, Biomass Research and Development Board
Biomass Research and Development Initiative (BRDi), “The Economics of Biomass Feedstocks in the United States, A Review of the Literature,” 2008.
Chisti, Y. (2007). Biodiesel from microalgae. Palmerston North: Biotechnology Advances.
Hubert, GW, et al. “Synthesis of Transportation Fuels from Biomass: Chemistry, Catalysis, and Engineering.” Chemical Reviews, 2006, 106, pp. 4044-4098.
Perlack R., L. Wright, A. Turhollow, R. Graham, B Stokes, and D. Erbach, Biomass as Feedstock for a Bioenergy and Bioproducts Industry: The Technical Feasibility of a Billion-Ton Annual Supply, USDA/DOE, DOE/GO-102005-2135, ORNL/TM-2005/66, April 2005.
Regalbuto, J. “Cellulosic Biofuels – Got Gasoline?” Science, Vol 325, 5492, pp. 822-824, August 2009.
NSF. “Breaking the Chemical and Engineering Barriers to Lignocellulosic Biofuels: Next Generation Hydrocarbon Biorefineries”. Ed. George W. Huber, 2008, 180 p.
Green Car Congress, “Terrabon to Open New Demonstration Facility Next Week for Biomass to Renewable Gasoline Technology,” October 2008.
Wu, M.; Mintz, M.; and Wang, M. Water Consumption in the Production of Ethanol and Petroleum Gasoline,” Env Mngmt, 44, 981-997, 2009.
 See Perlack R., L. Wright, A. Turhollow, R. Graham, B Stokes, and D. Erbach, Biomass as Feedstock for a “Bioenergy and Bioproducts Industry: The Technical Feasibility of a Billion-Ton Annual Supply,” USDA/DOE, DOE/GO-102005-2135, ORNL/TM-2005/66, April 2005. In their report, Perlack et al. answer the question as to whether the “land resources of the United States are capable of producing a sustainable supply of biomass sufficient to displace 30 percent or more of the country’s present petroleum consumption.” Their scenario assumes “relatively modest changes” in land use and agricultural and forestry practices. In other words, the report evaluates the resource availability, rather than the economic viability of biomass as a feedstock for transportation fuels.
 An example of a biological catalyst is yeast in the fermentation of sugars yielded from the starch in corn or sugarcane. Biological catalysts in fermentation (to produce alcohol) have been used for thousands of years.
 Heterogeneous catalysts are those that are in a different phase (i.e., gas, liquid, or solid) than the reactants.
 Wu, M., Mintz, M., and Wang, M. “Water Consumption in the Production of Ethanol and Petroleum Gasoline,” Env Mngmt, 44, 981-997, 2009.
 Perlack et al. 2005.
 Chisti, Y. Biodiesel from microalgae. Palmerston North: Biotechnology Advances. 2007.
 Biomass Research and Development Initiative (BRDi), “The Economics of Biomass Feedstocks in the United States, A Review of the Literature,” 2008.
 Hubert, GW, et al. “Synthesis of Transportation Fuels from Biomass: Chemistry, Catalysis, and Engineering.” Chemical Reviews, 2006, 106, pp. 4044-4098.
 National Science Foundation, “Breaking the Chemical and Engineering Barriers to Lignocellulosic Biofuels: Next Generation Hydrocarbon Biorefineries,” Ed. George W. Huber, 2008, p. 180.
 NSF/Huber 2008.
 Regalbuto, J. “Cellulosic Biofuels – Got Gasoline?” Science, Vol 325, 5492, pp. 822-824, August 2009 and Green Car Congress, “Terrabon to Open New Demonstration Facility Next Week for Biomass to Renewable Gasoline Technology,” October 2008,” October 2008.
 LS9. “LS9 Secures $25 Million in Latest Round of Funding.” Press Release, September 2009.
 Shell and Codexis. “Shell and Codexis Deepen Collaboration to Speed Arrival of Next Generation Biofuel.” Joint Press Release, October 2009.
 Gevo, Inc. “Major Oil and Gas Company, Total, Invests in Advanced Biofuels Leader Gevo.” Press Release, April 2009.
 NSF/Huber 2008.
 U.S. Department of Energy. Alternative Fuels and Advanced Vehicles Data Center – Federal and State Incentives and Laws. Last accessed March 19th, 2010.
With the long-awaited release of the Kerry-Lieberman clean energy and climate bill (The American Power Act) and EPA’s final action on its “tailoring” rule, two important clues emerged this week to the unfolding mystery of whether or not we will have climate legislation this year. And buckle up and enjoy the ride -- two more major developments are just around the corner. On Wednesday, the National Academy of Sciences will be releasing three of its panel reports on America’s Climate Choices and sometime in the next two weeks Senator Murkowski may bring forward for a vote her effort to overturn EPA’s endangerment finding.
The release of the K-L bill demonstrates both how far we have gone and how distant the goal remains. The bill achieved support from some key elements of the business community and goes much further in adding in elements (nuclear power and a hard price collar) that could expand its base of support. But the loss of Senator Graham as a co-sponsor and the absence of any bipartisan backing underscore the challenges it faces in achieving the 60 votes it will need to avoid a filibuster in the Senate. The Senate clock also continues to wind down making it harder to find floor time to move a comprehensive bill forward.
EPA’s recently issued interpretation of when greenhouse gases become regulated pollutants and its final tailoring rule show EPA’s willingness to make reasonable use of the existing Clean Air Act to tackle climate change. By delaying the effective date when new source review will apply to greenhouse gases, and limiting new source requirements for best available control technology to only the largest sources (estimated to impact approximately 900 additional major sources annually), the agency put to rest the fears of some that the Agency’s rules would sink the economy and harm small businesses. The rule shows that the existing Act, though cumbersome, can be used as a tool to reduce greenhouse gas emissions.
Both EPA’s action and the upcoming National Academy panel reports provide the perfect preface to the expected vote in the Senate on overturning EPA’s endangerment finding which links greenhouse gas emissions to health and welfare impacts from climate change. To argue for overturning the finding, some Senators will point to recent controversies: the errors in the IPCC report; the hacked e-mails referred to as “climategate;” and even the DC snowstorms of last winter as evidence that the science of climate change is somehow suspect. Despite the media attention these have received, none in any way undercut the overwhelming case underlying concerns about climate change. Three independent investigations have each cleared the scientists who authored the e-mails of charges that they manipulated data or infringed on the peer review process. The IPCC has corrected the two mistakes (the expected date of the melting of Himalayan glaciers and the percent of land in the Netherlands under water) uncovered to date in its reports – out of a total of thousands of pages, two mistakes neither of which undercuts the IPCC’s key conclusion that “warming of the climate system is unequivocal” and “that most of the observed increase in global average temperatures since the mid-20th century is very likely due to the observed increase in anthropogenic GHG concentrations.” Finally, notwithstanding Washington D.C.’s blustery winter, globally 2009 proved to be one of the warmest years on record. The NAS panel reports this week are likely only to reinforce these conclusions, further calling into question any votes in support of overturning EPA’s endangerment finding based on denying what we know about climate science.
Others in the Senate, including Senator Murkowski, make the case that the goal of overturning the endangerment finding is really about the need to take the worst option (EPA regulations) off the table and thereby protect our economy from the potentially dire consequences of EPA action particularly on small businesses. They argue that this would allow our elected representatives the opportunity and time to address this issue. But the limits EPA adopted in its tailoring rule (and its earlier decision to delay implementation) appear to take off the table these concerns about widespread and costly controls on small sources. Although legal challenges to the tailoring rule are possible, they would take time to work their way through the courts, and if they were successful, Congress would then be in a far better position (and have a more compelling case) to provide a narrow legislative fix addressing a specific problem.
When the debate on overturning EPA’s endangerment finding moves to the Senate floor (10 hours of debate is permitted), many will be wondering why the Senate isn’t instead focusing its debate on finding the common ground solutions urgently needed to get our nation on a path that enhances our energy independence, spurs the growth of new technologies, and slows climate change.
Steve Seidel is Vice President for Policy Analysis