# EPA Land Use Emissions for Corn

Ethanol

1 

# AIR, Inc. and RFA July 14, 2009

# Overview
• The following slides are informational only and are intended to highlight the wide variability and uncertainty in LUC modeling results • While AIR and RFA are attempting to conduct LUC modeling, we still have major concerns about the scientific basis, including the assumptions and methodology, for including international indirect land use changes in a lifecycle GHG analysis 2

# Overview

• AIR’s GTAP results for CARB with modified elasticities • EPA’s results • AIR’s GTAP results using EPA ethanol shock • Distillers grains assumptions

3 

## • Corn ethanol sensitivity modeling • Avoided emissions from unconventional fuelsCARBÕ s Ta b l e IV - 10 fr o m ISO R Š LUC s for C o rn Etha n ol Scena r io A B C D E F G M ean Econ o m i c Inputs ETOH pro d inc r ea s e 13.25 13.25 13.25 13.25 13.25 13.25 13.25 E l as t i ci ty of crop y i e lds wrt a r e aexpan s ion 0.5 0.75 0.5 0.5 0.5 0.66 0.75 0.59 Crop y i eld e la s ti c i ty 0.4 0.4 0.2 0.4 0.4 0.25 0.2 0.32 E l as t i ci ty of

l and transform at ion 0.2 0.2 0.2 0.3 0.1 0.2 0.2 0.2 E l as t i ci ty of harv e s t ed acr e ag e response 0.5 0.5 Mode lR e sults Tot a l land conver t ed 4.03 2.68 5.48 4.56 3.01 3.83 3.66 3.89

4 Tot a l land conver t ed 4.03 2.68 5.48 4.56 3.01 3.83 3.66 3.89 Fore s t land 1.04 0.37 1.46 0.89 1.00 0.73 0.55 0.86 P a stur e l and 3.00 2.32 4.02 3.65 2.01 3.10 3.10 3.03 U S l and conve rted 1.74 1.16 2.01 2.12 1.14 1.46 1.32 1.56 Fore s t land 0.7 0.36 0.82 0.81 0.48 0.46 0.40 0.58 P a stur e l and 1.04 0.79 1.19 1.31 0.66 1.00 0.92 0.99 LU C c arbon in t en s ity ( g CO2 eq/MJ) 33.6 18.3 44.3 35.3 27.1 27.4 24.1 30 CARB did adjust these values for the 8.7% improvement in yields to 2007, but did not adjust them for the storage derating factor of 10% (adjustment for this factor would yield average of 28 g/MJ)

# RFA Mtg with CARB on April 16 before

Board Hearing on 23rd • RFA presented information from Informa showing elasticity with resepct to area transformation was ~1, not 0.5 to 0.7 • In this meeting, Purdue (Hertel) suggested that the elasticity with respect to area expansion should be set to 1.0 and the price -yield elasticity should be set to ~ 0

– Same assumption as FASOM/FAPRI 

### • AIR was able to run GTAP with ARB’s ethanol shock of 13.25

5 

### bgy, with the area expansion elasticity at 0.95 and the price yield at 0.1

– Model would not reach a solution for us with 1.0/0.0 

### • We obtained an LUC for corn of 17.1 g/MJ (as opposed to CARB’s 30 g/MJ). 12.3% benefit vs gasoline (MW dry mill, nat gas, dried DGs).

– This accounts for the 8.7% yield improvement and the 10% storage derating factor w hich CARB intended to include

– Does NOT account for updated DG land use credits, reduced rice methane, livestock methane

# EPA’s Results Using FAPRI/FASOM

• Converted emissions to g/MJ for ease of comparison • Annualized emissions

– For 30 year, divided by 30, and for 100 year, divided by 100 (after discounting using 2%)

60.10

0.15 0.20 0.25 0.30 0.35 2022 Cropland Change, FASOM/FAPRI, 30/0% Total=1.93 million hectares

7 -0.05 0.00 0.05 0.106

8 10 12 14 2022 LUC Emissions, FASOM/FAPRI, 30/0%, Annualized Total=63.29 gCO2e/Mj

8 -2 0 2 41.5

2.0 2.5 3.0 3.5 4.0 2022 LUC Emissions, FASOM/FAPRI, 100/2%, Annualized Total=19.25 gCO2e/Mj

9 -0.5 0.0 0.5 1.0 1.5

# AIR GTAP Run with EPA Ethanol

“Shock”
• GTAP 2001 database • EPA reference is 12.4 bgy, control is 15 bgy, for difference of 2.6 bgy • GTAP is at 1.75 bgy in 2001

10 

## • We shocked model for increase from 1.75 to 4.34 (increase of 2.6, same as EPA) • Use price yield elasticity of 0.1 (close to 0), and area expansion elasticity of 0.950.05 0.10 0.15 0.20 0.25 Cropland Change, GTAP, 2.6 bgy Ethanol Shock, ETA=0.95, YDEL=0.1 Total=0.67 million hectares

11 FASOM/F

APRI indicate 1.93 mha converted, GT AP indicates 0.67 mha -0.05 0.000 2 4 6 8 10 12 Forestry

Livestock LUC Emissions, GTAP, 2.6 bgy Ethanol Shock, ETA=0.95, YDEL=0.1 Total= 20.98 gCO2e/Mj

12 The above results not corrected for yield increase or storage derating factor. When these are included, total = 18 g/MJ -4 -2

# Observations on Differences Between GTAP

and FASOM/FAPRI Results
• Big differences in amount of land converted

– FAPRI much higher than GTAP 

## • Big differences in where the land is converted

– FAPRI indicates its outside of North America, GTAP

13 

### indicates most of land conversion within U.S. 

## • These differences can have a large impact on LUC for corn (and other feedstocks)

# Distillers Grains in FASOM/FAPRI

• Two things affecting the land use credit: mass replacement ratio and % soy • FASOM assumes 1 lb of DG replaces 1 lb of feed, with 8.5% soy, 91.5% corn mix

14 

## • FAPRI more disaggregated

– 61% of DG used for beef cattle, 0.97 lb replaced, 3% soy

– 21% for dairy, 0.97 lb replaced, 3% soy

– 9% for swine, 0.89 lb replaced, 11% soy

– 9% for poultry, 0.79 lb replaced, 21% soy

– These need to be weighted together to compare with other sources

## 1 acre 8400 lbs corn 

## 2400 lbs DGs
2400 lbs corn

15 

## 3216 lbs animal feed 772 lbs soy 

## 0.28 acre 0.42 acre 0.7 acre

# DG Estimates

Parameter FASOM FAPRI GT AP Argonne Shurson Mass Replacement Ratio 1.0 0.87 1.0 1.28 1.22

16 Ratio % Corn 91.5% 94.7% 100% 76% 75% % Soy 8.5% 5.3% 0% 24% 25% FASOM, FA PRI, and GT APreplacement ratios and % soy are too low. FA PRI estimates especially troubling, since F APRI’ s land use estimates drive the corn land use numbers. And, why would EP

A perform modeling using dif ferent values for F

APRI and F

ASOM?50

60 70 80
0.90

1.00 1.10 1.20 1.28 Land Use Credit versus Percent Soy in Base Feed and DG Ratio DG Ratio Argonne Shurson

17 20 30 40
0 5 10 15 20 25 30 Percent Soy in Base Feed Air Improvement Resource, Inc. GTAP FASOM

FAPRI

# DG Conclusions

• GTAP, FASOM, and FAPRI DG assumptions should be revised to the Argonne or Shurson estimates • External correction of GTAP to Argonne DG estimates would reduce emissions from 18 g/MJ to 8

18 

## g/MJ

# EPA FASOM, FAPRI LUC SensitivityC ases

for Corn Ethanol
• There currently are none

– Economic sensitivity for higher yield and elimination of CRP floor

– AIR has requested complete data for these two cases so we

19 

### can see impact on LUCs. Availability? 

## • RFA suggested sensitivity cases

– DG assumptions

– Projected corn yields

– Elimination of U.S. CRP floor

# Other Issues with FAPRI


# • The fact that the model runs cannot be replicated by anyone outside of the CARD system is a big problem

20

# Other Issues RFA is Working On
• Comparing Winrock emissions to Woods Hole • Having FASOM/FAPRI run by sponsors with improved DG assumptions and a variety of projected corn yields

21 

# • Dr. Shurson is reviewing FASOM/FAPRI DG assumptions

# Questions

• What things is EPA trying to fix in GTAP? • Will GTAP modeling be done for final rule? • Is EPA doing a Winrock vs Woods Hole emissions comparison?

22 

## • Will EPA include the social cost of carbon concept in its time accounting?

# What do biofuels displace?
• Biofuels displace and delay the need for high carbon unconventional fuels • Most traditional lifecycle GHG analyses compare biofuels to average (conventional) fuels • Biofuels GHGs should be compared to the fuels they replace at the margin of the fuel market

# Liquid Fuel Supply Growth, 2007 - 2030

4.4 12.4 80 90 100 11 0mbpd Liquid Fuels Supply Growth, 2007 -2030

• Unconventional fuels nearly triple • Conventional fuels grow 14% 81.8 93.0 50 60 70200720082009201020112012201320142015201620172018201920202021202220232024202520262027202820292030mbpd

Conventional Unconventional

• Conventional fuels grow 14% • Unconventional = 42% of growth • Conventional = 58% of growth

Source: EIA

2009 AEO

# Unconventional growth sources

8 10 12 14mbpd Unconventional Fuel Growth, 2007 -2030

0 2 4 6 2007 2030mbpd

Biofuels Bitumen Extra - heavy oil CTL GTL Shale Other What would be used if these biofuels didn’t exist? Source: EIA

2009 AEO

# Unconventional growth, adjusted to exclude biofuels

Unconven tional Source Share of Unconventional Supply Growth Bitumen (T

ar Sands) 55.5% Extra Heavy Crude 10.7% Biofuels 0.0% Coal -to - Liquids 24.2% Gas -to - Liquids 5.6% Oil Shale 3.3% Other 0.7%

# What will biofuels displace in the aggregate?

Source Wo rstCase Best Case Conventional 58.0% 69.6% Bitumen (T

ar Sands) 23.3% 16.9% Extra Heavy Crude 4.5% 3.3% Coal -to - Liquids 10.2% 7.4% Liquids Gas -to - Liquids 2.4% 1.7% Oil Shale 1.4% 1.0% Other Unconventional 0.3% 0.2%

# Lifecycle GHG Emissions Compared

Gas -to - Liquids [a] Bitumen (T

ar Sands) [a] Extra - Heavy [a] Coal -to - Liquids [a] Oil Shale [a] Lifecycle GHG Emissions

0 50 100 150 200 250 Conventional Gasoline ... Cellulosic Ethanol [c] Corn Ethanol [b] Gas -to - Liquids [a] g CO2e/MJ Notes : • Farrell & Sperling. A Low Carbon Fuels Standard for California. Part I: Technical Analysis. Aug. 1, 2007. • Low est. = Midwest nat. gas dry mill (Liska et al., 2009). High est. = Midwest wet mill (CARB, 2009). • Low estimate = Huang, 2007. High estimate = W ang et al., 2007. • EPA, 2009. • DIRECT EMISSIONS ONLY

# Results

Conventional Gasoline [a] Best Case Displaced, Low GHG Worst Case Displaced, Low GHG Best Case Displaced, High GHG Worst Case Displaced, High GHG Avoided Emissions Ab ove Conventional Baseline Gasoline Avoided emissions above conventional ga soline baseline range from 8 to 22 g CO2e/MJ depending on assumptions used. +22 

### +8
0 20 40 60 80 100 120 Cellulosic Ethanol [c] Corn Ethanol [b] Conventional Gasoline [a] g CO2e/MJ Notes : • Farrell & Sperling. A Low Carbon Fuels Standard for California. Part I: Technical Analysis. Aug. 1, 2007. • Low est. = Midwest nat. gas dry mill (Liska et al., 2009). High est. = Midwest wet mill (CARB, 2009). • Low estimate = Huang, 2007. High estimate = W ang et al., 2007. • EPA, 2009.. • DIRECT EMISSIONS ONLY

# Questions

• Is EPA considering a marginal fuel displacement approach? • What methodology and assumptions are being used? • Is this encompassed by the NEMS modeling being

30 

## • Is this encompassed by the NEMS modeling being performed? • Ideas/current thinking on how to reconcile inequity of 2005 petroleum baseline?