Clarifying the biofuel carbon offset

Components of the biofuel carbon offset. The gross offset comprises the whole pie; the net induced offset is highlighted in blue. Based on stock-and-flow modeling of a corn ethanol scenario. 

The carbon neutrality of biofuel combustion is sometimes discussed in terms of its fossil fuel offset, i.e., the fossil carbon emissions that are avoided when it is used in place of a fossil-based fuel such as conventional gasoline. The offset occurs because the biofuel contains biogenic carbon recently removed from the atmosphere by photosynthesis instead of fossil carbon that was buried underground. 

As the U.S. Environmental Protection Agency (EPA) stated in its Renewable Fuel Standard (RFS) regulation, "For renewable fuels … the carbon emitted as a result of fuel combustion is offset by the uptake of biogenic carbon during feedstock production." As explained below, this assumption of a feedstock offset is not generally true. In particular, it fails for fuels derived from commodity crops, as is the case for most biofuels now produced at commercial scale. 

Substituting biofuel for fossil fuel triggers changes in several different carbon flows into and out of the atmosphere. The technical literature has examined these effects using complex methods such as consequential lifecycle analysis (CLCA) and integrated assessment modeling (IAM). However, the key concepts can be clearly described using a stylized stock-and-flow model. 

I built such a model to illustrate the major effects that influence how and to what extent biofuel use offsets carbon emissions. Although its parameters were chosen from the literature on corn ethanol, this model was designed to offer insights rather than generate specific numerical findings. It examines only the main carbon flows associated with biofuel use, omitting the ancillary, production-related GHG emissions that are the traditional focus of LCA. 

Researchers have identified three market-mediated effects that contribute to offsetting a biofuel's biogenic emissions. They are induced by the marginally higher crop prices that result as biofuel feedstock demand is added to demand for food and feed:  

• Decreased food consumption due to the higher prices; this can be termed the deprivation effect (although some of it may result from more efficient use of crop harvests).  
• Increased crop yields as farmers in response to the higher prices, comprising what is known as the intensification effect and thereby increasing the rate of net carbon uptake. 
• Increased overall harvests obtained by planting more cropland, a response known as the extensification effect and which involves land-use change (LUC) that may impact carbon-rich natural lands. 

The extensification-driven LUC can cause a large short-term release of carbon into the atmosphere, incurring what is known as carbon debt. By reducing the area of natural land that is actively storing carbon, it can also result in foregone sequestration that undermines the net offset. The deprivation effect reflects the "food versus fuel" problem and contributes to the offset by reducing carbon consumption by the food system. That implies a lower rate of CO2 emissions from respiration and thereby effectively raising the rate of net carbon uptake by the biosphere. Although intensification does not have the adverse impacts of these other two effects, it can result in higher GHG emissions from greater use of fertilizers, irrigation and other ancillary farming activities (as commonly evaluated by LCA, but omitted from the stock-and-flow model featured here). 

In addition to these effects on biogenic carbon flows, the decreased petroleum demand as biofuel displaces fossil fuel can decrease petroleum prices and cause a rebound effect of increased fuel demand and its associated CO2 emissions in other markets, further undermining the net offset. 

The pie chart above summarizes how these carbon flow changes influence the biofuel offset. The entire pie represents a complete balancing ("neutralization") of a biofuel's biogenic emissions through gains in net carbon uptake. This constitutes the gross offset. It has three components that fill the pie including the cross-hatched portions. They are depicted here based on nominal parameter values for a stock-and-flow scenario detailed in the paper on which this post is based. Deprivation accounts for 33% of the gross offset (pink slice); intensification accounts for 15% (green); and the remaining 52% is from extensification (beige), reflecting the area of new cropland put into production to supply both biofuel production and food system consumption. 

The cross-hatched portions show the countervailing effects of foregone carbon sequestration, which erodes 8% of the gross offset, and petroleum market rebound, which erodes 20% based on the assumed parameter values. That leaves the net induced offset, amounting to 72% of the gross offset. It determines the long-term net emissions reduction obtained when biofuel replaces fossil fuel. 

Biofuels can be seen as carbon neutral in that their production induces a gross offset. Explicitly tracking carbon flows with a stock-and-flow model makes it clear that "neutralizing" biofuel CO2 emissions involves several distinct mechanisms rather than a presumptive feedstock offset. Moreover, the net induced offset is less than a full offset even before considering a biofuel's non-biogenic, production-related GHG emissions as evaluated by LCA. Stock-and-flow modeling also highlights the strong time dependence of a biofuel's impact on atmospheric carbon when land-use change is involved, showing how the net induced offset influences the slope of the decline in the atmospheric carbon stock that pays down carbon debt. 

This illustrative analysis pertains to a crop-based biofuel such as corn ethanol. For other biofuels, such as those derived from biomass waste, different mechanisms could be involved, but a stock-and-flow analysis would still apply and their net offset would still be less than a full because of the rebound effect. 

Visualizing the time-varying carbon impact of biofuels

Several years ago I did a post entitled "When do biofuels really balance carbon?" At issue is the belief that biofuels are inherently carbon neutral. That assumption is typically justified in terms of a feedstock offset, i.e., that a biofuel's end-use and other biogenic CO2 emissions are fully balanced by CO2 uptake during photosynthesis when their feedstocks are grown. However, that proposition is not generally true. A more correct understanding is that the CO2 emitted from biofuel use can be partly balanced by gains in net CO2 uptake in several locations (not just where feedstock is grown) over a possibly long period of time.

In the biofuel literature, this understanding of biofuel-related carbon flows was developed through consequential lifecycle assessment (CLCA) modeling, which is quite complicated and hardly transparent. However, the key insights can be seen with relatively simple stock-and-flow modeling. The outcome of such an exercise is described here.

The following figure shows illustrative results for a scenario of biofuel use as shown in the bottom panel (c) of the figure. This model input assumes that corn ethanol use ramps up to 13 billion gallons per year (Ggal/year) over a 10-year period (2005-2015) and then remains constant thereafter. The analysis was done in units of teragrams of carbon (Tgc); 13 Ggal/year of ethanol corresponds to 20 Tgc/year on a carbon (not CO2) mass basis.

Changes over time in (a) atmospheric carbon and (b) net carbon emissions due to (c) biofuel use. Shown relative to a fossil-fuel reference case; units are teragrams of carbon (Tgc). 

The middle panel (b) shows the effect on net carbon emissions. Emissions rise sharply as ethanol use ramps up, reflecting the release of terrestrial carbon stocks as natural lands (such as tropical forests or grasslands) are cleared, directly or indirectly, to make way for new cropland. Such land-use change is triggered by the additional crop production needed for biofuels. Once biofuel use stops rising (after 2015 in the scenario modeled), net carbon emissions fall below the fossil fuel reference case. This emission reduction, which amounts to roughly 17 Tgc/year for the case shown here, reflects the net induced offset due to biofuel use. It is less than a full offset of the biofuel's associated biogenic emissions and results from changes in several carbon flows economically induced by biofuel use as explained in a subsequent post.

The top panel (a) shows the resulting change in atmospheric carbon which, as a stock, is the integral of the net emissions flow of panel (b). Atmospheric carbon rises above the fossil fuel reference level as biofuel increases, reflecting the carbon debt from the biofuel-related land-use change. Atmospheric carbon begins decreasing once biofuel use stops increasing, falling below the reference level after 2054. That is 48 years after the first year of modeled biofuel use (2006) in the scenario shown here, reflecting the time it takes to pay back the carbon debt and highlighting the nearly five decade lag before the biofuel use achieves a net CO2 reduction.

This greatly delayed climate mitigation is obscured by most LCA studies, which smooth over important time-varying effects when reducing their results to carbon intensity values (e.g., grams of CO2-equivalent per megajoule of fuel). The system dynamics revealed by stock-and-flow modeling emphasize that, although biofuels may offer a long-term net carbon reduction, they can make matters worse before they get better.