Assessing the Interactions among U.S. Climate Policy, Biomass Energy, and Agricultural Trade.

• Author: Wise, Marshall A.
• Position: Report

1. INTRODUCTION

   Energy from biomass (bioenergy) is potentially an important contributor to U.S. climate change mitigation efforts. Substituting biomass for fossil fuels in the energy system for uses such as generating electricity or creating liquid fuels could reduce C[O.sub.2] emissions. However, there are issues associated with large-scale reliance on bioenergy. One of the major issues is that biomass production competes with other uses of land, notably crop production and production of forest products. Because land is limited, expansion of land dedicated to biomass production would cause increased competition for land, potentially reducing the amount of land used for these other productive uses. In addition, expansion of cropland to produce biomass could reduce land in forest in general, both commercial and noncommercial, increasing land use change emissions as lands such as high-carbon forest is converted to lower-carbon cropland or land for biomass production. This issue of indirect land use emissions from biomass has been identified and studied by several authors, notably Fargione et al. (2008), Searchinger et al. (2008), Wise et al. (2009), and Havlik et al. (2011). The potential for policies that prohibit the expansion of cropland for biomass into forested lands and other non-commercial land types has been quantified by Melillo et al. (2009) and Popp et al. (2012). A comprehensive review of issues related to biomass production, technologies, use and its potential impacts on land use, greenhouse gas emissions, food production, and other issues of sustainability is provided by Chum et al. (2011).

   An issue that has not been as widely studied is that a reliance on biomass could influence the balance of trade, foremost in biomass itself, but also potentially in other agricultural products. Domestic-focused studies of biomass production potential often assume, either explicitly or implicitly, that biomass production would not be done in a manner that affects food production and the U.S. position of being a major exporter of products (see, for example, DOE 2011). However, agricultural products are heavily traded internationally, and a large-scale commitment to domestic production of biomass at levels of demand associated with deep carbon emissions reduction could affect the U.S. agricultural trade position in biomass and food crops. On the other hand, the U.S. could also end up being a large-scale importer of biomass under an aggressive climate mitigation policy assuming its import is allowed.

   Partly in response to these issues, the standard assumption to be used for the EMF-24 scenarios was that the U.S. could only use domestically-supplied biomass (see Fawcett et al., this volume). In this paper, we explore the implications of that assumption, as well as the impact of restrictions on land use change. For this study, we interpret the EMF-24 assumption as an explicit approach to limit the trade in biomass, ensuring that U.S. climate policy does not depend on biomass energy imports. To address the issue of emissions from land use change, we explore scenarios in which protections on forests are implemented to ensure that increased biomass production does not result in decreased forest land and associated land use change emissions.

   This paper uses the EMF-24 scenarios as a starting point to explore the relationship between U.S. climate policy and trade in biomass and agriculture products. In particular, it focuses on four related questions. (1) How might U.S. climate policy influence trade in biomass? (2) How might U.S. climate policy influence trade in other agricultural goods? (3) How might efforts to reduce biomass imports influence trade in other agricultural products? (4) How might efforts to protect forests influence trade in other agricultural products? The GCAM integrated assessment model is used throughout the paper as the means to explore these questions.

   We proceed to address these questions in two steps. In the first step, we focus on the impacts of the U.S. domestic climate policy on trade balances of biomass and other crops based entirely on the EMF-24 scenarios, but assuming no limits on biomass trade or on change in forested land. The wide-ranging technology scenarios of EMF-24 along with the various levels of U.S. climate policy in the EMF-24 scenario design provide an ideal vehicle to illustrate the mechanisms through which U.S. domestic climate policy might influence biomass and agricultural trade balances, and reveal the conditions that either increase or decrease such effects.

   In the second step, we explore two policies, independently and together, intended to ameliorate some of the negative impacts of bioenergy. First, we model a biomass trade restriction policy where the U.S. can neither import nor export biomass. Second, we model a forest protection policy to represent a plausible reaction to biomass expansion into forest and land use change emissions, similar in a broad sense to a REDD policy (United Nations, 2008) though here applied as a strict global constraint. Both of these policies will have intended consequences, but it is important to also understand the potential unintended consequences they might have on trade in other agricultural products.

   The remainder of the paper proceeds as follows. In Section 2, we briefly introduce the GCAM and provide links to additional documentation of its land use model component in particular. In Section 3 we provide the details of the design for the study. Section 4 and Section 5 provide the results of the analysis, first focusing on scenarios without trade or forest restrictions (Section 4) and then adding those in (Section 5). We close in Section 6 with final thoughts on the importance of understanding the interconnected nature of energy, land, and global market when designing U.S. climate policy.

2. GLOBAL CHANGE ASSESSMENT MODEL

   The model we used to project each scenario into the future is the Global Change Assessment Model (GCAM). GCAM (1) (Clarke et al., 2007, Edmonds and Reilly, 1985) is an integrated assessment model that links a global energy-economy-agricultural-land-use model with a climate model of intermediate complexity. As part of GCAM's modeling of human activities and physical systems, GCAM tracks emissions and concentrations of the important greenhouse gases and shortlived species (including C[O.sub.2], C[H.sub.4],[N.sub.2]O, N[O.sub.x], VO[C.sub.s], CO, S[O.sub.2], BC, OC, HF[C.sub.s], PF[C.sub.s], and S[F.sub.6]). GCAM is a market equilibrium model. It operates by solving for the set of prices in global and regional markets such that supplies and demands are in balance. At this model solution, all markets are in equilibrium. The version of GCAM used for this analysis was GCAM 3.0. (2,3)

   GCAM subdivides the world into fourteen regions and operates from 2005 to 2095 in five-year increments. The agriculture and terrestrial system (Wise et al. 2011) further subdivides each of the GCAM's fourteen geopolitical regions into as many as eighteen sub-regions, based on the agro-ecological zones described by Monfreda et al. (2009). GCAM computes the supply and demand for primary energy forms (e.g., coal, natural gas, crude oil), secondary energy products (e.g., electricity, hydrogen, refined liquids), several agricultural products (e.g., corn, wheat, rice, beef, poultry, etc.). GCAM typically assumes global trade in fossil fuels and agricultural products, but can be operated with markets defined regionally. GCAM models three sources of lignocellulosic biomass supply: purpose grown crops that require dedicated land such as switchgrass and woody crops, residues from agriculture and forestry operations, and organic municipal solid-waste (Luckow et al. 2010). When we refer to biomass in this paper, we are referring to these lignocellulosic resources rather than energy derived from first generation resources such as starches and oil crops, although they are included in GCAM.

   GCAM models several pathways for using lignocellulosic biomass in the energy system including production of electricity, liquid fuel, gas, and hydrogen. Biomass can also be consumed directly to provide end use heat. In the climate mitigation policies studied here, the use of biomass with carbon dioxide capture and storage (CCS) becomes an important source of electricity and liquid fuels in technology scenarios where CCS is available. GCAM includes the energy and cost required to collect, process by pelletizing or briquetting, and transport biomass for use in the energy system, with an approach and data from a study by Hamelinck et al. (2005). Luckow et al. (2010) describes in detail the data sources and values used in GCAM for biomass technology costs and energy...