Environmental and Resource Economics

, Volume 24, Issue 4, pp 291–312 | Cite as

Economic Potential of Biomass Based Fuels for Greenhouse Gas Emission Mitigation

  • Uwe A. Schneider
  • Bruce A. McCarl


Use of biofuels diminishes fossil fuelcombustion thereby also reducing net greenhousegas emissions. However, subsidies are neededto make agricultural biofuel productioneconomically feasible. To explore the economicpotential of biofuels in a greenhouse gasmitigation market, we incorporate data onproduction and biofuel processing for thedesignated energy crops switchgrass, hybridpoplar, and willow in an U.S. AgriculturalSector Model along with data on traditionalcrop-livestock production and processing, andafforestation of cropland. Net emissioncoefficients on all included agriculturalpractices are estimated through crop growthsimulation models or taken from the literature. Potential emission mitigation policies ormarkets are simulated via hypothetical carbonprices. At each carbon price level, theAgricultural Sector Model computes the newmarket equilibrium, revealing agriculturalcommodity prices, regionally specificproduction, input use, and welfare levels,environmental impacts, and adoption ofalternative management practices such asbiofuel production. Results indicate no rolefor biofuels below carbon prices of $40 perton of carbon equivalent. At these incentivelevels, emission reductions via reduced soiltillage and afforestation are more costefficient. For carbon prices above $70,biofuels dominate all other agriculturalmitigation strategies.

agricultural sector model alternative energy biofuel economics biomass power plants greenhouse gas emission mitigation short rotation woody crops switchgrass 


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Copyright information

© Kluwer Academic Publishers 2003

Authors and Affiliations

  • Uwe A. Schneider
    • 1
  • Bruce A. McCarl
    • 2
  1. 1.Research Unit Sustainability and Global ChangeHamburg UniversityHamburgGermany
  2. 2.Department of Agricultural EconomicsTexas A&M UniversityCollege StationUSA

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