A major benefit claimed for the replacement of fossil fuels by biofuels is their potential to reduce (GHG) emissions. This claim needs to be subject to rigorous analysis because GHG savings depend on whether a simple life-cycle approach is taken to their estimation or a wider approach that recognizes the fact that the markets for biofuels are global.
This analysis divides GHG emissions from biofuels into direct: the savings incurred by replacing fossil fuels by growing and processing crops to deliver biofuels at the pump in the US and EU, and indirect: the impacts on GHG emissions elsewhere of US and EU biofuels policies.
A comprehensive analysis by Wang et al. (2007) in the case of corn ethanol in the US shows that GHG savings are profoundly influenced by the method of production and in particular by how the process is fuelled. If the plant is fired by coal then there is net increase in emissions compared with gasoline. Using natural gas together with by-products such as distillers' grains or wood chips as fuel sources reduces emissions compared to gasoline by 40 to 50 percent. The current average GHG reduction in corn ethanol plants is 19 percent (Wang et al., 2007: Figure 11). Wang et al. (2007) conclude that the methods that are economical with respect to GHGs and energy should be identified and promoted. They suggest that the use of cellulosic feedstock in second generation plants, which cut emissions by 86 percent, may in fact represent the long-term sustainable ethanol pathway (Wang et al., 2007: Figure 11).
In the EU the direct savings in GHGs by growing biofuels are positive and similar in dimension to those in the US; savings of 20 to 35 percent are achieved by conventional means. Using dried distillers' grains as a supplement to combined heat and power energy source raises the savings to 50 percent compared with gasoline. Biodiesel savings of GHGs are higher, at between 50 and 60 percent (Joint Research Centre, 2008: Appendix 1). Nitrous oxide from the cultivated soils in growing feedstock for biodiesel in the EU is a major contributor to GHGs. The variation from field to field can be 100 times, depending on soils' organic matter content. This means that the error range of the above estimates of GHG savings of biofuels from crops is wide. As in the case of the US, the use of cellulosic feedstock (in the form of straw) stands out, with a saving of about 70 percent.
Given that capital is always a limiting factor, a way of looking at the effectiveness of biofuels in reducing direct GHG emissions is to examine the cost per tonne of carbon dioxide equivalent (CO2e) emissions avoided. Edwards (2008) shows that biofuels are a very expensive avoidance mechanism with costs of conventional bioethanol at €200-300 per tonne of CO2e at best and biodiesel at €175. The cost of avoidance by producing liquid fuels from wood is €250 per tonne of CO2e, while second generation processes using ethanol from straw are only slightly cheaper. Costs of all methods were well above the EU trading price for a tonne of CO2e of around €20.
Land is also a limiting factor in biofuels production. Edwards (2008) shows that using wood directly for electricity production is about equal to the savings by processing the wood to liquid fuel and superior to biofuels from annual crops. However, such a use of wood does not solve the problem of the need to replace liquid fossil fuels. The above analysis concerns direct savings of GHGs; the total savings are more likely to be negative if indirect savings are included, as the next sections illustrate.
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