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Indirect Land Use Change Seen with Uncertainty by EPA

October 1, 2009

In a letter to Senator Tom Harkin, Environmental Protection Agency Administrator Lisa Jackson announced the EPA will begin conducting an uncertainty analysis regarding measurement and verification of international indirect land use change resulting from the development and expansion of a domestic biofuels industry.  Indirect land use change is the concept that as domestic farmers reduce food production in order to grow fuel crops, farmers in other parts of the world will expand food production, particularly by cutting down forests, in order to fill the food void.  This deforestation would have considerable carbon emissions and indirect land use change was proposed as a method of not only taking those emissions into consideration, but a means of valuing various biofuels according to the amount of indirect land use change they would cause. 

The problem with the indirect land use change (ILUC) concept is just that, its indirectness.  No one can say with any certainty that 40 acres of Iowa corn fields converted to switchgrass would result in 40 or more acres of corn production developing in Indonesia on environmentally sensitive lands.  More importantly, ILUC has a number of deeper theoretical issues that must be addressed before included in the carbon scoring for domestically-grown biofuels.  First, it puts all of the blame for environmental degradation on this one product.  No other product has this level of scrutiny, not even the products biofuel crops would supposedly displace.  So even though corn farmers around the world would increase corn production by expanding onto sensitive lands if U.S. corn production fell because of weather, this reality is not currently accounted for in corn pricing and, in fact, through ILUC, any deforestation could be inaccurately credited to biofuels.  Second, the concept assumes an equilibrium exists in the current commodity markets and that any disruption would lead to immediate supply changes rather than long-term responses in demand.  Yes, it is possible massive adoption of biofuels crops could lead to supply reductions in corn or wheat which would then spike the world price which would cause some producers to look into expanding production.  But it would also cause many consumers to look into reducing consumption as well.  A further problem with ILUC is that it assumes deforestation to be the first response to rising commodity prices rather than displacement of other commodities experiencing small margins, as has been the historical case.  The reality is trees are rarely the first on the metaphorical and literal chopping block in response to changing market conditions.  Usually large animal pastureland is the first to get converted into row cropping resulting in diminished large animal production, not deforestation.  Finally, ILUC assumes deforestation to occur solely because of growing commodity demand and opportunity for large margins and does not recognize that historically, deforestation resulted from a desire for landowners to profit via timber sales, government policies designed to increase exports, and not just potential profit once timber was cleared.  New forest sustainability standards, quickly growing in popularity around the world, resulted from the recognition of timber demand on deforestation.

In any case, the current indirect land use change concept requires considerable reform before it becomes a part of the biofuel scoring process.  You’ll note, however, that I have not said ILUC should not play a part in the biofuel scoring process.  The concept is vital to seeing true global carbon emissions reductions and not just the implementation of systems that focus our attention on one hand while disguising or hiding emissions in another hand the way a magician uses slight of hand to pull quarters from children’s ears.

Many in the biofuels and agriculture sectors will be anxiously waiting for the results of the EPA uncertainty analysis to see how their industry will be impacted, all the while hoping for a beneficial ILUC score.  Environmentalists looking for true carbon reductions will hope not for burdensome scores that prevent biofuels industries from developing, but for fair scores and an effective ILUC system that works.  The EPA has its work cut out for it, but given the opportunity for further study, the agency can get this vital biofuel scoring component right.

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