Market, welfare and land-use implications of lignocellulosic bioethanol in Hawai'i

Mochizuki J, Coffman M, & Yanagida JF (2015). Market, welfare and land-use implications of lignocellulosic bioethanol in Hawai'i. Renewable Energy 76: 102-114. DOI:10.1016/j.renene.2014.10.071.

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Abstract

This article examines land-use, market and welfare implications of lignocellulosic bioethanol production in Hawai'i to satisfy 10% and 20% of the State's gasoline demand in line with the State's ethanol blending mandate and Alternative Fuels Standard (AFS). A static computable general equilibrium (CGE) model is used to evaluate four alternative support mechanisms for bioethanol. Namely: (i) a federal blending tax credit, (ii) a long-term purchase contract, (iii) a state production subsidy financed by a lump-sum tax and iv) a state production subsidy financed by an ad valorem gasoline tax. We find that because Hawaii-produced bioethanol is relatively costly, all scenarios are welfare reducing for Hawaii residents: estimated between -0.14% and -0.32%. Unsurprisingly, Hawaii's economy and its residents fair best under the federal blending tax credit scenario, with a positive impact to gross state product of $49 million. Otherwise, impacts to gross state product are negative (up to -$63 million). We additionally find that Hawaii-based bioethanol is not likely to offer substantial greenhouse gas emissions savings in comparison to imported biofuel, and as such the policy cost per tonne of emissions displaced ranges between $130 and $2100/tonne of CO2e. The policies serve to increase the value of agricultural lands, where we estimate that the value of pasture land could as well.

Item Type: Article
Uncontrolled Keywords: Computable general equilibrium modeling; Lignocellulosic bioethanol; Land use impact; Welfare impact; Greenhouse gas emissions
Research Programs: Risk, Policy and Vulnerability (RPV)
Risk & Resilience (RISK)
Bibliographic Reference: Renewable Energy; 76:102-114 (April 2015) (Published online 25 November 2014)
Depositing User: IIASA Import
Date Deposited: 15 Jan 2016 08:53
Last Modified: 14 Sep 2016 07:20
URI: http://pure.iiasa.ac.at/11551

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