Cellulosic biofuel production is cost-effective when indirect greenhouse gas emissions are minimized.

Cellulosic biofuel is increasingly considered as a solution to meeting low carbon fuel standards (LCFS) in the 21st century, but there are costs and benefits, both economic and environmental, of biofuel production.  Melillo et al. assess the lifecycle costs of using biofuel as an energy source, including the effects of land-use changes, net fluctuations in both direct and indirect greenhouse gas (GHG) emissions, and measures of carbon intensity (CI), or according to the authors, the “simultaneous consideration of the potential of net carbon intake through enhanced management of poor or degraded lands, nitrous oxide (N2O) emissions that would accompany increased use of fertilizer, environmental effects on terrestrial carbon storage, and consideration of the economics of land conversion.”  Based on indirect emissions and CI data from two different scenarios of biofuel production, the process is beneficial only if existing managed land, rather than natural land, is used for the process as much as possible, and if N2O fertilizer use is managed properly.—Jenny Ward
  Melillo, Jerry M. et al. 2009. Indirect Emissions from Biofuels: How Important? Science 326, 1397–1399.

Jerry M. Melillo and colleagues compared two different cases of biofuel production.  The first case provided for the economically sound conversion of natural lands into biofuel growth sources; the second relied on existing managed land for biofuel production.  Using a computable general equilibrium (CGE) model and a processed-based terrestrial biogeochemistry model, Melillo et al. estimated the projected in changes in global land cover, the direct and indirect effects on projected cumulative land carbon flux, and the partitioning of greenhouse gas balance among fossil fuel abatement and fertilizer N2O emissions for each case.  In addition, they created a CI index that measured the accumulation and emission of direct land carbon, indirect land carbon, and fertilizer N2O during increasing time periods from 2000 to 2100.
Each observation revealed the benefits of producing biofuels using existing managed land rather than converting natural land to biofuel harvest.  Through this practice, less depletion of natural forests will occur in the upcoming century, which will in turn increase carbon sequestration by trees.  Furthermore, this decrease in deforestation coupled with increased use of pastures, shrubland, and savannah for biofuel production, will decrease the initial carbon accumulation and increase the eventual carbon sequestration.
Although initial increases in GHG emissions and carbon accumulation will occur in each cellulosic biofuel production land-use case, these negative effects precede eventual reductions in atmospheric carbon during the latter part of the century.  This occurs most significantly when existing managed land is reused, which minimizes the indirect emissions gains associated with more environmentally detrimental land-use changes.—Jenny Ward

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