Growing a Sustainable Biofuels Industry: Economics, Environmental Considerations, and the Role of the Conservation Reserve Program

Biofuels are expected to be a major contributor to renewable energy in the coming decades under the Renewable Fuel Standard (RFS). These fuels have many attractive properties including the promotion of energy independence, rural development, and the reduction of national carbon emissions. However, several unresolved environmental and economic concerns remain. Environmentally, much of the biomass is expected to come from agricultural expansion and/or intensification, which may greatly affect the net environmental impact, and economically, the lack of a developed infrastructure and bottlenecks along the supply chain may affect the industry's economic vitality. The approximately 30 million acres (12 million hectares) under the Conservation Reserve Program (CRP) represent one land base for possible expansion. Here, we examine the potential role of the CRP in biofuels industry development, by (1) assessing the range of environmental effects on six end points of concern, and (2) simulating differences in potential industry growth nationally using a systems dynamics model. The model examines seven land-use scenarios (various percentages of CRP cultivation for biofuel) and five economic scenarios (subsidy schemes) to explore the benefits of using the CRP. The environmental assessment revealed wide variation in potential impacts. Lignocellulosic feedstocks had the greatest potential to improve the environmental condition relative to row crops, but the most plausible impacts were considered to be neutral or slightly negative. Model simulations revealed that industry growth was much more sensitive to economic scenarios than land-use scenarios - similar volumes of biofuels could be produced with no CRP as with 100% utilization. The range of responses to economic policy was substantial, including long-term market stagnation at current levels of first-generation biofuels under minimal policy intervention, or RFS-scale quantities of biofuels if policy or market conditions were more favorable. In total, the combination of the environmental assessment and the supply chain model suggests that large-scale conversion of the CRP to row crops would likely incur a significant environmental cost, without a concomitant benefit in terms of biofuel production.