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The biofuel industry has been rapidly growing around the world in recent years. Several papers have used general equilibrium models and addressed the economy-wide and environmental consequences of producing biofuels at a large scale. They mainly argue that since biofuels are mostly produced from agricultural sources, their effects are largely felt in agricultural markets with major land use and environmental consequences. In this paper, we argue that virtually all of these studies have overstated the impact of liquid biofuels on agricultural markets due to the fact that they have ignored the role of by-products resulting from the production of biofuels. Feed by-products of the biofuel industry, such as Dried Distillers Grains with Solubles (DDGS) and biodiesel by-products (BDBP) such as soy and rapeseed meals, can be used in the livestock industry as substitutes for grains and oilseed meals used in this industry. Hence, their presence mitigates the price impacts of biofuel production on the livestock and food industries. The importance of incorporating by-products of biofuel production in economic models is well recognized by some partial equilibrium analyses of biofuel production. However, to date, this issue has not been tackled by those conducting CGE analysis of biofuels programs. Accordingly, this paper explicitly introduces DDGS and BDBP, the major by-products of grain based ethanol and biodiesel production processes, into a worldwide CGE model and analyzes the economic and environmental impacts of regional and international mandate policies designed to stimulate bioenergy production and use. We first explicitly introduce by-products of biofuel production into the GTAP-BIO database, originally developed by Taheripour et al. (2007). Then we explicitly bring in DDGS 3 and BDBP into the Energy-Environmental version of the Global Trade Analysis Project (GTAP-E) model, originally developed by Burniaux and Truong (2002), and recently modified by McDougall and Golub (2007) and Birur, Hertel, and Tyner (2008). The structure of the GTAP-E model is redesigned to handle the production and consumption of biofuels and their by-products, in particular DDGS, across the world. Unlike many CGE models which are characterized by single product sectors, here grain based ethanol and DDGS jointly are produced by an industry, named EthanolC. The biodiesel industry also produces two products of biodiesel and BDBP jointly. This paper divides the world economy into 22 commodities, 20 industries, and 18 regions and then examines global impacts of the US Energy Independence and Security Act of 2007 and the European Union mandates for promoting biofuel production in the presence of by-products. We show that models with and without by-products demonstrate different portraits from the economic impacts of international biofuel mandates for the world economy in 2015. While both models demonstrate significant changes in the agricultural production pattern across the world, the model with by-products shows smaller changes in the production ...

This study conducted the updated simulations to depict a life cycle analysis (LCA) of the biodiesel production from soybeans and other feedstocks in the U.S. It addressed in details the interaction between LCA and induced land use change (ILUC) for biodiesel. Relative to the conventional petroleum diesel, soy biodiesel could achieve 76% reduction in GHG emissions without considering ILUC, or 66-72% reduction in overall GHG emissions when various ILUC cases were considered. Soy biodiesel's fossil fuel consumption rate was also 80% lower than its petroleum counterpart. Furthermore, this study examined the cause and the implication of each key parameter affecting biodiesel LCA results using a sensitivity analysis, which identified the hot spots for fossil fuel consumption and GHG emissions of biodiesel so that future efforts can be made accordingly. Finally, biodiesel produced from other feedstocks (canola oil and tallow) were also investigated to contrast with soy biodiesel and petroleum diesel.

Biofuels impact on global land use has been a controversial yet important topic. Up until recently, there has not been enough biofuels to have caused major land use change, so the evidence from actual global land use data has been scant. However, in the past decade, there have been 72 million hectares added to global crop cover. In this research we take advantage of this new data to calibrate the Global Trade Analysis Project (GTAP) model and parameters. We make two major changes. First, we calibrate the land transformation parameters (called constant elasticity of transformation, CET) to global regions so that the parameters better reflect the actual land cover change that has occurred. Second, we alter the land cover nesting structure. In the old GTAP model, cropland, pasture, and forest were all in the same nest suggesting, everything else being equal, that pasture or forest convert to cropland with equal ease and cost. However, we now take advantage of the fact that pasture converts to cropland at lower cost than forest. The paper provides the theoretical and empirical justification for these two model improvements. Then it re-evaluates the global land use impacts due to the USA ethanol program using the improved model tuned with actual observations. Finally, it shows that compared to the old model, the new model projects: (1) less expansion in global cropland due to ethanol expansion; (2) lower U.S. share in global cropland expansion; (3) and lower forest share in global cropland expansion. OPEN ACCESSAppl. Sci. 2013, 3 15

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