Full Title: The effect of CO2 regulations on the cost of corn ethanol production
Author(s): R J Plevin and S Mueller
Publisher(s): Energy and Resources Group, University of California, Berkeley
Publication Date: April 1, 2008
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Description (excerpt):
To explore the effect of CO2 price on the effective cost of ethanol production we have developed a model that integrates financial and emissions accounting for dry-mill corn ethanol plants. Three policy options are modeled: (1) a charge per unit of life cycle CO2 emissions, (2) a charge per unit of direct biorefinery emissions only, and (3) a low carbon fuel standard (LCFS). A CO2 charge on life cycle emissions increases production costs by between $0.005 and $0.008 l−1 per $10 Mg−1 CO2 price increment, across all modeled plant energy systems, with increases under direct emissions somewhat lower in all cases. In contrast, a LCFS increases the cost of production for selected plant energy systems only: a LCFS requiring reductions in average fuel global warming intensity (GWI) with a target of 10% below the 2005 baseline increases the production costs for coal-fired plants only. For all other plant types, the LCFS operates as a subsidy. The findings depend strongly on the magnitude of a land use change adder. Some land use change adders currently discussed in the literature will push the GWI of all modeled production systems above the LCFS target, flipping the CO2 price from a subsidy to a tax.