GHG Trading Framework for the U.S. Biofuels Sector

Proceedings of Farm Foundation/USDA Conference, St. Louis, Missouri, October 15-16, 2008

22 Pages Posted: 2 Mar 2009 Last revised: 22 Mar 2015

See all articles by Subbu Kumarappan

Subbu Kumarappan

Michigan State University - Department of Agricultural Economics

Satish Joshi

Michigan State University - Department of Agricultural Economics

Date Written: February 20, 2009

Abstract

Substitution of petroleum fuels with biofuels such as ethanol and biodiesel has been shown to reduce greenhouse gas (GHG) emissions. These GHG reductions can be traded in the emerging carbon markets, and methodologies for quantifying and trading are still being developed. The main challenges in developing such GHG trading framework are analyzed. An outline of such a framework is presented that depends on the life cycle assessment of GHG reductions, along with a combination of project specific and regional standard performance measures. The advantages of assigning GHG property and trading rights to biofuel producers are discussed. At carbon prices of $10 per metric ton, estimated additional revenues to biofuel producers range from $17 to 64 million dollars per billion gallons of corn ethanol and cellulosic ethanol respectively.

Keywords: Biofuels, ethanol, biodiesel, carbon trading, GHG emissions trading, carbon, methodology, CCX, CDM, maize, lignocellulosics, well to wheel

JEL Classification: K32, N5, O13, Q2, L71, N7, Q4, Q42

Suggested Citation

Kumarappan, Subramanian and Joshi, Satish V., GHG Trading Framework for the U.S. Biofuels Sector (February 20, 2009). Proceedings of Farm Foundation/USDA Conference, St. Louis, Missouri, October 15-16, 2008, Available at SSRN: https://ssrn.com/abstract=1351907

Subramanian Kumarappan (Contact Author)

Michigan State University - Department of Agricultural Economics ( email )

East Lansing, MI 48824
United States

Satish V. Joshi

Michigan State University - Department of Agricultural Economics ( email )

91 Agriculture Hall
East Lansing, MI 48824
United States
517-432-9802 (Phone)
517-432-1800 (Fax)

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