Bioenergy implications: Trying to keep up
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Bioenergy implications: Trying to keep up Pat Westhoff ( [email protected] ) FAPRI at the University of Missouri (www.fapri-mu.org ) “Forestry, Agriculture and Climate Change: Modeling to Support Policy Analysis” Shepherdstown, WV September 29, 2011
description
Bioenergy implications: Trying to keep up. Pat Westhoff ( [email protected] ) FAPRI at the University of Missouri ( www.fapri-mu.org ) . “Forestry, Agriculture and Climate Change: Modeling to Support Policy Analysis” Shepherdstown, WV September 29, 2011. Here’s the situation. - PowerPoint PPT Presentation
Transcript of Bioenergy implications: Trying to keep up
Bioenergy implications: Trying to keep up
Pat Westhoff ([email protected])
FAPRI at the University of Missouri(www.fapri-mu.org)
“Forestry, Agriculture and Climate Change: Modeling to Support Policy Analysis”Shepherdstown, WVSeptember 29, 2011
Here’s the situation
Like Bruce McCarl, I only saw two of the presentations in advance
So I’ll make a few points about the presentations and a few of my own
Khanna: Implications of biofuel production Many nice features in model, including
Terms of trade effects Endogenous levels of fuel consumption
One conclusion: RFS increases total fuel consumption due to lower fuel prices More biofuel production reduces (producer) prices for
gasoline—OK But what about mandate compliance costs? If RINs
have value, are they reflected in consumer fuel prices?
Net effect on consumer prices appears ambiguous
Smith: CRAM in bioenergy analysis Nice discussion of impacts of oil prices and
carbon taxes
In carbon tax scenario, interesting to see impacts on hay, livestock Reminder that accounting GHG emissions
important not just in model, but in “real world” implementation
At least in U.S., easy to imagine regulations that give farmers credit for changes in crop mix, but NOT charge producers for livestock emissions
Hellwinckel: Cellulosic feedstock data effects New data suggests
Lot more crop residues and standing trees Lot less use of grasses Net effect: far less sequestration, net carbon flux
from agriculture increases over time
Reminder that new data can change stories
Aside: future of BCAP uncertain—may not continue
Galik & Abt: woody biomass Impacts appear very region- and
assumption-specific Price changes differ across regions Assumptions about residue utilization
matter a lot
How much can we aggregate and stylize without missing what’s important?
Birur: Policy impacts in a general equilibrium framework
General equilibrium approach allows an internally consistent, global picture
Lots of good and useful analysis
One important question: has world changed in unexpected and important ways since 2004?
U.S. and Brazilian ethanol prices
04/05
05/06
06/07
07/08
08/09
09/10
10/11
0.00
0.50
1.00
1.50
2.00
2.50
3.00
OmahaSao Paulo
Dol
lars
per
gal
lon
Source: FAPRI-MU Aug. 2011 baseline update, based on data reported by state of Nebraska and USDA GAIN reports
Implications U.S. has been become a net exporter of ethanol, and
has exported ethanol to Brazil
Given current market situation Allowing tariff to expire on Dec. 31 won’t cause imports Allowing tax credit to expire on Dec. 31 may increase U.S.
exports (if U.S. prices dip in response)
Current policies and markets imply U.S. will export ethanol to Brazil because it’s profitable U.S. will import ethanol from Brazil to satisfy advanced
biofuel mandate Ships passing in the night…
U.S. ethanol production and use mandates
2006
2008
2010
2012
2014
2016
2018
2020
2021
02000400060008000
10000120001400016000
Mandated use that can come from corn ethanolEthanol production
Billi
on g
allo
ns
Sources: Production from US Department of Energy; mandate based on the Energy Independence and Security Act of 2007
U.S. corn use
04/05
06/07
08/09
10/11
12/13
14/15
16/17
0
1000
2000
3000
4000
5000
6000
7000
Ethanol & coproductsFeed useExports
Billi
on b
ushe
ls
Source: FAPRI-MU Aug. 2011 baseline update
U.S. grain and soybean prices
012345678
04/0
5
06/0
7
08/0
9
10/1
1
12/1
3
14/1
5
16/1
7
Dolla
rs pe
r bus
hel
Grain prices
Wheat Corn
Source: FAPRI-MU baseline update, August 2011. September USDA projections for 2011/12: $6.50-$7.50/bu. for corn, $7.35-$8.35/bu. for wheat and $12.65-$14.65/bu. for soybeans.
02468
10121416
04/0
5
06/0
7
08/0
9
10/1
1
12/1
3
14/1
5
16/1
7
Dolla
rs pe
r bus
hel
Soybean prices
Soybeans
U.S. corn and soybean yields
120
130
140
150
160
170
180
2000
2002
2004
2006
2008
2010
2012
2014
2016
Bush
els pe
r acre
Corn
Source: FAPRI-MU baseline update, August 2011. September USDA estimates: 148.1 for corn, 41.8 for soybeans.
30323436384042444648
2000
2002
2004
2006
2008
2010
2012
2014
2016
Bush
els pe
r acre
Soybeans
Change in Crop Area: * Birur **USDA Aug. estimates of actual area harvested ***USDA Aug. estimates of area planted (million acres)
USA*2004-15
EU27*2004-15
USA** 2004-11
EU27**2004-11
USA*** 2004-11
PaddyRice -1.80 -0.42 -0.7 0.1 -0.7Wheat -7.80 -9.42 -4.0 -0.7 -4.5Corn 6.16 -1.30 10.8 -2.3 11.4rCrGrains 0.68 -1.39 -4.6 -4.4 -5.4Soybean 8.34 1.41 -0.1 0.1 -0.3RapeMustd 0.30 21.22 0.2 5.5 0.2Palm 0.00 0.00 0.0 0.0rOilseeds 0.70 5.66 -0.3 1.0 -0.4Sugarcane -0.08 0.00 0.0 0.0Sugarbeet -0.11 3.50 -0.1 -0.1OthAgri -2.68 -3.01 Cotton -3.4 0.0
3.71 16.24 Sum -2.2 -0.7 0.214
U.S. dry mill ethanol costs and returns
04/05
06/07
08/09
10/11
12/13
14/15
16/17
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
Ethanol & DDGS salesOperating costsNet return
Dolla
rs p
er g
allo
n
Source: FAPRI-MU Aug. 2011 baseline update
How are ethanol prices determined? If mandates aren’t binding
In long run, gasoline prices and ethanol prices “should” be closely related
In short run, lots of complications▪ “Blend wall” means demand in conventional vehicles may be very
inelastic over a range of prices▪ Use in higher blends will take time (vehicles, pumps, etc.) and will only
happen if ethanol prices are expected to be low enough long enough
If mandates are binding Supply price must be high enough to generate sufficient
supplies Demand price must be low enough to encourage use RINs make up the difference
RIN values
10/11
11/12
12/13
13/14
14/15
15/16
16/17
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
ConventionalAdvancedBiodiesel
Dolla
rs p
er R
IN g
allo
n
Source: FAPRI-MU Aug. 2011 baseline update
U.S. hay acreage and prices
30
35
40
45
50
55
60
65
70
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
Millio
n acre
s
Acreage
Source: USDA NASS.
0
20
40
60
80
100
120
140
160
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
Dolla
rs pe
r ton
All hay price
U.S. livestock and poultry prices
60
80
100
120
140
160
2004
2006
2008
2010
2012
2014
2016Dolla
rs pe
r hun
dred
weigh
t
Cattle prices
Feeder cattle (OK City)Fed cattle (5-area)
Source: FAPRI-MU baseline update, August 2011
405060708090
100
2004
2006
2008
2010
2012
2014
2016Dolla
rs pe
r hun
dred
weigh
t
Hog and chicken prices
Barrow & Gilt (51-52% lean)Chickens (12 city wholesale)
