Conflicting Goals: Energy Security versus GHG Reductions under the EISA Cellulosic Ethanol Mandate

Increasing energy security and lowering greenhouse gas (GHG) emissions have been prominent goals in recent energy and environmental policies. While these goals are often complementary, there may also be cases where they conflict. A case in point is the Energy Independence and Security Act of 2007 (EISA). The goals of EISA are to increase the United States’ energy independence and security as well as to increase the nation’s production of clean renewable fuels. Title I of EISA establishes new fuel economy requirements for American cars and trucks that can be expected to reduce both the nation’s future oil consumption and GHG emissions. Title II of EISA establishes mandates for the use of increasing quantities of low carbon fuels. While the Title II mandates will meet the energy security goal of EISA, the mandate for the use of at least 16 billion gallons of cellulosic ethanol by 2022 may conflict with efforts to substantially reduce the nation’s GHG emissions over the next 20 years. The nation’s production capacity for biomass may be limited by a variety of factors, such as land availability. The biofuels mandate in EISA will likely require shifting biomass from its potential use as a low cost, low GHG emissions energy source for the production of electric power. Thus, there is a trade-off between the energy security gains of the biofuels mandate under EISA and the more effective (in terms of GHG emissions reductions) use of biomass in the electric utility sector. One means of evaluating this trade-off is to examine the factors that affect “cost-effectiveness” in terms of energy security of diverting biomass from electricity production to cellulosic ethanol production. This paper identifies some of the key factors that affect the cost-effectiveness of the energy security and climate change goals of EISA. The cost-effectiveness of the EISA energy security goal will depend on (1) constraints on biomass production, that is, the extent to which the EISA mandate may crowd out the use of biomass to generate electricity; (2) the world oil price; and (3) the social cost of carbon.