The use of biofuels in domestic transportation sector in the United States and European Union is attributed mainly to the binding mandates, Renewable Fuel Standard in the US and European Directive on the Promotion of Renewable Energy in the EU. The mandates have triggered production of first generation technologies that have been around for centuries and use food crops like corn or sugarcane as inputs and the second generation technologies that are still being developed but rely on cellulose or waste material. This raises important questions, what are the implications of policy mandates and biofuel production on land use change, global food crop prices and fuel blend technology as the binding mandates will rely mainly on first generation fuel technologies for the foreseeable future.

Most analysis of policy mandates and biofuel production technologies leave out the land use change impact assessment. To investigate the questions I focus on how the mandates in the US and EU interact with land use. I use a computable general equilibrium framework, the MIT Emissions Prediction and Policy Analysis (EPPA) model, which captures full economy-wide impacts of policy mandates and land use. I have developed a mechanism to integrate the first and second generation technologies, the transportation sector, and land use for policy impact analysis. I simulated the policy mandates through a permit trading system which is constrained by the blend wall technology of the underlying vehicle transportation fleet.

I find that the global biofuel crop land requirement over 2005 to 2030 time frame is 44 percent higher with the mandates. The land requirement is met primarily by the reallocation of non-biofuel crop land and partially by pasture, natural grass and harvested forest lands. The long term food crop prices increase by less than 1% per year with mandates as land productivity improvements dampen the impact of biofuel production on prices. In the case of global biofuel free-trade Brazil becomes the largest producer which reduces the deforestation in Brazil by 7 percent. I also find that fuel blend-wall acts as an implicit constraint on the domestic biofuel use as it limits the total vehicle fuel consumption.

This paper analyzes the influence of the long-run decline in US energy intensity on projections of energy use and carbon emissions to the year 2050. We build on our own recent work which decomposes changes in the aggregate US energy-GDP ratio into shifts in sectoral composition (structural change) and adjustments in the energy demand of individual industries (intensity change), and identifies the impact on the latter of price-induced substitution of variable inputs, shifts in the composition of capital and embodied and disembodied technical progress. We employ a recursive-dynamic computable general equilibrium (CGE) model of the US economy to analyze the implications of these findings for future energy use and carbon emissions. Comparison of the simulation results against projections of historical trends in GDP, energy use and emissions reveals that the range of values for the rate of autonomous energy efficiency improvement (AEEI) conventionally used in CGE models is consistent with the effects of structural changes at the sub-sector level, rather than disembodied technological change. Even so, our results suggest that US emissions may well grow faster in the future than in the recent past.

© 2007 Elsevier Ltd.

The emergence of U.S. shale gas resources to economic viability affects the nation’s energy outlook and the expected role of natural gas in climate policy. Even in the face of the current shale gas boom, however, questions are raised about both the economics of this industry and the wisdom of basing future environmental policy on projections of large shale gas supplies. Analysis of the business model appropriate to the gas shales suggests that, though the shale future is uncertain, these concerns are overstated. The policy impact of the shale gas is analyzed using two scenarios of greenhouse gas control—one mandating renewable generation and coal retirement, the other using price to achieve a 50% emissions reduction. The shale gas is shown both to benefit the national economy and to ease the task of emissions control. However, in treating the shale as a “bridge” to a low carbon future there are risks to the development of technologies, like capture and storage, needed to complete the task.

Anthropogenic emissions of greenhouse gases are very likely to have already changed the Earth’s climate, and will continue to change it for centuries if no action is taken. Nuclear power, a nearly carbon-free source of electricity, could contribute significantly to climate change mitigation by replacing conventional fossil-fueled electricity generation technologies. To examine the potential role of nuclear power, an advanced nuclear technology representing Generation III reactors is introduced into the Emissions Predictions and Policy Analysis economic model, which projects greenhouse gas and other air pollutant emissions as well as climate policy costs. The model is then used to study how the cost and availability of nuclear power affect the economy and the environment at the global scale.

A literature review shows that estimates of nuclear power costs vary widely, because of differences in both calculation methods and cost parameters. Based on a sensitivity analysis, the most important parameters are the discount rate, the overnight cost, the capacity factor and the economic lifetime. The methodological differences affect not only the absolute power costs, but also the relative costs among electricity generation technologies. Acknowledging this uncertainty, a levelized cost model leads to bus-bar cost scenarios ranging from $35/MWh to $60/MWh.

Cap-and-trade climate policies strengthen the development of nuclear power in the high nuclear cost scenarios. In low-cost cases, nuclear power grows significantly even without climate policies, which have little further influence on the market share of nuclear power. Lower costs of nuclear power decrease the costs of climate policies: the consumption NPV loss due to a 550ppm climate policy is reduced by 36% if nuclear costs are reduced from the highest to the lowest scenario. Nuclear power development at the largest scale projected would involve the depletion of currently known conventional and phosphate uranium deposits.

Environmental benefits of the development of competitive nuclear power include a reduction in greenhouse gas emissions, even if no climate policy is implemented. For example, CO2 emissions decrease by 32% in 2050 in the lowest nuclear cost scenario. Conventional pollutant emissions are also reduced: NOx and SO2 emissions decrease by 14% and 24% in 2050.

The economic value of the political decision to keep the nuclear option open is evaluated to range between $1,300 billion and $17,600 billion, in terms of consumption NPV loss, depending on the climate policy regime. These benefits should eventually be weighed against the proliferation, waste and safety issues associated with further development of nuclear power.