a tax credit is combined with a blending mandate, which is part of the federal Renewable Fuel Stan- dard policy.9 Food security concerns have been raised over the effects of tax credits and subsidies on biofuel production and, in turn, on the level and stability of agricultural and food prices.10 Some have pointed out, however, that energy prices were a stronger driver of past growth in biofuel produc- tion than tax credits alone.11 What if the current Renewable Fuel Standard
were replaced with (or complemented by) a policy focused on lowering the carbon intensity of fuel, such as California’s Low Carbon Fuel Standard? Te essential difference between the two policies involves the incentives for biofuel producers and blenders. Because the Renewable Fuel Standard awards credits based on the production and blend- ing of ethanol and biodiesel, it rewards biofuel pro- duction regardless of whether and how much that production reduces carbon emissions. In contrast, the Low Carbon Fuel Standard allocates credits to blenders who achieve a specified reduction in car- bon intensity of the blended fuel. It is thus a direct incentive to reduce carbon intensity in transport and other fuels. California’s policy favors, for exam- ple, sugar-based ethanol and second-generation biofuels from cellulosic sources, such as switch- grass and miscanthus, over the maize-based ethanol currently favored under existing national policy.12 If a policy similar to the Low Carbon Fuel
Standard—aimed at reducing carbon intensity by 15 percent—were adopted nationally and used to complement the existing Renewable Fuel Standard, simulations show that the amount of maize-based ethanol produced and consumed in the United States would fall by 11.8 billion liters by 2035, while ethanol from cellulosic feedstocks would increase by 12.5 billion liters by the same year.13 Such a shiſt could have important implications for international markets and land-use change outside the United States.14 At present, a number of initiatives and studies
are being conducted in the United States to see if it is feasible to scale up a California-like policy on a wider regional basis. A national low-carbon fuel policy would need to take into account the differ- ent fuel demands of the various subregions of the
52 THE STORY GETS MORE COMPLICATED
country in order to come up with a standard that could both lead to reduced use of high-carbon fuels and meet the concerns about energy security and affordability that are major components in the US debate about energy policy.
ROUNDTABLE FOR SUSTAINABLE BIOFUELS
Within the wider international community, there have been efforts to promote the sustainable pro- duction of biofuels and to provide producers with guidelines and incentives for ensuring that biofuels are low in carbon content relative to fossil-based alternatives, as well as compatible with interna- tional standards of decent work and fair compensa- tion. Following the example of other initiatives for sustainable production, the Roundtable for Sus- tainable Biofuels was launched in 2011 as a mecha- nism for certifying biofuel producers who adhere to standards of low environmental impact and fair labor practices. Tis certification allows them to receive a price premium, similar to the price pre- mium earned by fair-trade coffee producers. Te Roundtable was designed in a way that makes the standards needed to reach official “sustainable” status compatible with those applied to certify the biofuels imported into Europe under the Renew- able Energy Directive. Over time, the Roundtable for Sustainable Biofuels standards might be ratch- eted up to encourage biofuel producers to further reduce the carbon intensity of biofuels; they could also include the indirect environmental effects of biofuels, especially those related to changes in land use and land cover.
LOOKING AHEAD
Food and energy markets will continue to interact in the future, creating fast-changing market oppor- tunities for producers of feedstock crops like sugar and maize, regardless of whether they are supplying food, feed, or fuel sectors. But domestic trade poli- cies and restrictions can lead to market disruptions and sharp price spikes, as seen in 2008 and 2010. One of the main lessons of the food price crises of the past several years is that open trade is essential to
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