Biofuels and carbon management

Public policy supports biofuels for their benefits to agricultural economies, energy security and the environment. The environmental rationale is premised on greenhouse gas (GHG, "carbon") emissions reduction, which is a matter of contention. This issue is challenging to resolve because of critical but difficult-to-verify assumptions in lifecycle analysis (LCA), limits of available data and disputes about system boundaries. Although LCA has been the presumptive basis of climate policy for fuels, careful consideration indicates that it is inappropriate for defining regulations. This paper proposes a method using annual basis carbon (ABC) accounting to track the stocks and flows of carbon and other relevant GHGs throughout fuel supply chains. Such an approach makes fuel and feedstock production facilities the focus of accounting while treating the CO2 emissions from fuel end-use at face value regardless of the origin of the fuel carbon (bio- or fossil). Integrated into cap-and-trade policy and including provisions for mitigating indirect land-use change impacts, also evaluated on an annual basis, an ABC approach would provide a sound carbon management framework for the transportation fuels sector.