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I am submitting the attached co-authored report evaluating the
economic foundations of the GTAP model. This model is used by CARB
to estimate emissions from indirect land use change ILUC for the
Low Carbon Fuel Standard. It results in far lower estimates than
biophysical models would estimate of the land use costs of
converting land to produce the quantity of crops that are
incorporated into a mega joule of each biofuel.
 
                Our report is based on on-going research sponsored
by the Tobin Center for Economic Policy at Yale. The report finds
that the GTAP model lacks an economic basis and is particularly
unable to project changes in land use. Our report also finds that
both unsupported structural features and parameters systematically
lead to these low ILUC estimates. Accordingly, GTAP does not
provide a reasonable scientific basis on which to estimate ILUC nor
to support a conclusion that crop-based biofuels reduce greenhouse
gas emissions when replacing gasoline or diesel. For this reason,
it would be inappropriate to make regulatory changes designed to
reduce greenhouse gas emissions that incentive any increased use,
or even continued use, of these biofuels.
 
                The inability of GTAP to provide an economically
grounded estimate of ILUC does not mean that the use of land to
produce biofuels should be considered carbon-free. One reasonable
alternative approach is to factor in the carbon opportunity cost of
using for biofuels. It this land would be equally appropriate to
use a biophysical model to estimate what the average carbon losses
have been to produce the cropland that in turn generates the crops
used for biofuels (amortized according to CARB policy over 30
years). Either approach is likely to conclude that using crop-based
biofuels substantially increases greenhouse gas emissions relative
to the use of fossil fuels.