Somebody remind me how biofuels are supposed to displace petroleum?

[GliderGuider]

Another economist rediscovers Jevons in the twilight of the Oil Age...

Renewable Fuel and the Global Rebound Effect

Evaluations of renewable fuel standards typically compute the reduction in global greenhouse gas emissions based on the amount of fossil fuel “displaced.” However they universally fail to provide any explanation of how displaced fuel stops the production of fossil fuel. In spite of this, they assume that every gallon displaced does, in fact, stop exactly one gallon of production.

In its 2010 analysis of the national Renewable Fuel Standard Program (RFS2), the Environmental Protection Agency (EPA) explains that this is not the case, but it continues to rely on this assumption nonetheless. If fact, to the extent displacement does stop production, it must do so by reducing the world oil price. But reducing this price will increase the demand for fossil fuel just as it decreases supply. This increase in demand is the global rebound effect, and it partly cancels the climate benefits of producing renewable fuels.

(From the Conclusions in the PDF):

So the short‐run rebound effect may be no less than the long‐run rebound effect. Finding that long‐run impact from the cost savings requires knowing how consumers respond to a change in price—that is, knowing their demand elasticity. The background documents for the EPA’s RIA show that the long‐run global demand elasticity for fossil fuel is about 30%.  This means that out of the $100 million a day saved worldwide in our current example, about $30 million a day will be spent buying more fuel—and almost all of that will be fossil in nature, just because most liquid fuel is fossil fuel.

It's interesting how willing I am to accept an economist's opinion when he's making a point that I agree with...:evilgrin:

[madokie]

1. How human of you

self delete

[joshcryer]

2. Heh :)

[Fledermaus]

3. By using less liquid fuels

Public transportation using renewable energy, fewer and smaller cars, scooters, & bicycles
http://www.youtube.com/watch?feature=iv&annotation_id=annotation_668127&v=ypvw59fcbCs

[GliderGuider]

4. Didn't actually read the article? Can't say I blame you.

Damn economists are too hard to read, especially when they're saying things you don't want to hear.

Essentially the story is that unless we somehow change the way economics works, the increased production of biofuels will bring down the effective price of oil. When that happens a natural "rebound effect" will allow us (the global "us") to use more of the stuff. The underlying assumption is that the only reasons we would use less liquid fuel is if there is less liquid fuel to use or the price goes up rather than down.

[Fledermaus]

6. Pseudoscience

Pseudoscience is a claim, belief, or practice which is presented as scientific, but which does not adhere to a valid scientific methodology, lacks supporting evidence or plausibility, cannot be reliably tested, or otherwise lacks scientific status.

[Fledermaus]

14. The rebound effect is never over 100%

But you would have us believe that if you were to get a new car that impoved your efficency 100%, you would now dirve over 30,000 miles a year instead of 15,000 miles.

[GliderGuider]

15. I would have you believe that? Really?

Um, no I wouldn't. Steven Soft would have you believe that if biofuels drive down the overall cost of liquid fuels, that the increase in demand due to lower price would result in more oil would be used than if biofuels had not driven down the aggregate price of liquid fuels. Basically he's saying that biofuel production represents an increase in the oil supply, which would lower prices, and the lower prices would stimulate some degree of increased demand, and that the rebound effect is likely to be in the range of 29% to 70%.

[Fledermaus]

16. Show us one example of a rebound effect being greater than 100%

[GliderGuider]

17. There isn't one.

The rebound effect in this case was estimated at 29% to 70%. Where are you getting "greater than 100%" from?

[Fledermaus]

18. The Title of your post..."Renewable Fuel and the Global Rebound Effect"

You are the one coming up with over 100% and I'm asking you to prove it.

[GliderGuider]

19. The title of the article says nothing about the rebound effect being over 100%

Nor does the body of the paper. It explicitly says "29 percent to 70 percent". I'm not sure how you're misreading that.

[Fledermaus]

20. Your words....post #4

"Essentially the story is that unless we somehow change the way economics works, the increased production of biofuels will bring down the effective price of oil. When that happens a natural "rebound effect" will allow us (the global "us") to use more of the stuff."

PS the price of oil is going up. Thats why bio fuels are competitive. Higher fuel prices promote higher efficiency and the rebound effect is always less than 100%

[GliderGuider]

21. OK. If you want my own take on this, here it is.

The article I linked to was interesting because it referenced rebound (aka the Jevons Paradox) but it's missing one key element in the analysis. It's not surprising, since Stoft is an economist, that his analysis assumes an unconstrained crude oil supply. That's the only way there can be a rebound effect. Unfortunately for economists the world over, the oil supply is now physically limited - we've hit Peak Oil. As a result, any increase in demand can only result in increased price, since increasing the supply to any significant extent is now impossible. What that means is that any addition of biofuels to the oil supply will only serve to keep the crude oil price down a bit, but not a lot since the amount of biofuels in the near future is unlikely to amount to more than a few percent of crude oil supply. Any constraint on the price of oil will enable the entire supply of crude oil to be consumed, since unregulated oil demand can be safely assumed to outstrip a constrained supply, with or without biofuels.

High oil prices enable biofuel production, but they also support the steadily rising marginal extraction costs of crude oil (as pointed out in my other more interesting post from yesterday). There is no classical economic reason why increasing biofuel production would displace any oil use, if both are available to the consumer at a similar price. The only thing that might change the lay of the land would be price manipulation like a carbon tax that preferentially disadvantages crude oil. That would create a price difference between the two products that isn't related to their utility. We can bet that Exxon, BP, Total etc. will work very hard to prevent such an outcome.

So in the end, we'll burn all the oil, along with any biofuel we make. The fact that supply will steadily fall further and further behind demand pretty much guarantees it.

[Fledermaus]

22. Pseudoscience vs Reality

Pseudoscience is a claim, belief, or practice which is presented as scientific, but which does not adhere to a valid scientific methodology, lacks supporting evidence or plausibility, cannot be reliably tested, or otherwise lacks scientific status.


Reality
ENERCON E126 - The World's Largest Wind Turbine
http://www.youtube.com/watch?v=LQxp6QTjgJg

Denmark Wind Turbine Generators Powering Transition to EV Cars
http://www.youtube.com/watch?v=DO8Rc_YjJBk

[GliderGuider]

23. Opinions.

I've never claimed my views were science. Think of them as controversial opinions intended to make people think for themselves.

[jpak]

5. What a stupid red herring - who said that biofuels will replace petroleum?

no one

Biofuels are one of many renewable energy technologies - along with energy efficiency - that will replace fossil fuels.

yup

[GliderGuider]

8. O'Really?

Worldwatch: Biofuels poised to replace oil
Biofuels to replace oil
Can Biodiesel Replace Crude Oil
Algae Biofuel Could Replace Oil
Company says biofuel can replace off-shore oil
USDA/DOE Study: Biofuels Could Replace 30% of U.S Oil by 2030
Gasoline from Algae Will Replace Gasoline from Oil
Plant Oils Will Replace Petroleum In Coming Years
Algae Biodiesel: to completely replace petroleum-based transportation fuel soon?

etc. etc. etc.

Everybody from Science Daily to the European Community to Worldwatch has said so.

The point of using biofuels to displace petroleum is to reduce CO2 emissions. No displacement, no CO2 reduction. No CO2 reduction, no Siberian peat bogs. No Siberian peat bogs, no life. Remember the point of the exercise...

[jpak]

9. None of those links state that biofuels will completely replace petroleum

that all state that they could reduce petroleum consumption

reading comprehension

try again

[GliderGuider]

10. The article doesn't talk about complete replacement, it talks about displacement

"Displace" doesn't imply "completely replace" unless it's used in the form "displace all oil use". If you'd read the article you'd know it doesn't say that.

[jpak]

13. The read your own links and remind yourself how biofuels are supposed to displace petroleum

:D

[4dsc]

11. Good one Glilder.

[jpak]

12. didn't actually click on those links - huh

good one

[lfairban]

7. I didn't read the PDF, but . . .

. . . one thing that was mentioned in the abstract was the OPEC response to declining fossil fuels. What happens when the oil producers find that they can no longer reduce the price because their profit margin would evaporate. Their only option at that point would be to curtail production until the price rises.

This would also suppress their off shore oil exploration. Why look for more when you can't sell what you already have?