Economics of bioenergy crops for electricity generation: Implications for land use and greenhouse gases

This paper develops a dynamic linear optimization framework to examine the optimal land allocation for two perennial crops, switchgrass and miscanthus, that can be co-fired with coal for electricity generation. Detailed spatial data at county level is used to determine the heterogeneous costs of producing and delivering biomass to power plants in Illinois over a 15-year period. A transportation module is incorporated in the model to link power plants to perennial crop growing areas such that power plants obtain their biomass input from the cheapest sources. A supply curve for bioenergy is thereby generated and the implications of various levels of production for farm income, subsidy payments and for the environment are analyzed. The environmental benefit in the form of reduced carbon-dioxide emissions from co-firing biomass with coal are determined by conducting a lifecycle analysis of carbon-dioxide emissions from electricity generated by co-firing bioenergy crops as compared to that generated from coal only. The lifecycle analysis includes the soil carbon sequestered by perennial grasses and the carbon emissions displaced by these grasses due to both conversion of land from row crops and co-firing the grasses with coal. Spatial variability in land use and in soil carbon sequestration potential of land use choices, and their policy implications are discussed.