A Renewable Electricity Standard, implemented on top of the Renewable Fuels Standard, could generate $14 billion in accumulated additional revenues for agriculture and forestry, increasing the demand for and production of dedicated energy crops for biomass feedstocks.
That’s according to findings in Implications of Energy and Carbon Policies for Agriculture and Forestry Sectors, a University of Tennessee Bio-based Energy Analysis Group study commissioned by 25x'25 Alliance.
That would cause shifts to more intensely managed pastureland, but University of Tennessee researchers predict that forest residues, thinnings and tree harvest will play a significant role in meeting those feedstock demands. There would be no significant changes to commodity cropland use, or crop and livestock prices. Since both prices and production increase over time for beef, pork, and poultry, gross returns will also increase.
The study goes on to show that a Renewable Electricity Standard (RES) could create an additional $215 billion of additional economic activity, more than 700,000 jobs, and $84 billon to the nation’s GDP.
The study evaluates a 25% RES to be met by 2025. However, with exceptions for small power retailers, hydropower sales, municipal solid waste sales and energy efficiency credits, the effective RES is 17% by 2025. Issues of grid access and infrastructure needs were not addressed in the study.
“Positive benefits occur if a carbon payment mechanism is added to the RFS and RES,” says Burt English, UT ag economist and one of the study’s authors. This policy component would see revenues generated by practices that reduce greenhouse gases, such as conservation tillage, bioenergy crop production, afforestation, grassland management and methane capture. Income from payments for reducing greenhouse gas emissions and market revenues would be higher the potential increase in the cost of inputs. Under this scenario, English states, “the net returns to agriculture climb to $57 billion more than the RFS alone. The national impact is equally significant, adding $226 billion in economic activity, 800,000 jobs and $87 billion to the nation’s GDP.”
"This study provides good information in preparation for what is expected to be the next round of state and national energy legislation," says Bart Ruth, past president of the American Soybean Association and 25x'25 policy chairman. "It's the kind of information that can be used by policy makers in developing what is an absolute priority for a clean energy future a carefully constructed energy strategy, complete with long-term incentives and programs. A comprehensive and stable energy policy is necessary to get the most out of what America's farms, ranches and forestlands have to offer to a clean and economically viable energy future. A properly constructed RES could be an integral component of such a strategy."