risk management

As U.S. energy policy turns to bioenergy, and second-generation biofuels in particular, to foster energy security and environmental benefits, consideration should be given to the implications of climate risk for the incipient bioenergy industry. As a case-in-point, we review evidence from the 2012 U.S. drought, underscoring the risk of extreme weather events to the agricultural sector in general, and the bioenergy supply chain in particular, including reductions in feedstock production and higher prices for agricultural commodities and biofuels. We also use a risk management framework developed by the Intergovernmental Panel on Climate Change to review current understanding regarding climate-related hazards, exposure, and vulnerability of the bioenergy supply chain with a particular emphasis on the growing importance of lignocellulosic feedstocks to future bioenergy development. A number of climate-related hazards are projected to become more severe in future decades, and future growth of bioenergy feedstocks is likely to occur disproportionately in regions preferentially exposed to such hazards. However, strategies and opportunities are available across the supply chain to enhance coping and adaptive capacity in response to this risk. In particular, the implications of climate change will be influenced by the expansion of cellulosic feedstocks, particularly perennial grasses and woody biomass. In addition, advancements in feedstock development, logistics, and extension provide opportunities to support the sustainable development of a robust U.S.bioenergy industry as part of a holistic energy and environmental policy. However, given the nascent state of the cellulosic biofuels industry, careful attention should be given to managing climate risk over both short- and long-time scales.

Land-use change (LUC) is a contentious policy issue because of its uncertain, yet potentially substantial, impact on bioenergy climate change benefits. Currently, the share of global GHG emissions from biofuels-induced LUC is small compared to that from LUC associated with food and feed production and other human-induced causes. However, increasing demand for biofuels derived from feedstocks grown on agricultural land could increase this contribution. No consensus has emerged on how to appropriately isolate and quantify LUC impacts of bioenergy from those of other LUC drivers. We reviewed the literature and illustrate some strategies to minimize bioenergy-related LUC, including ways to increase land’s total productivity and the design and implementation of effective land use policies. The best strategies to reduce LUC risk will vary geographically, requiring a balancing of the advantages and limitations of potential options within the local context together with other goals (social, environmental, economic, energy security, and diversification).