MEMORANDUM Date: October 3, 2016 Subject: Short-Rotation Trees Technical Memorandum From: U.S. Environmental Protection Agency, Office of Transportation and Air Quality To: Docket ID No. EPA-HQ-OAR-2016-0041 In this memo EPA details the lifecycle analysis (LCA) results and important considerations in support of the proposed determinations for short-rotation hybrid poplar and short-rotation willow in the Renewables Enhancement and Growth Support (REGS) proposed rulemaking. Detailed results and calculations of lifecycle greenhouse gas (GHG) emissions are provided in spreadsheets available in the docket.1 I. Introduction This document focuses on our assumptions related to the various stages in the short- rotation hybrid poplar and short-rotation willow biofuel lifecycle, including fuel and feedstock production and distribution. The general system boundaries for lifecycle GHG analysis of biofuels under the Renewable Fuel Standard (RFS) program were determined as part of the RFS2 final rule.2 Applying these system boundaries to our analysis of biofuel produced from short- rotation hybrid poplar and short-rotation willow was straightforward because the lifecycle system for short-rotation hybrid poplar and short-rotation willow biofuels is similar to those of other biofuels that were analyzed in the RFS2 final rule. To analyze the indirect agricultural and land use change impacts, we used the same agricultural economic models that were used for the RFS2 final rule. The Forest and Agricultural Sector Optimization Model (FASOM), developed by Professor Bruce McCarl of Texas A&M University and others, provides detailed information on domestic agricultural and GHG impacts of renewable fuels. The Food and Agricultural Policy Research Institute international models, maintained by the Center for Agricultural and Rural Development at Iowa State University (FAPRI-CARD), consist of a number of econometric models that provide detailed information on the impacts on international agricultural markets from the wider use of renewable fuels in the U.S. 1 See “Hybrid Poplar FASOM Data for the Docket.xlsx,” “Willow FASOM Data for the Docket.xlsx,” “Hybrid Poplar LCA Calculations.xls,” and “Willow LCA Calculations.xls,” available in Docket ID No. EPA-HQ-OAR- 2016-0041. 2 See 75 FR 14670 (March 26, 2010). 1 II. Background on Short-Rotation Hybrid Poplar and Short-Rotation Willow A. Populus The genus Populus contains poplar species of varying biological characteristics grown in several regions of the world including North America, Europe, and Asia. Populus is comprised of 25-30 species across six sections3 on the basis of leaf and flower characteristics. In addition to a bioenergy feedstock, they provide a variety of benefits including protection against erosion, serving as noise barriers, use as natural water pumps, for pulp production in the paper industry, and for production of transport packaging (Isebrands and Richardson, 2014). Combined with willows, poplars account for more than 95 million hectares (ha) of natural (82 million ha) and planted forest systems (13 million ha) globally (International Poplar Commission, FAO). Natural hybridization within a given section of Populus is common; hybrids between taxa in the Aigeiros and Tacamahaca sections also occur readily in nature. Additionally, artificial hybridization efforts have been ongoing for decades to maximize desirable characteristics in a cultivar. The most common of these commercial hybrids is P. deltoides × P. nigra (P. × canadensis) (Isebrands and Richardson, 2014). B. Salix Salix is a diverse and much larger genus than Populus, comprising 330–500 willow species worldwide of deciduous or, rarely, semi-evergreen trees and shrubs (Argus, 1999). Willows are tolerant of a wider range of climates than poplars. Willows are predominantly found in temperate and arctic zones, with some occurrence in the subtropics and tropics; most willows grow in the northern hemisphere (Isebrands and Richardson, 2014). Physically, willows take on many forms. They occur as upright trees, shrubs, prostrate plants or groundcovers, with the majority of taxa occurring as shrubs. As is the case with Populus, a large number of Salix hybrids have been bred through artificial cross-pollination. III. Modeling Assumptions The FASOM model makes a number of assumption about the categories detailed below, which may affect the results of modeling short-rotation hybrid poplar and willow. A. Land Coverage in FASOM FASOM represents private timberlands and all agricultural activity across the conterminous (“lower 48”) United States, broken into 11 market regions. The model tracks both area used for production and idled (if any) within each land category (Beach 2010). The land use categories in FASOM are: • Cropland is actively managed cropland, used for both traditional crops (e.g., corn and soybeans) and dedicated energy crops (e.g., hybrid poplar, willow, switchgrass). 3 “Section” is the taxonomic rank below genus and above species. 2 • Cropland pasture is managed pasture land used for livestock production, but which can also be converted to cropland production without additional improvement. • Pasture is land used only for pasture or grazing that cannot be converted into cropland. • Forestland contains a number of sub-categories, tracking the number of acres of private forestland existing at the starting point of the model that remain in standing forests (i.e., have not yet been harvested), the number of acres harvested, the number of harvested acres that are reforested, and the area converted from other land uses (afforested). Public forestland area is not explicitly tracked because it is assumed to remain constant over time, although exogenous estimates of forest products production from these lands are included in the model. • Rangeland is unmanaged land that can be used for livestock grazing production. While the amount of rangeland idled or used for production may vary, it is assumed that rangeland may not be used for any other purpose than for animal grazing due to its low productivity. In addition, much of the rangeland in the U.S. is publicly owned. • Developed (urban) land is assumed to have an inherently higher value than land used for any other use. Thus, the rate of urbanization is assumed to be exogenous based on projections of population and income growth and does not change between the cases analyzed. • Conservation Reserve Program (CRP) refers to land that is voluntarily taken out of crop production and placed in the USDA CRP. Land in the CRP is generally marginal cropland retired from production and converted to vegetative cover, such as grass, trees, or woody vegetation to conserve soil, improve water quality, enhance wildlife habitat, or produce other environmental benefits. This allocation of land types has been updated since the RFS2 final rule, and has been employed for more recent EPA analyses (e.g., grain sorghum). Hybrid poplar and willow are grown on “cropland” in FASOM, where they can compete with traditional crops as well as other energy crops (e.g., switchgrass). While we are defining hybrid poplar and willow as “planted trees,” which come from “tree plantations,” per the renewable biomass definition, they are not grown on forestland as it is characterized in FASOM. The assumption in FASOM that hybrid poplar and willow will be cultivated on agricultural lands and not forest lands is consistent with historical data and expectations for future patterns. We expect that future production of hybrid poplar and willow will be on less productive agricultural land because they are unlikely to generate the returns per acre needed to economically compete with other options on more productive agricultural (or forest) lands. Current research is consistent with the assumption that hybrid poplar and willow will be produced on less productive agricultural land. For example, demonstration plots of hybrid poplar, primarily in the states of Washington, Oregon, and Minnesota, are being developed on less productive agricultural lands as are willows in upstate 3 New York through the Willow Project at SUNY-ESF, which is the largest dedicated willow operation in the United States with over 1100 acres planted.4 B. Representation of Short-Rotation Hybrid Poplar and Short-Rotation Willow in FASOM Hybrid poplar and willow are unique in FASOM in that their end products can be allocated to either the forest sector in the form of pulp, or the agricultural sector in the form of bioenergy feedstock. Other crops represented in FASOM can only be consumed in one sector or the other (i.e., there is no means for agriculture to be consumed in the forest sector, and no means for forest products to be consumed in agriculture). If the price of pulp products reaches a certain level, FASOM will cultivate hybrid poplar and willow systems to help generate pulp supply. However, this does not occur to any appreciable degree as the returns for hybrid poplar and willow are inferior under normal circumstance. We allowed for the possibility of hybrid poplar and willow to contribute supply for the forest sector in our modeling, but none of this supply occurred. On the agricultural side, hybrid poplar and willow are allowed to compete with annual crops in FASOM. In order for them to be widely adopted, they need to provide high enough returns to farmers to induce them to switch from alternative land uses to hybrid poplar and willow. Under baseline conditions, there is very little willow or hybrid poplar acreage5 due to the relatively poor opportunity for returns. There are two additional assumptions in FASOM that distinguish hybrid poplar and willow (and other dedicated energy feedstocks) from other agricultural crops. First, by definition in FASOM, perennial crops such as switchgrass, hybrid poplar, and willow are produced under zero tillage. This is a reasonable assumption because perennial crops are not tilled on an annual basis, resulting in less soil disturbance relative to annual crops. For example, a short-rotation willow coppice growth system in New York State can go over 20 years between site reestablishment (up to 7, 3-4 year cycles).6 This has important implications for the amount and timing of carbon released from soils.