Why does the iLUC for Vegetable Oils differ under the LCFS?
ARB released the indirect land use change (iLUC) estimates for three vegetable oil biodiesel fuels.
The iLUC result depends on many parameters and the key factor driving the difference between soy, Canola, and palm oils is likely the Armington assumption in GTAP combined with the prices history in the GTAP database. The Armington elasticity controls how much a commodity can trade internationally based on prior history. Since the U.S. has historically not imported much palm oil, the use of Canola oil would not result in the prediction of large palm oil imports.
Understanding the long run behavior of oils and fats includes factors not modeled in GTAP such as the interchangeability of oils within end uses such as confections, pastries, fry oil, and animal feed.
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