Designing and Analyzing Policies for Renewable Fuels

Designing and Analyzing Policies for Renewable Fuels

Federal and state policies to reduce greenhouse gas emissions in the transportation section utilize several alternative policies to traditional pollution taxes and cap and trade programs. The programs aim to increase the utilization of clean, renewable fuel sources in the production of finished motor gasoline. Many of the policies currently in place are being proposed at the state and national level involve some variant of a mandate with the option of flexibility by allowing firms to generate the purchase credits for over- or under- consumption of clean inputs. The two most prominent policies in place in the United States are the renewable fuel standard (RFS) at the national level and California’s Low Carbon Fuels Standard (LCFS). Both policies are currently undergoing large changes, and major amendments to the programs are expected in the coming year. Our research seeks to provide a timely and policy relevant examination of the economics of the policies, the effects and effectiveness of various amendments to the programs, and the historical cost of the policies to the fuel industry.

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