Mandating Green: On the Design of Renewable Fuel Policies and Cost Containment Mechanisms

Principal Investigator: C.-Y. Cynthia Lin Lawell | University of California, Davis
Research Team: Gabriel E. Lade | University of California, Davis

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.

Status: Completed
Funding: $38,942
Sponsors: US DOT

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Associated Publications

Lade, Gabriel E., C.-Y. Cynthia Lin, and Aaron Smith (2015) Ex Post Costs and Renewable Identification Number (RIN) Prices under the Renewable Fuel Standard Resources for the Future Discussion Paper 15-22.

Lade, Gabriel E., and C.-Y. Cynthia Lin Lawell. (2015). The design and economics of low carbon fuel standards. Research in Transportation Economics, 52, 91-99.

Auffhammer, Maximilian, C.-Y. Cynthia Lin Lawell, James Bushnell, Olivier Deschênes, and Junjie Zhang. (2016). Economic Considerations: Cost-Effective and Efficient Climate Policies. In Veerabhadran “Ram” Ramanathan (Ed.), Bending the Curve: Ten scalable solutions for carbon neutrality and climate stabilityCollabra, 2 (1), Article 18, 1-14.

Lade, Gabriel E., C.-Y. Cynthia Lin Lawell, and Aaron Smith (2017) Designing Climate Policy: Lessons from the Renewable Fuel Standard and the Blend Wall, American Journal of Agricultural Economics.

Lin Lawell, C.-Y. Cynthia. (2017). Dynamic Structural Econometric Modeling of the Ethanol Industry. In Alberto Adrego Pinto and David Zilberman (Eds.), Modelling, Dynamics, Optimization and Bioeconomics II (pp. 293-306). Springer Proceedings in Mathematics & Statistics.

Working Papers

Yi, Fujin, and C.-Y. Cynthia Lin Lawell. (Draft 2017). What Factors Affect the Decision to Invest in a Fuel Ethanol Plant?: A Structural Model of the Ethanol Investment Timing Game.

Lade, Gabriel E., and C.-Y. Cynthia Lin Lawell. (Draft 2017) The Design of Renewable Fuel Policies and Cost Containment Mechanisms.

Lade, Gabriel E., C.-Y. Cynthia Lin Lawell, and Aaron Smith. (Draft 2017) Policy Shocks and Market-Based Regulations: Evidence from the Renewable Fuel Standard.