IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v101y2017icp194-200.html
   My bibliography  Save this article

Feasibility of meeting increased biofuel mandates with E85

Author

Listed:
  • Pouliot, Sébastien
  • Babcock, Bruce A.

Abstract

The Environmental Protection Agency implements the Renewable Fuel Standard through annual blending mandates for different categories of biofuels. In its proposed rule released for the 2014, 2015 and 2016 calendar years, EPA reduced mandates because the volume of ethanol that consumers can easily use is lower than the original mandates specified in the Renewable Fuels Standard. This study estimates the demand for E85 using a new dataset that allows direct inference about the demand from the data. We report on how owners of flex vehicles in two metropolitan areas responded to changes in the price of E85. Using our new estimates of consumer demand, we find that owners of current flex vehicles in all US metro areas would consume 285 million gallons of E85 if it was priced at parity on a cost-per-mile basis with E10, and one billion gallons of E85 if it was priced to save drivers 20% on a cost-per-mile basis.

Suggested Citation

  • Pouliot, Sébastien & Babcock, Bruce A., 2017. "Feasibility of meeting increased biofuel mandates with E85," Energy Policy, Elsevier, vol. 101(C), pages 194-200.
    • Handle: RePEc:eee:enepol:v:101:y:2017:i:c:p:194-200
    DOI: 10.1016/j.enpol.2016.11.042
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421516306474
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2016.11.042?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Anderson, Soren T., 2012. "The demand for ethanol as a gasoline substitute," Journal of Environmental Economics and Management, Elsevier, vol. 63(2), pages 151-168.
    2. Aguilar, Francisco X. & Cai, Zhen & Mohebalian, Phillip & Thompson, Wyatt, 2015. "Exploring the drivers' side of the “blend wall”: U.S. consumer preferences for ethanol blend fuels," Energy Economics, Elsevier, vol. 49(C), pages 217-226.
    3. Soren T. Anderson & James M. Sallee, 2011. "Using Loopholes to Reveal the Marginal Cost of Regulation: The Case of Fuel-Economy Standards," American Economic Review, American Economic Association, vol. 101(4), pages 1375-1409, June.
    4. Corts, Kenneth S., 2010. "Building out alternative fuel retail infrastructure: Government fleet spillovers in E85," Journal of Environmental Economics and Management, Elsevier, vol. 59(3), pages 219-234, May.
    5. Lin, C.-Y. Cynthia & Prince, Lea, 2013. "Gasoline price volatility and the elasticity of demand for gasoline," Energy Economics, Elsevier, vol. 38(C), pages 111-117.
    6. de Gorter, Harry & Drabik, Dusan, 2015. "The Distinct Economic Effects of the Ethanol Blend Wall, RIN Prices and Ethanol Price Premium due to the RFS," Working Papers 250020, Cornell University, Department of Applied Economics and Management.
    7. Sébastien Pouliot & Bruce A. Babcock, 2016. "Compliance Path and Impact of Ethanol Mandates on Retail Fuel Market in the Short Run," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(3), pages 744-764.
    8. Pouliot, Sébastien & Babcock, Bruce A., 2014. "The demand for E85: Geographical location and retail capacity constraints," Energy Economics, Elsevier, vol. 45(C), pages 134-143.
    9. Christopher R. Knittel & Ben S. Meiselman & James H. Stock, 2017. "The Pass-Through of RIN Prices to Wholesale and Retail Fuels under the Renewable Fuel Standard," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 4(4), pages 1081-1119.
    10. Petrolia, Daniel R. & Bhattacharjee, Sanjoy & Hudson, Darren & Herndon, Cary W., 2010. "Do Americans want ethanol? A comparative contingent-valuation study of willingness to pay for E-10 and E-85," Energy Economics, Elsevier, vol. 32(1), pages 121-128, January.
    11. Dusan Drabik & Harry De Gorter & David R. Just & Govinda R. Timilsina, 2015. "The Economics of Brazil’s Ethanol-Sugar Markets, Mandates, and Tax Exemptions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(5), pages 1433-1450.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Luo, Jinjing & Moschini, GianCarlo, 2019. "Pass-through of the policy-induced E85 subsidy: Insights from Hotelling's model," Energy Economics, Elsevier, vol. 84(C).
    2. Gabrielius MEJERAS & Alfredas RIMKUS & Jonas MATIJOŠIUS, 2021. "Investigation Of The Influence Of Hydrogen On The Energy Performance Of A Spark Ignition Engine Using Gasoline And Bioethanol Fuel Mixtures," Transport Problems, Silesian University of Technology, Faculty of Transport, vol. 16(3), pages 41-51, September.
    3. Li, Jing & Stock, James H., 2019. "Cost pass-through to higher ethanol blends at the pump: Evidence from Minnesota gas station data," Journal of Environmental Economics and Management, Elsevier, vol. 93(C), pages 1-19.
    4. An, Henry & Qiu, Feng & Rude, James, 2021. "Volatility spillovers between food and fuel markets: Do administrative regulations affect the transmission?," Economic Modelling, Elsevier, vol. 102(C).
    5. Dumortier, Jerome & Elobeid, Amani & Carriquiry, Miguel, 2022. "Light-duty vehicle fleet electrification in the United States and its effects on global agricultural markets," Ecological Economics, Elsevier, vol. 200(C).
    6. Correa, Diego F. & Beyer, Hawthorne L. & Possingham, Hugh P. & Fargione, Joseph E. & Hill, Jason D. & Schenk, Peer M., 2021. "Microalgal biofuel production at national scales: Reducing conflicts with agricultural lands and biodiversity within countries," Energy, Elsevier, vol. 215(PA).
    7. Gabriel E. Lade & James Bushnell, 2019. "Fuel Subsidy Pass-Through and Market Structure: Evidence from the Renewable Fuel Standard," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 6(3), pages 563-592.
    8. Gabriel E. Lade, 2018. "Testimony Before the U.S. House Committee on Energy and Commerce Subcommittee on Environment," Center for Agricultural and Rural Development (CARD) Publications 18-pb24, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    9. Andersson, Linda & Ek, Kristina & Kastensson, Åsa & Wårell, Linda, 2020. "Transition towards sustainable transportation – What determines fuel choice?," Transport Policy, Elsevier, vol. 90(C), pages 31-38.
    10. Aloisio S. Nascimento Filho & Rafael G. O. dos Santos & João Gabriel A. Calmon & Peterson A. Lobato & Marcelo A. Moret & Thiago B. Murari & Hugo Saba, 2022. "Induction of a Consumption Pattern for Ethanol and Gasoline in Brazil," Sustainability, MDPI, vol. 14(15), pages 1-11, July.
    11. Dumortier, Jerome & Carriquiry, Miguel & Elobeid, Amani, 2021. "Where does all the biofuel go? Fuel efficiency gains and its effects on global agricultural production," Energy Policy, Elsevier, vol. 148(PA).
    12. Gabriel E. Lade & James Bushnell, 2016. "Fuel Subsidy Pass-Through and Market Structure: Evidence from the Renewable Fuel Standard," Center for Agricultural and Rural Development (CARD) Publications 16-wp570, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    13. Jiranyakul, Komain, 2022. "Ethanol Use and Gasoline Consumption in Thailand," MPRA Paper 115503, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sébastien Pouliot & Kenneth A Liao & Bruce A Babcock, 2018. "Estimating Willingness to Pay for E85 in the United States Using an Intercept Survey of Flex Motorists," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 100(5), pages 1486-1509.
    2. Liao, Kenneth & Pouliot, Sébastien, 2016. "Estimates of the Demand for E85 Using Stated-Preference Data off Revealed-Preference Choices," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236107, Agricultural and Applied Economics Association.
    3. Gabriel E. Lade & James Bushnell, 2019. "Fuel Subsidy Pass-Through and Market Structure: Evidence from the Renewable Fuel Standard," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 6(3), pages 563-592.
    4. Gabriel E. Lade & James Bushnell, 2016. "Fuel Subsidy Pass-Through and Market Structure: Evidence from the Renewable Fuel Standard," Center for Agricultural and Rural Development (CARD) Publications 16-wp570, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    5. Gabriel E Lade & C -Y Cynthia Lin Lawell & Aaron Smith, 2018. "Policy Shocks and Market-Based Regulations: Evidence from the Renewable Fuel Standard," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 100(3), pages 707-731.
    6. Soren T. Anderson & James M. Sallee, 2016. "Designing Policies to Make Cars Greener: A Review of the Literature," NBER Working Papers 22242, National Bureau of Economic Research, Inc.
    7. Christina Korting & Harry de Gorter & David R Just, 2019. "Who Will Pay for Increasing Biofuel Mandates? Incidence of the Renewable Fuel Standard Given a Binding Blend Wall," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 101(2), pages 492-506.
    8. Andersson, Linda & Ek, Kristina & Kastensson, Åsa & Wårell, Linda, 2020. "Transition towards sustainable transportation – What determines fuel choice?," Transport Policy, Elsevier, vol. 90(C), pages 31-38.
    9. Luo, Jinjing & Moschini, GianCarlo, 2019. "Pass-through of the policy-induced E85 subsidy: Insights from Hotelling's model," Energy Economics, Elsevier, vol. 84(C).
    10. Li, Jing & Stock, James H., 2019. "Cost pass-through to higher ethanol blends at the pump: Evidence from Minnesota gas station data," Journal of Environmental Economics and Management, Elsevier, vol. 93(C), pages 1-19.
    11. Yeh, Sonia & Burtraw, Dallas & Sterner, Thomas & Greene, David, 2021. "Tradable performance standards in the transportation sector," Energy Economics, Elsevier, vol. 102(C).
    12. Sebastien Pouliot & Bruce A. Babcock, 2014. "Impact of Ethanol Mandates on Fuel Prices when Ethanol and Gasoline are Imperfect Substitutes," Center for Agricultural and Rural Development (CARD) Publications 14-wp551, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    13. Gabriel E. Lade & C.-Y. Cynthia Lin Lawell, 2021. "The Design of Renewable Fuel Mandates and Cost Containment Mechanisms," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 79(2), pages 213-247, June.
    14. Ghoddusi, Hamed, 2017. "Blending under uncertainty: Real options analysis of ethanol plants and biofuels mandates," Energy Economics, Elsevier, vol. 61(C), pages 110-120.
    15. Korting, Christina & Just, David R., 2017. "Demystifying RINs: A partial equilibrium model of U.S. biofuel markets," Energy Economics, Elsevier, vol. 64(C), pages 353-362.
    16. Scott K. Shriver, 2015. "Network Effects in Alternative Fuel Adoption: Empirical Analysis of the Market for Ethanol," Marketing Science, INFORMS, vol. 34(1), pages 78-97, January.
    17. Huse, Cristian, 2014. "Fast and Furious (and Dirty): How Asymmetric Regulation May Hinder Environmental Policy," MPRA Paper 48909, University Library of Munich, Germany.
    18. GianCarlo Moschini & Harvey Lapan & Hyunseok Kim, 2017. "The Renewable Fuel Standard in Competitive Equilibrium: Market and Welfare Effects," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(5), pages 1117-1142.
    19. Salvo, Alberto & Huse, Cristian, 2013. "Build it, but will they come? Evidence from consumer choice between gasoline and sugarcane ethanol," Journal of Environmental Economics and Management, Elsevier, vol. 66(2), pages 251-279.
    20. Scheitrum, Daniel, 2017. "Renewable Natural Gas as a Solution to Climate Goals: Response to California's Low Carbon Fuel Standard," MPRA Paper 77193, University Library of Munich, Germany.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:101:y:2017:i:c:p:194-200. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.