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Multi-objective regulations on transportation fuels: Comparing renewable fuel mandates and emission standards

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  • Rajagopal, D.
  • Plevin, R.
  • Hochman, G.
  • Zilberman, D.

Abstract

We compare two types of fuel market regulations — a renewable fuel mandate and a fuel emission standard — that could be employed to simultaneously achieve multiple outcomes such as reduction in fuel prices, fuel imports and greenhouse gas (GHG) emissions. We compare these two types of regulations in a global context taking into account heterogeneity in carbon content of both fossil fuels and renewable fuels. We find that although neither the ethanol mandate nor the emission standard is certain to reduce emissions relative to a business-as-usual baseline, at any given level of biofuel consumption in the policy region, a mandate, relative to an emission standard, results in higher GHG emissions, smaller expenditure on fuel imports, lower price of ethanol-blended gasoline and higher domestic fuel market surplus. This result holds over a wide range of values of model parameters. We also discuss the implications of this result to a regulation such as the US Renewable Fuel Standard given recent developments within the US such as increase in shale and tight oil production and large increase in average vehicle fuel economy of the automotive fleet.

Suggested Citation

  • Rajagopal, D. & Plevin, R. & Hochman, G. & Zilberman, D., 2015. "Multi-objective regulations on transportation fuels: Comparing renewable fuel mandates and emission standards," Energy Economics, Elsevier, vol. 49(C), pages 359-369.
  • Handle: RePEc:eee:eneeco:v:49:y:2015:i:c:p:359-369
    DOI: 10.1016/j.eneco.2015.02.020
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    References listed on IDEAS

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    Cited by:

    1. Gal Hochman & Chrysostomos Tabakis, 2020. "Biofuels and Their Potential in South Korea," Sustainability, MDPI, vol. 12(17), pages 1-17, September.
    2. Landry, Joel R. & Bento, Antonio M., 2020. "On the trade-offs of regulating multiple unpriced externalities with a single instrument: Evidence from biofuel policies," Energy Economics, Elsevier, vol. 85(C).
    3. Whistance, Jarrett & Thompson, Wyatt & Meyer, Seth, 2017. "Interactions between California's Low Carbon Fuel Standard and the National Renewable Fuel Standard," Energy Policy, Elsevier, vol. 101(C), pages 447-455.
    4. Debnath, Deepayan & Whistance, Jarrett & Thompson, Wyatt & Binfield, Julian, 2017. "Complement or substitute: Ethanol’s uncertain relationship with gasoline under alternative petroleum price and policy scenarios," Applied Energy, Elsevier, vol. 191(C), pages 385-397.
    5. Yu, Wenbin & Zhao, Feiyang & Yang, Wenming, 2020. "Qualitative analysis of particulate matter emission from diesel engine fueled with Jet A-1 under multivariate combustion boundaries by principal component analysis," Applied Energy, Elsevier, vol. 269(C).
    6. 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.
    7. Debnath, Deepayan & Whistance, Jarrett & Thompson, Wyatt, 2017. "The causes of two-way U.S.–Brazil ethanol trade and the consequences for greenhouse gas emission," Energy, Elsevier, vol. 141(C), pages 2045-2053.
    8. Miranda, Amanda Carvalho & da Silva Filho, Silvério Catureba & Tambourgi, Elias Basile & CurveloSantana, José Carlos & Vanalle, Rosangela Maria & Guerhardt, Flávio, 2018. "Analysis of the costs and logistics of biodiesel production from used cooking oil in the metropolitan region of Campinas (Brazil)," Renewable and Sustainable Energy Reviews, Elsevier, vol. 88(C), pages 373-379.
    9. Liu, Boying & Shumway, C. Richard & Yoder, Jonathan K., 2017. "Lifecycle economic analysis of biofuels: Accounting for economic substitution in policy assessment," Energy Economics, Elsevier, vol. 67(C), pages 146-158.

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    More about this item

    Keywords

    Climate change; Transportation; Energy security; Renewable energy; Mandate; Emission standard;
    All these keywords.

    JEL classification:

    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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