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Impact of Intensity Standards on Alternative Fuel Adoption: Renewable Natural Gas and California’s Low Carbon Fuel Standard

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  • Daniel Scheitrum

Abstract

Natural gas is a rapidly growing transportation fuel. While fossil natural gas is only slightly cleaner than conventional fuels, it provides a vector to introduce renewable natural gas (RNG) which can yield substantial emissions reductions. This paper considers RNG supply estimates from four possible sources: dairy manure, municipal solid waste, wastewater treatment plants, and landfill gas along with other major transportation fuels to evaluate the impact of California’s Low Carbon Fuel Standard (LCFS) a first of its kind fuel intensity standard. A static, multi-market, partial equilibrium, numerical model of the California fuel markets assesses the economic surplus and climate impact responses to the LCFS policy and compares the efficiency of the LCFS to a hypothetical carbon tax. Results indicate LCFS policy is sufficient to incentivize substantial quantities of RNG production. The LCFS approaches the efficiency of a carbon tax as the LCFS policy becomes more stringent when combined with a price ceiling.

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  • Daniel Scheitrum, 2020. "Impact of Intensity Standards on Alternative Fuel Adoption: Renewable Natural Gas and California’s Low Carbon Fuel Standard," The Energy Journal, , vol. 41(2), pages 191-217, March.
    • Handle: RePEc:sae:enejou:v:41:y:2020:i:2:p:191-217
    DOI: 10.5547/01956574.41.2.dsch
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    References listed on IDEAS

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    1. Scheitrum, Daniel & Myers Jaffe, Amy & Dominguez-Faus, Rosa & Parker, Nathan, 2017. "California low carbon fuel policies and natural gas fueling infrastructure: Synergies and challenges to expanding the use of RNG in transportation," Energy Policy, Elsevier, vol. 110(C), pages 355-364.
    2. Searchinger, Timothy & Heimlich, Ralph & Houghton, R. A. & Dong, Fengxia & Elobeid, Amani & Fabiosa, Jacinto F. & Tokgoz, Simla & Hayes, Dermot J. & Yu, Hun-Hsiang, 2008. "Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land-Use Change," Staff General Research Papers Archive 12881, Iowa State University, Department of Economics.
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    5. Chen, Xiaoguang & Huang, Haixiao & Khanna, Madhu & Önal, Hayri, 2014. "Alternative transportation fuel standards: Welfare effects and climate benefits," Journal of Environmental Economics and Management, Elsevier, vol. 67(3), pages 241-257.
    6. Yueyue Fan & Allen Lee & Nathan Parker & Daniel Scheitrum & Rosa Dominguez-Faus & Amy Myers Jaffe & Kenneth Medlock III, 2017. "Geospatial, Temporal and Economic Analysis of Alternative Fuel Infrastructure: The case of freight and U.S. natural gas markets," The Energy Journal, International Association for Energy Economics, vol. 0(Number 6).
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