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Renewable Energy Policies for the Electricity, Transportation, and Agricultural Sectors: Complements or Substitutes

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  • Oliver, Anthony
  • Khanna, Madhu

Abstract

Renewable Portfolio Standards (RPSs) have been enacted in 29 states in the US, in part to encourage an increase in the amount of electricity generated from renewable sources. Biomass can be utilized in a dedicated bio-power plant to generate electricity, co-fired with coal at an existing power plant, or used to produce cellulosic ethanol that also yields co-product electricity. Considering these options along with a detailed national model of agricultural biomass production allows for the simulation of the effect of existing policies on electricity based biomass demand. Using a multi-period, multi-market, price endogenous model of the U.S. agricultural, electricity, and transportation sectors, the effect of existing state-level RPS is evaluated along with the implications for the agriculture sector. It is found that RPSs increase generation from both biomass and wind-based electricity generation, while decreasing the amount of generation from natural gas, and coal. Due to the co-product electricity generation a greater amount of electricity is generated from biomass under the RFS & RPS scenario than the RPS scenario even though biomass prices are higher.

Suggested Citation

  • Oliver, Anthony & Khanna, Madhu, 2013. "Renewable Energy Policies for the Electricity, Transportation, and Agricultural Sectors: Complements or Substitutes," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150406, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea13:150406
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    File URL: http://ageconsearch.umn.edu/record/150406/files/oliver_khanna_AAEA%202013%20final%20draft.pdf
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    References listed on IDEAS

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    1. Spreen, Thomas H., 2006. "Price Endogenous Mathematical Programming Models and Trade Analysis," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 38(02), pages 249-253, August.
    2. Huang, Haixiao & Khanna, Madhu & ├ľnal, Hayri & Chen, Xiaoguang, 2013. "Stacking low carbon policies on the renewable fuels standard: Economic and greenhouse gas implications," Energy Policy, Elsevier, vol. 56(C), pages 5-15.
    3. Carolyn Fischer, 2010. "Renewable Portfolio Standards: When Do They Lower Energy Prices?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 101-120.
    4. Bruce A. McCarl & Thomas H. Spreen, 1980. "Price Endogenous Mathematical Programming As a Tool for Sector Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(1), pages 87-102.
    5. Dumortier, Jerome, 2012. "Biomass Cofiring in Coal Power Plants and its Impact on Agriculture in the United States," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124944, Agricultural and Applied Economics Association.
    6. Maung, Thein A. & McCarl, Bruce A., 2008. "Economics of Biomass Fuels for Electricity Production: A Case Study with Crop Residues," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6417, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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    Keywords

    Environmental Economics and Policy; Resource /Energy Economics and Policy;

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