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The Design and Economics of Low Carbon Fuel Standards

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  • Lade, Gabriel E.
  • Lawell, C.-Y. Cynthia Lin

Abstract

Low carbon fuel standards (LCFS) are increasingly common policy tools used to decrease emissions and increase the penetration of renewable energy technologies in the transportation sector. In this paper, we discuss important design elements of the policy, and provide a background on prominent policies that are currently enacted or proposed. The economics of an LCFS are presented using a simple conceptual model, and the economic literature on the policy is reviewed. Important opportunities to build on the extant literature are identified, including studying the role of low carbon fuel standards in spurring technical change, and the interaction of the policy with other federal and state transportation policies.

Suggested Citation

  • Lade, Gabriel E. & Lawell, C.-Y. Cynthia Lin, 2015. "The Design and Economics of Low Carbon Fuel Standards," ISU General Staff Papers 201501010800001097, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:201501010800001097
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    Cited by:

    1. Plevin, Richard J. & Delucchi, Mark A. & O’Hare, Michael, 2017. "Fuel carbon intensity standards may not mitigate climate change," Energy Policy, Elsevier, vol. 105(C), pages 93-97.
    2. 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.
    3. Lijuan Yang, 2024. "The economics of standards: A literature review," Journal of Economic Surveys, Wiley Blackwell, vol. 38(3), pages 717-758, July.
    4. repec:cdl:itsdav:qt3427b1cn is not listed on IDEAS
    5. Christensen, Adam & Hobbs, Benjamin, 2016. "A model of state and federal biofuel policy: Feasibility assessment of the California Low Carbon Fuel Standard," Applied Energy, Elsevier, vol. 169(C), pages 799-812.
    6. repec:cdl:itsdav:qt5zj382t4 is not listed on IDEAS
    7. Bhardwaj, Chandan & Axsen, Jonn & Kern, Florian & McCollum, David, 2020. "Why have multiple climate policies for light-duty vehicles? Policy mix rationales, interactions and research gaps," Transportation Research Part A: Policy and Practice, Elsevier, vol. 135(C), pages 309-326.
    8. Huseynov, Samir & Palma, Marco A., "undated". "Does California’s LCFS Reduce CO2 Emissions?," 2018 Annual Meeting, August 5-7, Washington, D.C. 274200, Agricultural and Applied Economics Association.
    9. 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.
    10. Miller, Jesse & Clark, Christopher M. & Peterson, Steve & Newes, Emily, 2024. "Estimated attribution of the RFS program on soybean biodiesel in the U.S. using the bioenergy scenario model," Energy Policy, Elsevier, vol. 192(C).
    11. repec:cdl:itsdav:qt9gk6w15t is not listed on IDEAS
    12. Upham, Paul & Virkamäki, Venla & Kivimaa, Paula & Hildén, Mikael & Wadud, Zia, 2015. "Socio-technical transition governance and public opinion: The case of passenger transport in Finland," Journal of Transport Geography, Elsevier, vol. 46(C), pages 210-219.
    13. Ahmad Karnama & João Abel Peças Lopes & Mauro Augusto da Rosa, 2018. "Impacts of Low-Carbon Fuel Standards in Transportation on the Electricity Market," Energies, MDPI, vol. 11(8), pages 1-20, July.
    14. Scott, William A., 2025. "Cost and carbon-intensity reducing innovation in biofuels for road transportation," Energy Policy, Elsevier, vol. 197(C).
    15. Gasia, Jaume & Miró, Laia & Cabeza, Luisa F., 2017. "Review on system and materials requirements for high temperature thermal energy storage. Part 1: General requirements," Renewable and Sustainable Energy Reviews, Elsevier, vol. 75(C), pages 1320-1338.

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    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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