Article
The Design of Renewable Fuel Policies and Cost Containment Mechanisms
Economics Working Papers
Publication Date
3-1-2017
Number
17041
Abstract
Renewable fuel mandates are popular policy mechanisms to reduce greenhouse gas emissions from transportation fuels. We study the effects and effciency of two policies, a renewable share mandate and a carbon intensity standard, with and without a cost containment mechanism. Using both a theory model of a regulated fuel industry and a numerical model of the U.S. fuel market, we show that an optimally set mandate leads to only modest welfare gains over business as usual. However, the effciency of both policies substantially increases when combined optimally with a cost containment mechanism.
Version History
Original Release Date: March 2017
Disciplines
Departments
Department of Economics, Iowa State University
File Format
application/pdf
Length
32 pages
Citation Information
Gabriel E. Lade and C.-Y. Cynthia Lin Lawell. "The Design of Renewable Fuel Policies and Cost Containment Mechanisms" (2017) Available at: http://works.bepress.com/gabriel-lade/12/