A biofuel mandate and a low carbon fuel standard with ‘double counting’

Johanna Jussila Hammes ()
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Johanna Jussila Hammes : VTI, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden

No 2014:19, Working papers in Transport Economics from CTS - Centre for Transport Studies Stockholm (KTH and VTI)

Abstract: European Union’s (EU) energy legislation from 2009 is still being implemented in the Member States. We study analytically the Renewable Energy Directive and the Fuel Quality Directive’s provisions for the transport sector. The former Directive imposes a biofuel mandate and allows double counting of some biofuels. The latter Directive imposes a Low Carbon Fuel Standard (LCFS). We show that either the biofuel mandate or the LCFS is redundant. Double counting makes the biofuel mandate easier to fulfil but also depresses the price of biofuels. Production of the doubly counted biofuels increases nevertheless and production of the single-counted biofuels falls. Given the type of technical change studied, double counting spurs technical development of the doubly counted biofuels. The LCFS directs support towards those biofuels with lowest life-cycle carbon emissions. The redundant policy instrument, the biofuel mandate or the LCFS, only creates costs but no benefits and should be abolished. Double counting makes the biofuel mandate non-cost-efficient and should be reconsidered.

Keywords: Biofuel mandate; Low carbon fuel standard; Double counting; Technical change; European energy legislation (search for similar items in EconPapers)
JEL-codes: D61 H21 H23 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2014-10-24
New Economics Papers: this item is included in nep-agr, nep-ene, nep-env and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:ctswps:2014_019

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