Multi-objective regulations on transportation fuels: Comparing renewable fuel mandates and emission standards

D. Rajagopal, R. Plevin, Gal Hochman and David Zilberman

Energy Economics, 2015, vol. 49, issue C, 359-369

Abstract: We compare two types of fuel market regulations — a renewable fuel mandate and a fuel emission standard — that could be employed to simultaneously achieve multiple outcomes such as reduction in fuel prices, fuel imports and greenhouse gas (GHG) emissions. We compare these two types of regulations in a global context taking into account heterogeneity in carbon content of both fossil fuels and renewable fuels. We find that although neither the ethanol mandate nor the emission standard is certain to reduce emissions relative to a business-as-usual baseline, at any given level of biofuel consumption in the policy region, a mandate, relative to an emission standard, results in higher GHG emissions, smaller expenditure on fuel imports, lower price of ethanol-blended gasoline and higher domestic fuel market surplus. This result holds over a wide range of values of model parameters. We also discuss the implications of this result to a regulation such as the US Renewable Fuel Standard given recent developments within the US such as increase in shale and tight oil production and large increase in average vehicle fuel economy of the automotive fleet.

Keywords: Climate change; Transportation; Energy security; Renewable energy; Mandate; Emission standard (search for similar items in EconPapers)
JEL-codes: Q21 Q28 Q41 Q42 Q48 Q58 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:49:y:2015:i:c:p:359-369

DOI: 10.1016/j.eneco.2015.02.020

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