Fuel price impacts and compliance costs associated with the Renewable Fuel Standard (RFS)

Adam Christensen and Sauleh Siddiqui ()

Energy Policy, 2015, vol. 86, issue C, 614-624

Abstract: US policy instruments concerning vehicle biofuels are currently being revisited. For example, as part of an on-going annual Renewable Fuel Standard (RFS) implementation, the Environmental Protection Agency (EPA) requests stakeholder feedback/analysis of programmatic effects, including impacts on gasoline/diesel prices and compliance costs. Motivated by the need for regulatory-specific feedback, a novel regional market model is developed that quantifies price impacts across different regional markets for a number of market variables, including several types of compliance certificates known as Renewable Identification Numbers (RINs). An analysis of the most recent EPA proposal suggests that the D4 (biodiesel) RIN price could rise to >$1.00/RIN. Sensitivity results show that the D4 RIN price is highly sensitive to soybean oil prices, while D5/D6 RIN prices are most sensitive to the volume of E85 consumed. It was found that the projected costs associated with the RFS in 2017 could be reduced by approximately 50% if an additional 600 million gallons of E85 were consumed. The analysis also suggests that the RFS does not dramatically affect the retail price of either gasoline and diesel fuels paid by consumers.

Keywords: Biofuel; Market model; Policy; Renewable fuel; Tax credits; Fuel prices (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:86:y:2015:i:c:p:614-624

DOI: 10.1016/j.enpol.2015.08.002

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