The Expanding Role of Renewable Fuel Policy as a Demand Driver in Agriculture

Cortney Cowley

Economic Review, 2024, vol. vol. 109, issue no. 6, 16

Abstract: Energy policies that promote shifts toward renewable fuels have important implications for the agricultural sector. Policies in the Inflation Reduction Act (IRA) in particular are likely to increase connections between the U.S. row crop sector and the energy industry. The IRA, which Congress passed in August 2022, created policies to help further transition the U.S. economy away from hydrocarbons and toward more domestic renewable fuel production. Previous shifts in renewable fuel policy, such as the implementation of the Renewal Fuel Standard (RFS) in 2006, may help shed light on the IRA’s potential effects. For example, prices for corn became more correlated with energy prices after the RFS due in part to a dramatic shift in demand for corn as an energy input. Cortney Cowley examines the RFS as a case study for the potential effects of policy-led renewable energy transitions such as the IRA. She finds that following the implementation of the RFS, the broader transition in the U.S. economy from conventional motor fuels to more renewable biofuels increased demand for and production of corn in the U.S. agricultural industry and likely contributed to higher but more volatile prices for crop producers. Outcomes from the RFS suggest that increased linkages between the crop and energy sector may boost farm income on balance but lead to more income variation and uncertainty for crop producers.

Keywords: Inflation Reduction Act; renewable energy; agriculture (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.kansascityfed.org/Economic%20Review/do ... viewV109N6Cowley.pdf Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedker:98541

Ordering information: This journal article can be ordered from

DOI: 10.18651/ER/v109n6Cowley

Access Statistics for this article

More articles in Economic Review from Federal Reserve Bank of Kansas City Contact information at EDIRC.
Bibliographic data for series maintained by Zach Kastens ().