Does a Renewable Fuel Standard for Biofuels Reduce Climate Costs?

Mads Greaker, Michael Hoel () and Knut Einar Rosendahl
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Michael Hoel: Dept. of Economics, University of Oslo, Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway

No 09/2014, Memorandum from Oslo University, Department of Economics

Abstract: Recent literature on biofuels has questioned whether biofuels policies are likely to reduce the negative effects of climate change. Our analysis explicitly takes into account that oil is a non-renewable natural resource. A blending mandate has no effect on total cumulative oil extraction. However, extraction of oil is postponed as a consequence of the renewable fuel standard. Thus, if emissions from biofuels are negligible, the standard will have beneficial climate effects. The standard also reduces total fuel (i.e., oil plus biofuels) consumption initially. Hence, even if emissions from biofuels are non-negligible, a renewable fuel standard may still reduce climate costs. In fact our simulations show that even for biofuels that are almost as emissions-intensive as oil, a renewable fuel standard has beneficial climate effects.

Keywords: Renewable fuel standard; Blending mandate; Biofuels; Climate costs; Petroleum extraction profi…le (search for similar items in EconPapers)
JEL-codes: Q30 Q40 Q50 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2014-04-23
New Economics Papers: this item is included in nep-agr, nep-ene, nep-env, nep-reg and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Does a Renewable Fuel Standard for Biofuels Reduce Climate Costs? (2014)
Working Paper: Does a Renewable Fuel Standard for Biofuels Reduce Climate Costs? (2014)
Working Paper: Does a Renewable Fuel Standard for Biofuels Reduce Climate Costs? (2014)
Working Paper: Does a Renewable Fuel Standard for Biofuels Reduce Climate Costs? (2012)
Working Paper: Does a renewable fuel standard for biofuels reduce climate costs? (2012)
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