Designing Climate Policy: Lessons from the Renewable Fuel Standard and the Blend Wall

Thumbnail Image
Date
2018-11-01
Authors
Lin Lawell, C.-Y. Cynthia
Smith, Aaron
Major Professor
Advisor
Committee Member
Journal Title
Journal ISSN
Volume Title
Publisher
Authors
Person
Lade, Gabriel
Assistant Professor
Research Projects
Organizational Units
Organizational Unit
Economics

The Department of Economic Science was founded in 1898 to teach economic theory as a truth of industrial life, and was very much concerned with applying economics to business and industry, particularly agriculture. Between 1910 and 1967 it showed the growing influence of other social studies, such as sociology, history, and political science. Today it encompasses the majors of Agricultural Business (preparing for agricultural finance and management), Business Economics, and Economics (for advanced studies in business or economics or for careers in financing, management, insurance, etc).

History
The Department of Economic Science was founded in 1898 under the Division of Industrial Science (later College of Liberal Arts and Sciences); it became co-directed by the Division of Agriculture in 1919. In 1910 it became the Department of Economics and Political Science. In 1913 it became the Department of Applied Economics and Social Science; in 1924 it became the Department of Economics, History, and Sociology; in 1931 it became the Department of Economics and Sociology. In 1967 it became the Department of Economics, and in 2007 it became co-directed by the Colleges of Agriculture and Life Sciences, Liberal Arts and Sciences, and Business.

Dates of Existence
1898–present

Historical Names

  • Department of Economic Science (1898–1910)
  • Department of Economics and Political Science (1910-1913)
  • Department of Applied Economics and Social Science (1913–1924)
  • Department of Economics, History and Sociology (1924–1931)
  • Department of Economics and Sociology (1931–1967)

Related Units

Journal Issue
Is Version Of
Versions
Series
Department
Abstract

Many policies mandate renewable energy production to combat global climate change. These policies often differ significantly from first-best policy prescriptions. Among the largest renewable energy mandates enacted to date is the Renewable Fuel Standard (RFS), which mandates biofuel consumption far beyond what is feasible with current technology and infrastructure. In this article, we critically review the methods used by the Environmental Protection Agency to project nearand long-term compliance costs under the RFS, and draw lessons from the RFS experience to date that would improve the program’s efficiency. The lessons are meant to inform both future RFS rulemaking and the design of future climate policies. We draw two lessons specific to the RFS. (1) Incorporate uncertainty into rulemaking. Make, implement, and analyze policy with a view towards what might happen, rather than a projection of what will happen. (2) Implement multiyear rules. Multi-year rulemaking allows for longer periods between major regulatory decisions and sends greater certainty to markets. We also make two more general recommendations. (3) Tie waiver authority to compliance costs or include cost containment provisions. Explicit and transparent cost containment mechanisms send a stable policy signal to markets. (4) Fund research and development of new technologies directly rather than mandating them. Future technological advancement is uncertain, and mandating new technologies has proven to be largely ineffective to date, particularly in fuel markets.

Comments
Description
Keywords
Citation
DOI
Source
Copyright
Collections