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

dc.contributor.author Lade, Gabriel
dc.contributor.author Lin Lawell, C.-Y. Cynthia
dc.contributor.author Smith, Aaron
dc.contributor.department Economics
dc.contributor.department Center for Agricultural and Rural Development
dc.date 2018-08-29T01:46:50.000
dc.date.accessioned 2020-06-30T02:08:35Z
dc.date.available 2020-06-30T02:08:35Z
dc.date.issued 2018-03-01
dc.description.abstract <p>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. We critically review the methods used by the Environmental Protection Agency to project near- and 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. First, incorporate uncertainty into rulemaking; second, implement multi-year rules. Multi-year rulemaking allows for longer periods between major regulatory decisions and sends greater certainty to markets. We also provide two more general recommendations: tie waiver authority to compliance costs or include cost containment provisions, and 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.</p>
dc.description.comments <p>This is a working paper of an article from Lade, Gabriel E., C. Y. Cynthia Lin Lawell, and Aaron Smith. "Designing climate policy: Lessons from the Renewable Fuel Standard and the blend wall." <em>American Journal of Agricultural Economics</em> 100, no. 2 (2018): 585-599. doi: <a href="https://doi.org/10.1093/ajae/aax092">10.1093/ajae/aax092</a>. </p>
dc.identifier archive/lib.dr.iastate.edu/econ_las_pubs/625/
dc.identifier.articleid 1624
dc.identifier.contextkey 12698572
dc.identifier.s3bucket isulib-bepress-aws-west
dc.identifier.submissionpath econ_las_pubs/625
dc.identifier.uri https://dr.lib.iastate.edu/handle/20.500.12876/21861
dc.source.uri https://lib.dr.iastate.edu/cgi/viewcontent.cgi?article=1051&context=econ_workingpapers
dc.subject.disciplines Agricultural and Resource Economics
dc.subject.disciplines Behavioral Economics
dc.subject.disciplines Environmental Studies
dc.subject.disciplines Growth and Development
dc.subject.keywords climate policy
dc.subject.keywords mandates
dc.subject.keywords renewable fuel standard
dc.title Designing Climate Policy: Lessons from the Renewable Fuel Standard and the Blend Wall
dc.type article
dc.type.genre article
dspace.entity.type Publication
relation.isOrgUnitOfPublication 4c5aa914-a84a-4951-ab5f-3f60f4b65b3d
relation.isOrgUnitOfPublication 1a6be5f1-4f64-4e48-bb66-03bbcc25c76d
File
Collections