Greenhouse gas reductions under low carbon fuel standards?
By: Stephen P. Holland, Christopher R. Knittel, Jonathan E. Hughes
Contributors: Knittel, Christopher R.; Hughes, Jonathan E.; National Bureau of Economic Research
Series: NBER working paper series -- working paper 13266; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 13266.
Publisher: National Bureau of Economic Research
Published: 2007
Place of publication: Cambridge, MA
Language: eng
Format: [electronic resource] /
Description: "A low carbon fuel standard (LCFS) seeks to reduce greenhouse gas emissions by limiting a fuel producer's carbon emissions per unit of output.  California has launched an LCFS for transportation fuels; others have called for a national LCFS.  We show that this policy decreases production of high-carbon fuels but increases production of low-carbon fuels.  The net effect of this may be an increase in carbon emissions.  The LCFS cannot be first best, and the best LCFS may reduce social welfare.  We simulate the outcomes of a national LCFS, focusing on gasoline and ethanol as the high- and low-carbon fuels.  For a broad range of parameters, we find that the LCFS is unlikely to increase CO2 emissions.  However, the surplus losses from the LCFS are likely to be quite large ($80 to $760 billion annually for a national LCFS reducing carbon intensities by 10 percent), energy prices are likely to increase, and the average carbon cost ($307 to $2,272 per ton of CO2 for the same LCFS) can be much larger than damage estimates.  We describe an efficient policy that achieves the same emissions reduction at a much lower surplus cost ($16 to $290 billion) and much lower average carbon cost ($60 to $868 per ton of CO2)"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 8/16/2007.

Includes bibliographical references.

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