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Does a Renewable Fuel Standard for Biofuels Reduce Climate Costs?

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Listed:
  • Mads Greaker
  • Michael Hoel
  • Knut Einar Rosendahl
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 nonrenewable 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 nonnegligible, 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.

Suggested Citation

  • Mads Greaker & Michael Hoel & Knut Einar Rosendahl, 2014. "Does a Renewable Fuel Standard for Biofuels Reduce Climate Costs?," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 1(3), pages 337-363.
    • Handle: RePEc:ucp:jaerec:doi:10.1086/678189
    DOI: 10.1086/678189
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    Cited by:

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    3. Noel, Michael D. & Roach, Travis, 2017. "Marginal reductions in vehicle emissions under a dual-blend ethanol mandate: Evidence from a natural experiment," Energy Economics, Elsevier, vol. 64(C), pages 45-54.
    4. Hoel, Michael, 2020. "The rise and fall of bioenergy," Journal of Environmental Economics and Management, Elsevier, vol. 101(C).

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    More about this item

    JEL classification:

    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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