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Greenhouse Gas Reductions under Low Carbon Fuel Standards?

UNCG Author/Contributor (non-UNCG co-authors, if there are any, appear on document)
Stephen P. Holland, Associate Professor (Creator)
Institution
The University of North Carolina at Greensboro (UNCG )
Web Site: http://library.uncg.edu/

Abstract: A low carbon fuel standard (LCFS) seeks to reduce greenhouse gas emissions by limiting the carbon intensity of fuels. We show this decreases high carbon fuel production but increases low carbon fuel production, possibly increasing net carbon emissions. The LCFS cannot be efficient, and the best LCFS may be nonbinding. We simulate a national LCFS on gasoline and ethanol. For a broad parameter range, emissions decrease, energy prices increase, abatement costs are large ($80–$760 billion annually), and average abatement costs are large ($307–$2,272 per CO2 metric ton). A cost effective policy has much lower average abatement costs ($60–$868). (JEL Q54, Q58)

Additional Information

Publication
American Economic Journal: Economic Policy 2009, 1:1, 106–146
Language: English
Date: 2009
Keywords
Carbon regulation, Greenhouse gas, Carbon emissions reduction, Fuel standards