Assessing the efficiency implications of renewable fuel policy design in the United States

Abstract

Obligated parties have chosen to comply with the Renewable Fuel Standard (RFS) by increasing the blending of biomassbased biodiesel beyond originally targeted levels rather than increasing blending/consumption of ethanol to targeted levels that would have required pricing higher blends of ethanol (E85) at or below an energy-equivalent level to E10. This paper develops a welfare-economic framework to analyze the extent to which the nested design and the accompanying cellulosic waiver credit and biodiesel tax credit contributed to a compliance strategy by blenders that favored blending of biodiesel instead of inducing consumption of E85, and its implications for social welfare.

Assessing the feasibility of the Inflation Reduction Act’s EV critical mineral targets

“…The barriers facing the critical minerals target in the IRA bring to mind the inability of the young cellulosic biofuels industry to meet the 16-billion-gallon annual production target set for it in the 2007 Renewable Fuel Standard (RFS) for 2022 18 . In 2021, the US Environmental Protection Agency set a 2022 Renewable Volume Obligation of 630 million gallons of this fuel 19 , a far cry from the original aspirations of the RFS.…”