(E3 ) Working Papers Series
E3 Working Paper WP-012 Abstract
WP-012: D. Rajagopal, G. Hochman, D. Zilberman, "Multi-criteria comparison of fuel policies: Renewable fuel standards, clean fuel standards and fuel GHG tax" (July 2011) Full Paper
In this paper, we perform a multicriteria comparison of different policy instruments, such as renewable fuel standard (RFS), low carbon fuel standard (LCFS), greenhouse gas (GHG) tax and a combination of RFS and fuel GHG tax, with the criteria being the share of alternatives to conventional crude oil in domestic fuel consumption (assumed to represent greater energy independence and/or security), the level of GHG emissions, and the domestic price of fuel. We find that the impacts of these policies depend on whether they are local or global. When the policies are applied globally, an LCFS results in higher fuel price, lower fuel consumption, and lower GHG emissions than RFS. But, when policies are regional, and when the fuel transport cost is small, we find that an RFS results in a larger share of alternative to conventional fossil-fuels, the same or lower domestic price of fuel, and a similar level of emissions compared to an LCFS or a fuel GHG tax. Under these conditions, a RFS may be preferable to other policy instruments.