STEPS, Institute of Transportation Studies, Davis
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STEPS, Institute of Transportation Studies, Davis

2028 Academic Surge
University of California, Davis
One Shields Avenue
Davis, CA 95616

(530) 752-6548 phone

 

Economic assessment

(Last updated October 5, 2009)

This research compares the effectiveness of difference policies, especially the LCFS vs. the cap-and-trade program. We also explore the biofuel resource and GHG reduction potential in California and in the western U.S. states and the potential electrification applications to replace transportation fuels. We intend to tackles the following questions: Are there enough low-GHG fuels available to meet the standard? How much production of in-state resources will be available or necessary to meet the LCFS? Given that the standard is flexible and designed to promote innovation, what are the likely competing technologies for compliance with the standard? What are the costs of compliance from fuel providers’ perspective?


1. Economic Impact Assessment

LCFS as a long-term low carbon fuel policy

  • Sperling, Daniel, and Sonia Yeh. 2009. Toward a global low carbon fuel standard. Transport Policy, in press.


LCFS vs. Cap-and-trade

  • Holland, Stephen. 2009. Taxes and trading versus intensity standards: second-best environmental policies with incomplete regulation (leakage) or market power. Berkeley, CA: Center for the Study of Energy Markets, University of California Energy Institute.
  • Holland, Stephen, Jonathan Hughes, and Christopher Knittel. 2009. Greenhouse Gas Reductions under Low Carbon Fuel Standards? American Economic Journal: Economic Policy 1 (1):106-46.10.1257/pol.1.1.106.


2. Assessment of Technologies to Meet a Low Carbon Fuel Standard

California’s low carbon fuel standard (LCFS) was designed to incentivize a diverse array of available strategies for reducing transportation greenhouse gas (GHG) emissions. It provides strong incentives for fuels with lower GHG emissions, while explicitly requiring a 10% reduction in California’s transportation fuel GHG intensity by 2020. This paper investigates the potential for cost-effective GHG reductions from electrification and expanded use of biofuels. The analysis indicates that fuel providers could meet the standard using a portfolio approach that employs both biofuels and electricity, which would reduce the risks and uncertainties associated with the progress of cellulosic and battery technologies, feedstock prices, land availability, and the sustainability of the various compliance approaches. Our analysis is based on the details of California’s development of an LCFS; however, this research approach could be generalizable to a national U.S. standard and to similar programs in Europe and Canada.


Supply curve_LCFS_Fig1

Figure 1. Fuel providers’ biofuel GHG compliance cost curves in California and from western states at gasoline fuel costs of $2/gge and $3/gge (production cost, excluding local delivery, marketing, and taxes).


Publication:

Yeh, Sonia, Nicholas P. Lutsey, and Nathan C. Parker. 2009. Assessment of Technologies to Meet a Low Carbon Fuel Standard. Environmental Science & Technology 43 (18):6907-6914.

Presentation:

"Role of Low Carbon Fuel Standards in Reducing (US) Transportation Emissions," Twelfth Biennial Asilomar Conference on Transportation and Energy Policy: Transportation and Climate Policy. Pacific Grove, CA (July 28-31, 2009).