Policy Shocks and Market-Based Regulations: Evidence from the Renewable Fuel Standard

Lade, Gabriel E.; Lin Lawell, C.-Y. Cynthia; Macalester College; Cornell University

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Policy Shocks and Market-Based Regulations: Evidence from the Renewable Fuel Standard

2017-02-01
By Lade, Gabriel E. ; Lin Lawell, C.-Y. Cynthia

[PDF-1.44 MB]

English

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Details:

Creators:

Lade, Gabriel E. ; Lin Lawell, C.-Y. Cynthia

Lade, Gabriel E. ; Lin Lawell, C.-Y. Cynthia Less -
Corporate Creators:

Macalester College ; Cornell University

Macalester College ; Cornell University Less -
Corporate Contributors:

National Center for Sustainable Transportation (NCST) ; United States. Department of Transportation. University Transportation Centers (UTC) Program ; United States. Department of Transportation. Office of the Assistant Secretary for Research and Technology ; University of California, Davis, Institute of Transportation Studies

National Center for Sustainable Transportation (NCST) ; United States. Department of Transportation. University Transportation Centers (UTC) Program ; United States. Department of Transportation. Office of the Assistant Secretary for Research and Technology ; University of California, Davis, Institute of Transportation Studies Less -
Subject/TRT Terms:

[+]

Biomass Fuels Commodity Classification Exhaust Gases Fuel Consumption Marketing Policy Analysis Regulations
Resource Type:

Manuscript
Geographical Coverage:

United States
Corporate Publisher:

National Center for Sustainable Transportation (NCST) (UTC)
Abstract:

The Renewable Fuel Standard mandates large increases in U.S. biofuel consumption and is implemented using tradable compliance credits known as RINs. In early 2013, RIN prices soared, causing the regulator to propose reducing future mandates. We estimate empirically the effect of three ‘policy shocks’ that reduced the expected mandates in 2013. We find that the largest of these shocks decreased the value of the fuel industry’s 2013 compliance obligation by $7 billion. We then study the effects of the shocks on commodity markets and the market value of publicly traded biofuel firms. Results show that the burden of the mandate reductions fell primarily on advanced biofuel firms and commodity markets of the marginal compliance biofuel. We argue that the policy shocks reduced the incentive to invest in the technologies required to meet the future objectives of the RFS, and discuss alternative policy designs to address the problems that arose in 2013.
Content Notes:

Citation: Lade, Gabriel E., C.-Y. Cynthia Lin Lawell, and Aaron Smith. (Draft 2017) Policy Shocks and Market-Based Regulations: Evidence from the Renewable Fuel Standard.
Format:

PDF
Funding:

DTRT13-G-UTC29
Collection(s):

University Transportation Centers
Main Document Checksum:

[+]

urn:sha256:17eed0bbc35b8bb97776a05be8278825a3694de1e7986f9f38c20b942df060ab
Download URL:

https://rosap.ntl.bts.gov/view/dot/66977/dot_66977_DS1.pdf
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Policy Shocks and Market-Based Regulations: Evidence from the Renewable Fuel Standard

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