Unintended Consequences of Transportation Carbon Policies: Land-Use, Emissions, and Innovation
Name
Knittel_Unintended consequences.pdf
Size
2.32 MB
Format
Adobe PDF
Checksum (MD5)
b1b80d71a2c593035f03606829899912
Author(s)
Holland, Stephen P.
Hughes, Jonathan E.
Parker, Nathan C.
Knittel, Christopher Roland
Alternative Title
Unintended Consequences of Carbon Policies: Transportation Fuels, Land-Use, Emissions, and Innovation
Date Issued
July 2015
Journal
The Energy Journal
Publisher
International Association for Energy Economics (IAEE)
Citation
Holland, Stephen P., Jonathan E. Hughes, Christopher R. Knittel, and Nathan C. Parker. “Unintended Consequences of Carbon Policies: Transportation Fuels, Land-Use, Emissions, and Innovation.” The Energy Journal 36, no. 3 (July 1, 2015).
Version
Original manuscript
Abstract
Renewable fuel standards, low carbon fuel standards, and ethanol subsidies are popular policies to incentivize ethanol production and reduce emissions from transportation. Compared to carbon trading, these policies lead to large shifts in agricultural activity and unexpected social costs. We simulate the 2022 Federal Renewable Fuel Standard (RFS) and find that energy crop production increases by 39 million acres. Land-use costs from erosion and habitat loss are between $277 and $693 million. A low carbon fuel standard (LCFS) and ethanol subsidies have similar effects while costs under an equivalent cap and trade (CAT) system are essentially zero. In addition, the alternatives to CAT magnify errors in assigning emissions rates to fuels and can over or under-incentivize innovation. These results highlight the potential negative effects of the RFS, LCFS and subsidies, effects that would be less severe under a CAT policy.
MIT Department
Sloan School of Management
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.5547/01956574.36.3.shol
