Jonathan Rubin presented at the 93rd annual meeting of the Transportation Research Board, January 13, 2014. Rubin, who authored the paper with Paul Leiby of Oak Ridge National Laboratory and Maxwell Brown of the Colorado School of Mines, presented “Regional Credit Trading: Economic and GHG Impacts of a National Low Carbon Fuel Standard,” in Session 355: Fuel Mandates and Policies: Where Are We? The abstract for Rubin’s talk is below.
This research examines the economic implications of different designs for a U.S. national low carbon fuel standard (NLCFS) for the road transportation sector. A NLCFS based on the average carbon intensity (CI) of all fuels sold in the gasoline and diesel markets generates an incentive for fuel suppliers to reduce the measured CI of their petroleum fuels. Recent work looked at the implications of different designs for a national NLCFS in terms of compliance costs, credit price volatility, energy security and possible saving from different credit trading systems for the on-road transportation sector. Extending that previous work done from an aggregate national perspective, this paper takes into account regional supplies of low carbon fuels, differences in the regional CI of petroleum fuels and differences in the prices of gasoline and diesel. It also examines the impact of California’s regional LCFS on compliance costs of a NLCFS. We find significantly different costs of compliance by region. At the same time, flexibility mechanisms in terms of credit trading and banking can lower costs substantially.