skip to main content
OSTI.GOV title logo U.S. Department of Energy
Office of Scientific and Technical Information

Title: Understanding and Informing the Policy Environment: State-Level Renewable Fuels Standards

Abstract

Renewable fuels standard (RFS) policies are becoming a popular public policy mechanism for developing the market for renewable fuels in the transportation sector. During the past decade, U.S. states and several countries began implementing these more market-based (less command and control) policies to support increased biofuels production and use. This paper presents an overview of current and proposed U.S. state-level policies, as well as selected electric sector policies and international fuel standard policies. Current U.S. state-level renewable fuel policies list drivers including an improved economy and environment, as well as fuel self-sufficiency. Best practices and experience from an evaluation of renewable portfolio standards (RPS) in the United States and international RFS policies can inform U.S. state-level policy by illustrating the importance of policy flexibility, binding targets, effective cost caps, and tradable permits. Understanding and building on the experiences from these previous policies can improve the policy mechanism and further develop a market for renewable fuels to meet the goals of improved economy, environment, and fuel self-sufficiency.

Authors:
; ;
Publication Date:
Research Org.:
National Renewable Energy Lab. (NREL), Golden, CO (United States)
Sponsoring Org.:
USDOE
OSTI Identifier:
898863
Report Number(s):
NREL/TP-640-41075
TRN: US200708%%132
DOE Contract Number:
AC36-99-GO10337
Resource Type:
Technical Report
Country of Publication:
United States
Language:
English
Subject:
29 ENERGY PLANNING, POLICY AND ECONOMY; 32 ENERGY CONSERVATION, CONSUMPTION, AND UTILIZATION; BIOFUELS; EVALUATION; FLEXIBILITY; MARKET; PRODUCTION; PUBLIC POLICY; TARGETS; TRANSPORTATION SECTOR; RENEWABLE FUELS STANDARDS; RFS; RENEWABLE PORTFOLIO STANDARDS; RPS; STATE POLICY; ENERGY PLAN; POLICY DRIVERS; BINDING TARGETS; MARKETS; COST CAPS; BIODIESEL; ENTHANOL; INTERNATIONAL POLICY; FUELS; TRANSPORTATION; Energy Analysis

Citation Formats

Brown, E., Cory, K., and Arent, D. Understanding and Informing the Policy Environment: State-Level Renewable Fuels Standards. United States: N. p., 2007. Web. doi:10.2172/898863.
Brown, E., Cory, K., & Arent, D. Understanding and Informing the Policy Environment: State-Level Renewable Fuels Standards. United States. doi:10.2172/898863.
Brown, E., Cory, K., and Arent, D. Mon . "Understanding and Informing the Policy Environment: State-Level Renewable Fuels Standards". United States. doi:10.2172/898863. https://www.osti.gov/servlets/purl/898863.
@article{osti_898863,
title = {Understanding and Informing the Policy Environment: State-Level Renewable Fuels Standards},
author = {Brown, E. and Cory, K. and Arent, D.},
abstractNote = {Renewable fuels standard (RFS) policies are becoming a popular public policy mechanism for developing the market for renewable fuels in the transportation sector. During the past decade, U.S. states and several countries began implementing these more market-based (less command and control) policies to support increased biofuels production and use. This paper presents an overview of current and proposed U.S. state-level policies, as well as selected electric sector policies and international fuel standard policies. Current U.S. state-level renewable fuel policies list drivers including an improved economy and environment, as well as fuel self-sufficiency. Best practices and experience from an evaluation of renewable portfolio standards (RPS) in the United States and international RFS policies can inform U.S. state-level policy by illustrating the importance of policy flexibility, binding targets, effective cost caps, and tradable permits. Understanding and building on the experiences from these previous policies can improve the policy mechanism and further develop a market for renewable fuels to meet the goals of improved economy, environment, and fuel self-sufficiency.},
doi = {10.2172/898863},
journal = {},
number = ,
volume = ,
place = {United States},
year = {Mon Jan 01 00:00:00 EST 2007},
month = {Mon Jan 01 00:00:00 EST 2007}
}

Technical Report:

Save / Share:
  • Most renewable portfolio standards (RPS) have five or more years of implementation experience, enabling an assessment of their costs and benefits. Understanding RPS costs and benefits is essential for policymakers evaluating existing RPS policies, assessing the need for modifications, and considering new policies. This study provides an overview of methods used to estimate RPS compliance costs and benefits, based on available data and estimates issued by utilities and regulators. Over the 2010-2012 period, average incremental RPS compliance costs in the United States were equivalent to 0.8% of retail electricity rates, although substantial variation exists around this average, both from year-to-yearmore » and across states. The methods used by utilities and regulators to estimate incremental compliance costs vary considerably from state to state and a number of states are currently engaged in processes to refine and standardize their approaches to RPS cost calculation. The report finds that state assessments of RPS benefits have most commonly attempted to quantitatively assess avoided emissions and human health benefits, economic development impacts, and wholesale electricity price savings. Compared to the summary of RPS costs, the summary of RPS benefits is more limited, as relatively few states have undertaken detailed benefits estimates, and then only for a few types of potential policy impacts. In some cases, the same impacts may be captured in the assessment of incremental costs. For these reasons, and because methodologies and level of rigor vary widely, direct comparisons between the estimates of benefits and costs are challenging.« less
  • The objectives of this research program were threefold: Provide a brief summary assessment of current and developing technologies utilizing carbohydrate crops as potential energy resources; provide an economic analysis of current agricultural policies and their implications concerning the potential use of the carbohydrate crops as biomass energy sources; and identify and examine alternative policies for stimulating biomass production for fuel uses. The conclusions of this preliminary analysis of policy implications suggest the following: (1) Significant quantities of ethanol from carbohydrate crops could be produced from the equivalent number of dollars currently diverted and expected to be spent under the Foodmore » and Agriculture Act of 1977 (FAA-'77). (2) However, the production of ethanol from sugar crops or corn would mean that significant changes in the prices of agricultural products could be expected (all other things being equal). (3) In the initial development of ethanol fuels, ethanol from corn appears to be the least expensive as compared to sugarcane, sugar beets, and sweet sorghum. This is primarily because of high by-product credits. However, the crop with the greatest long-term potential is sweet sorghum. (4) Various policy incentive programs will continue to be directed towards stimulating biomass energy production. Several incentive systems already have been recommended in Congress and among the states. Key among these is the present waiver of the Federal Excise Tax through 1984 on gasohol. Battelle has cited a number of potential incentive programs. Each incentive will tend to stimulate different areas of biomass and fuels production. Also, the programs likely will have secondary impacts on other segments of the U.S. agricultural sector. Four policy incentive programs are described in detail.« less
  • Future manufacturing of renewable energy equipment in the United States provides economic development opportunities for state and local communities. However, demand for the equipment is finite, and opportunities are limited. U.S. demand is estimated to drive total annual investments in renewable energy equipment to $14-$20 billion by 2030. Evidence from leading states in renewable energy manufacturing suggests that economic development strategies that target renewable energy sector needs by adapting existing policies attract renewable energy manufacturing more than strategies that create new policies. Literature suggests that the states that are most able to attract direct investment and promote sustained economic developmentmore » can leverage diverse sets of durable assets--like human capital and modern infrastructure--as well as low barriers to market entry. State marketing strategies for acquiring renewable energy manufacturers are likely best served by an approach that: (1) is multi-faceted and long-term, (2) fits within existing broad-based economic development strategies, (3) includes specific components such as support for renewable energy markets and low barriers to renewable energy deployment, and (4) involves increased differentiation by leveraging existing assets when applicable.« less
  • Future manufacturing of renewable energy equipment in the United States provides economic development opportunities for state and local communities. However, demand for the equipment is finite, and opportunities are limited. U.S. demand is estimated to drive total annual investments in renewable energy equipment to $14-$20 billion by 2030. Evidence from leading states in renewable energy manufacturing suggests that economic development strategies that target renewable energy sector needs by adapting existing policies attract renewable energy manufacturing more than strategies that create new policies. Literature suggests that the states that are most able to attract direct investment and promote sustained economic developmentmore » can leverage diverse sets of durable assets—like human capital and modern infrastructure–as well as low barriers to market entry. State marketing strategies for acquiring renewable energy manufacturers are likely best served by an approach that: (1) is multi-faceted and long-term, (2) fits within existing broad-based economic development strategies, (3) includes specific components such as support for renewable energy markets and low barriers to renewable energy deployment, and (4) involves increased differentiation by leveraging existing assets when applicable.« less
  • This report is intended to provide state officials with a better understanding of the potential and limitations of state tax incentives for encouraging energy conservation and the use of renewable resources. Specific barriers which stand in the way of utilizing alternate energy sources and ways to overcome them are discussed. Major types of state tax incentives include property tax reductions or exemptions, sales and use tax exemptions, income tax deductions, and income tax credits. Their content and purpose are examined, using various techniques for assessing their effectiveness. Individual types of incentives are analyzed, based on their advantages and disadvantages.