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A mixed complementarity model for the US biofuel market with federal policy interventions.

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Title: A mixed complementarity model for the US biofuel market with federal policy interventions.
Authors: Christensen, Adam1, Siddiqui, Sauleh2
Source: Biofuels, Bioproducts & Biorefining. Jul/Aug2015, Vol. 9 Issue 4, p397-411. 1p.
Subject Terms: *Biomass energy, *Energy policy, *Ethanol as fuel, *Tax credits
Geographic Terms: United States
Company/Entity: United States. Environmental Protection Agency
Abstract: Policymakers in the USA have provided various mechanisms to grow the domestic biofuel industry. One of the most significant policies in the USA is the volume mandate specified within the Renewable Fuel Standard ( RFS). There are a number of other overlapping factors that impact the use of biofuels, namely the so-called blend wall, or the 10% blend limit of ethanol in gasoline, along with a complex system of tax credits. All of these policies directly affect the value of a Renewable Identification Number ( RIN), the tradable compliance certificate created as part of the RFS. Regulators track RIN prices carefully because they are a measure of the cost of compliance. In this work a mixed complementarity problem ( MCP) is presented to combine these market dynamics into one model. This tool was specifically designed for policymakers to compare scenarios and study the effects on key market variables including RIN, gasoline, and diesel prices, along with production quantities for a number of different finished blended fuels. Our results suggest that RIN prices will increase with an increase in the volume of biofuel mandated by the Environmental Protection Agency ( EPA); however the behavior of the different RIN prices depends on how the biofuel volumes are assigned among all the subcategories. Under scenarios investigated in this study, it is likely that a primary compliance strategy is to blend more biodiesel into diesel fuel. This behavior would increase the price of the D4 RIN but the premium could be mitigated by reinstating the biodiesel production tax credit. © 2015 Society of Chemical Industry and John Wiley & Sons, Ltd [ABSTRACT FROM AUTHOR]
Database: Energy & Power Source
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  Data: A mixed complementarity model for the US biofuel market with federal policy interventions.
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  Data: *<searchLink fieldCode="DE" term="%22Biomass+energy%22">Biomass energy</searchLink><br />*<searchLink fieldCode="DE" term="%22Energy+policy%22">Energy policy</searchLink><br />*<searchLink fieldCode="DE" term="%22Ethanol+as+fuel%22">Ethanol as fuel</searchLink><br />*<searchLink fieldCode="DE" term="%22Tax+credits%22">Tax credits</searchLink>
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  Label: Abstract
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  Data: Policymakers in the USA have provided various mechanisms to grow the domestic biofuel industry. One of the most significant policies in the USA is the volume mandate specified within the Renewable Fuel Standard ( RFS). There are a number of other overlapping factors that impact the use of biofuels, namely the so-called blend wall, or the 10% blend limit of ethanol in gasoline, along with a complex system of tax credits. All of these policies directly affect the value of a Renewable Identification Number ( RIN), the tradable compliance certificate created as part of the RFS. Regulators track RIN prices carefully because they are a measure of the cost of compliance. In this work a mixed complementarity problem ( MCP) is presented to combine these market dynamics into one model. This tool was specifically designed for policymakers to compare scenarios and study the effects on key market variables including RIN, gasoline, and diesel prices, along with production quantities for a number of different finished blended fuels. Our results suggest that RIN prices will increase with an increase in the volume of biofuel mandated by the Environmental Protection Agency ( EPA); however the behavior of the different RIN prices depends on how the biofuel volumes are assigned among all the subcategories. Under scenarios investigated in this study, it is likely that a primary compliance strategy is to blend more biodiesel into diesel fuel. This behavior would increase the price of the D4 RIN but the premium could be mitigated by reinstating the biodiesel production tax credit. © 2015 Society of Chemical Industry and John Wiley & Sons, Ltd [ABSTRACT FROM AUTHOR]
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        Value: 10.1002/bbb.1545
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      – Code: eng
        Text: English
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        PageCount: 1
        StartPage: 397
    Subjects:
      – SubjectFull: Biomass energy
        Type: general
      – SubjectFull: Energy policy
        Type: general
      – SubjectFull: Ethanol as fuel
        Type: general
      – SubjectFull: Tax credits
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      – SubjectFull: United States
        Type: general
      – SubjectFull: United States. Environmental Protection Agency
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      – TitleFull: A mixed complementarity model for the US biofuel market with federal policy interventions.
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            NameFull: Siddiqui, Sauleh
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              M: 07
              Text: Jul/Aug2015
              Type: published
              Y: 2015
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            – TitleFull: Biofuels, Bioproducts & Biorefining
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