Low Carbon Fuel Standard Credit Prices and Pass-Through at the Pump—A Preliminary Investigation

State governments have increasingly looked to a Low Carbon Fuel Standard (LCFS) to reduce greenhouse gas emissions from the transportation sector. LCFS policies create an implicit subsidy for biofuels that are blended onto finished fuels. The implicit subsidy is issued via tradable credits to low-carbon fuel producers or fuel blenders. The effectiveness of the policy then relies crucially on full pass-through of these subsidies downstream in the supply chain. While studies have estimated pass-through from similar policies and contexts, this white paper will estimate the pass-through of state LCFS credit prices from fuel suppliers downstream to retailers at major rack locations on the west coast. The researchers will use daily spot credit prices for the California LCFS and Oregon Clean Fuels Program (CFP) and rack biodiesel and renewable diesel prices to estimate the extent to which suppliers pass through costs downstream. The estimates will be supplemented with a simple theoretical framework that highlights the mechanisms through which full pass-through can be hindered in a diesel industry subject to a LCFS-type policy.

Language

  • English

Project

  • Status: Programmed
  • Funding: $36344
  • Contract Numbers:

    DOT 69A3551747114

  • Sponsor Organizations:

    National Center for Sustainable Transportation

    University of California, Davis
    Davis, CA  United States 

    Office of the Assistant Secretary for Research and Technology

    University Transportation Centers Program
    Department of Transportation
    Washington, DC  United States  20590
  • Managing Organizations:

    National Center for Sustainable Transportation

    University of California, Davis
    Davis, CA  United States 

    University of California, Davis

    Institute of Transportation Studies
    Davis, CA  United States  95616
  • Project Managers:

    Iacobucci, Lauren

  • Performing Organizations:

    University of California, Davis

    Institute of Transportation Studies
    Davis, CA  United States  95616
  • Principal Investigators:

    Smith, Aaron

  • Start Date: 20201001
  • Expected Completion Date: 20210930
  • Actual Completion Date: 0
  • USDOT Program: University Transportation Centers

Subject/Index Terms

Filing Info

  • Accession Number: 01742552
  • Record Type: Research project
  • Source Agency: National Center for Sustainable Transportation
  • Contract Numbers: DOT 69A3551747114
  • Files: UTC, RiP
  • Created Date: Jun 16 2020 2:08PM