Institute of the Environment and Sustainability

Governments throughout the world have enacted policies to support the introduction of alter- natives to crude oil. These policies are viewed as means to achieve multiple objectives such as energy independence and security, reduce greenhouse gas (GHG) emissions, protect fuel con- sumers and support infant industries. We evaluate the trade-o�s presented by di�erent policy instruments such as renewable fuel (biofuel) standards (RFS), fuel GHG intensity standards (FGIS) and fuel GHG tax in achieving these objectives. Using a two-region partial-equilibrium model, we �nd that the relative performance of the two policies, RFS and FGIS, relative to each other and relative to a fuel tax, depends on whether the policy is global or regional in scope. Whereas the FGIS has better environmental performance than RFS when applied globally, the two policies lead to similar environmental outcomes when the policy is regional. RFS leads to bigger marker share for non-crude oil fuels than both FGIS and fuel tax.