Assessing Low Carbon Fuel Standards: Implications of New Congressional and State Efforts to Cap Carbon in Gasoline

by Dr. Michael E. Canes and Dr. Edward H. Murphy
April 16, 2009

Low carbon fuel standards have been proposed by state governments and now are a part of the climate and energy legislation introduced in the U.S. House of Representative's Energy & Commerce Committee earlier this month. A low carbon fuel standard sets limits on the greenhouse gas emissions allowed from the production and consumption of a transportation fuel and then reduces those limits over time. Meeting these standards necessitates the rapid and extensive introduction and use of alternatives to petroleum-based gasoline, but very few are close to commercial viability and most face significant technical and economic hurdles before becoming viable.

Economists Michael Canes and Edward Murphy recently analyzed similar proposed regulations, concluding that low carbon fuel standards were a "prohibitively costly" approach which would have limited effectiveness in reducing greenhouse gas emissions. They will discuss the findings of their recently released study of low carbon fuel standards on April 16. This new Marshall Institute study, Economics of a National Low Carbon Fuel Standard, is available at http://www.marshall.org/pdf/materials/644.pdf

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