Economics-renewable fuel
Review and evaluate the performance of (critique) the renewable fuel standard during the first ‘renewable biofuel’ phase that has relied on expanding corn-based ethanol processing.
The review should introduce readers to the motivation, program characteristics, and experience with the program. The review should emphasize points that allow you to explain the benefits and shortcomings of the policy later (straw man concept). In particular, your review could discuss:
– the contribution of biofuels to greenhouse gas (CO2) reduction
– the determination of ethanol demand and the market for quota-right (RIN) certificates under a tradable permit system with a demand quota on (two) refiners, and the effect of a quota increase on ethanol demand and certificate pricing
– the effect of a decade of steady quota expansions on the corn market (price)
– unforeseen events with a big effect on markets that are related to biofuels markets
The RFS demand quantity required for use by refiners by year is:
Year RFS quantity (billion gallons)
2004 2.2
2005 2.7
2006 3.9
2007 4.5
2008 9.0
2009 10.5
2010 12.0
2011 12.6
2012 13.2
2013 13.8
2014 14.4
2015 15.0
The evaluation options include keeping the program in more or less its current form, modifying the program to avoid incidental problems that have occurred thus far, replacing the policy with another (possibly more efficient) policy, or eliminating the program for a free market. You can choose any one of these courses of action – your answer on this part will be judged on the strength of your economic and technical arguments. You should mention that course of action you propose in your introduction. Then explain the details and argue for your idea towards the end of the paper.