Designing Climate Policy: Lessons from the Renewable Fuel Standard and the Blend Wall

Many policies mandate renewable energy production to combat global climate change. These policies often differ significantly from first-best policy prescriptions. Among the largest renewable energy mandates enacted to date is the Renewable Fuel Standard (RFS), which mandates biofuel consumption far beyond what is feasible with current technology and infrastructure. We critically review the methods used by the Environmental Protection Agency to project near- and long-term compliance costs under the RFS, and draw lessons from the RFS experience to date that would improve the program’s efficiency. The lessons are meant to inform both future RFS rulemaking and the design of future climate policies. We draw two lessons specific to the RFS. First, incorporate uncertainty into rulemaking; second, implement multi-year rules. Multi-year rulemaking allows for longer periods between major regulatory decisions and sends greater certainty to markets. We also provide two more general recommendations: tie waiver authority to compliance costs or include cost containment provisions, and fund research and development of new technologies directly rather than mandating them. Future technological advancement is uncertain, and mandating new technologies has proven to be largely ineffective to date, particularly in fuel markets

Carbon emissions from Southeast Asian peatlands will increase despite emission-reduction schemes.

Carbon emissions from drained peatlands converted to agriculture in Southeast Asia (i.e. Peninsular Malaysia, Sumatra and Borneo) are globally significant and increasing. Here, we map the growth of Southeast Asian peatland agriculture and estimate CO2 emissions due to peat drainage in relation to official land-use plans with a focus on the Reducing Emissions from Deforestation and Degradation (REDD+) related Indonesian moratorium on granting new concession licenses for industrial agriculture and logging. We find that, prior to 2010, 35% of Southeast Asian peatlands had been converted to agriculture, principally by smallholder farmers (15% of original peat extent) and industrial oil palm plantations (14%). These conversions resulted in 1.46-6.43 GtCO2 of emissions between 1990 and 2010. This legacy of historical clearances on deep peat areas will contribute 51% (4.43-11.45 GtCO2 ) of projected peatland CO2 emissions over the period 2010-2130. In Indonesia, which hosts most of the region's peatland and where concession maps are publicly available, 70% of peatland conversion to agriculture occurred outside of known concessions for industrial plantation development, with smallholders accounting for 60% and industrial oil palm accounting for 34%. Of the remaining Indonesian peatswamp forest (PSF), 45% is not protected, and its conversion would amount to CO2 emissions equivalent to 0.7-2.3% (5.14-14.93 Gt) of global fossil fuel and cement emissions released between 1990-2010. Of the peatland extent included in the moratorium, 48% was no longer forested, and of the PSF included 40-48% is likely to be affected by drainage impacts from agricultural areas and will emit CO2 over time. We suggest that recent legislation and policy in Indonesia could provide a means of meaningful emission reductions if focused on revised land-use planning, PSF conservation both inside and outside agricultural concessions, and the development of agricultural practices based on rehabilitating peatland hydrological function