Renewable Natural Gas as a Solution to Climate Goals: Response to California's Low Carbon Fuel Standard

Natural gas is a growing portion of transportation fuel consumed in California. While natural gas has a slight environmental benefit relative to the use of conventional liquid fuels, such as gasoline and diesel, the environmental performance of natural gas can be greatly improved by procurement from renewable sources. Yet renewable natural gas (RNG) production is too expensive to compete with fossil natural gas in the absence of policy intervention. I consider the impacts of the LCFS policy on four pathways of RNG production: (1) dairy manure, (2) municipal solid waste, (3) wastewater treatment plants, and (4) landfill gas. Using a novel dataset of California RNG supply estimates, I construct a static, multi-market, partial equilibrium model of the California fuels markets to evaluate the supply response of RNG to existing California fuel policy, the Low Carbon Fuel Standard (LCFS). I also evaluate policy response of natural gas from fossil sources, gasoline, ethanol, diesel, and biodiesel fuels. Additionally, I apply a method of modeling consumer fuel switching to accurately reflect the extent to which fuel substitution is possible in the short term. I assess the economic surplus, climate, and RNG response to the LCFS policy and compare the policy efficiency of the LCFS to a hypothetical carbon tax. My findings indicate that the LCFS policy is sufficient to incentivize substantial quantities of RNG production; enough to supply the entire market for vehicular natural gas. Further, the LCFS is less efficient than a carbon tax, but when combined with a price ceiling, the policy approaches the efficiency of a carbon tax as the LCFS policy become more stringent

Renewable Natural Gas as a Solution to Climate Goals: Response to California's Low Carbon Fuel Standard

Natural gas is a growing portion of transportation fuel consumed in California. While natural gas has a slight environmental benefit relative to the use of conventional liquid fuels, such as gasoline and diesel, the environmental performance of natural gas can be greatly improved by procurement from renewable sources. Yet renewable natural gas (RNG) production is too expensive to compete with fossil natural gas in the absence of policy intervention. I consider the impacts of the LCFS policy on four pathways of RNG production: (1) dairy manure, (2) municipal solid waste, (3) wastewater treatment plants, and (4) landfill gas. Using a novel dataset of California RNG supply estimates, I construct a static, multi-market, partial equilibrium model of the California fuels markets to evaluate the supply response of RNG to existing California fuel policy, the Low Carbon Fuel Standard (LCFS). I also evaluate policy response of natural gas from fossil sources, gasoline, ethanol, diesel, and biodiesel fuels. Additionally, I apply a method of modeling consumer fuel switching to accurately reflect the extent to which fuel substitution is possible in the short term. I assess the economic surplus, climate, and RNG response to the LCFS policy and compare the policy efficiency of the LCFS to a hypothetical carbon tax. My findings indicate that the LCFS policy is sufficient to incentivize substantial quantities of RNG production; enough to supply the entire market for vehicular natural gas. Further, the LCFS is less efficient than a carbon tax, but when combined with a price ceiling, the policy approaches the efficiency of a carbon tax as the LCFS policy become more stringent

Indemnifying Precaution: Economic Insights for Regulation of a Highly Infectious Disease

Economic insights are powerful for understanding the challenge of managing a highly infectious disease, such as COVID-19, through behavioral precautions including social distancing. One problem is a form of moral hazard, which arises when some individuals face less personal risk of harm or bear greater personal costs of taking precautions. Without legal intervention, some individuals will see socially risky behaviors as personally less costly than socially beneficial behaviors, a balance that makes those beneficial behaviors unsustainable. For insights, we review health insurance moral hazard, agricultural infectious disease policy, and deterrence theory, but find that classic enforcement strategies of punishing noncompliant people are stymied. One mechanism is for policymakers to indemnify individuals for losses associated with taking those socially desirable behaviors to reduce the spread. We develop a coherent approach for doing so, based on conditional cash payments and precommitments by citizens, which may also be reinforced by social norms

Exploring the Role of Natural Gas in U.S. Trucking (Revised Version)

The recent emergence of natural gas as an abundant, inexpensive fuel in the United States could prompt a momentous shift in the level of natural gas utilized in the transportation sector. The cost advantage of natural gas vis-à-vis diesel fuel is particularly appealing for vehicles with a high intensity of travel and thus fuel use. Natural gas is already a popular fuel for municipal and fleet vehicles such as transit buses and taxis. In this paper, we investigate the possibility that natural gas could be utilized to provide fuel cost savings, geographic supply diversity and environmental benefits for the heavy-duty trucking sector and whether it can enable a transition to lower carbon transport fuels. We find that a small, cost-effective intervention in markets could support a transition to a commercially sustainable natural gas heavyduty fueling system in the state of California and that this could also advance some of the state’s air quality goals. Our research shows that an initial advanced natural gas fueling system in California could facilitate the expansion to other U.S. states. Such a network would enable a faster transition to renewable natural gas or biogas and waste-to-energy pathways. Stricter efficiency standards for natural gas Class 8 trucks and regulation of methane leakage along the natural gas supply chain would be necessary for natural gas to contribute substantially to California’s climate goals as a trucking fuel. To date, industry has favored less expensive technologies that do not offer the highest level of environmental performance

Paying Americans to Take the Vaccine - Would it Help or Backfire?

This research investigates the extent to which financial incentives (conditional cash transfers) would induce Americans to opt for vaccination against COVID-19. We performed a randomized survey experiment with a representative sample of 1,000 American adults in December 2020. Respondents were asked whether they would opt for vaccination under one of three incentive conditions ($1,000,$1,500, or $2,000 financial incentive) or a no-incentive condition. We find that—without coupled financial incentives—only 58% of survey respondents would elect for vaccination. A coupled financial incentive yields an 8-percentage-point increase in vaccine uptake relative to this baseline. The size of the cash transfer does not dramatically affect uptake rates. However, incentive responses differ dramatically by demographic group. Republicans were less responsive to financial incentives than the general population. For Black and Latino Americans especially, very large financial incentives may be counter-productive

International sourcing decisions in the wake of a food scandal

This research investigates whether and how the 2013 Horsemeat Scandal has altered European food retailers’ efforts to mitigate fraud in the international agri-food supply chain. We construct an econometric model that matches fraud alert data from the European Union (EU) Rapid Alert System for Food and Feed (RASFF) from 2006 to 2016 with annual data on bilateral trade flows. We find that—prior to the horsemeat scandal—detection of fraud along the supply chain induced a small amount of trade diversion toward third-country sources, but did not substantially affect total trade into the EU. In contrast, in the years after the scandal, the detection of fraud by international suppliers was substantially trade destructive. Detection of fraud reduced trade, not only with the country from which the fraudulent product originated, but also from third-country exporters of the same product. These findings extend beyond trade in meat products and to importing countries outside Western and Northern Europe

Impact of Intensity Standards on Alternative Fuel Adoption: Renewable Natural Gas and California's Low Carbon Fuel Standard

Natural gas is a rapidly growing transportation fuel. While fossil natural gas is only slightly cleaner than conventional fuels, it provides a vector to introduce renewable natural gas (RNG) which can yield substantial emissions reductions. This paper considers RNG supply estimates from four possible sources: dairy manure, municipal solid waste, wastewater treatment plants, and landfill gas along with other major transportation fuels to evaluate the impact of California's Low Carbon Fuel Standard (LCFS) a first of its kind fuel intensity standard. A static, multi-market, partial equilibrium, numerical model of the California fuel markets assesses the economic surplus and climate impact responses to the LCFS policy and compares the efficiency of the LCFS to a hypothetical carbon tax. Results indicate LCFS policy is sufficient to incentivize substantial quantities of RNG production. The LCFS approaches the efficiency of a carbon tax as the LCFS policy becomes more stringent when combined with a price ceiling.36 month embargo; published online: 1 April 2020This item from the UA Faculty Publications collection is made available by the University of Arizona with support from the University of Arizona Libraries. If you have questions, please contact us at [email protected]

Sewing terror: price dynamics of the strawberry needle crisis

In September 2018, a former strawberry-picking supervisor for a strawberry farm in New South Wales was arrested for inserting sewing needles in hundreds of punnets of fresh strawberries sold in retail stores across several Australian states. This paper analyses the 2018 Australian strawberry needle scare as a case study on the market impacts of agro-terrorism events. We develop a novel four-step procedure to estimate the effects of the strawberry needle contamination on wholesale fresh strawberry prices. Our results indicate a drop in wholesale fresh strawberries prices of about 20% while the needle crisis was ongoing. However, public and private supply restrictions caused wholesale prices to rise by up to 94% relative to expected dynamics over several weeks in the immediate wake of the incident

Renewable Natural Gas as a Solution to Climate Goals: Supply Estimates and Response to California’s Low Carbon Fuel Standard

Natural gas is a growing portion of transportation fuel consumed in California. While, natural gas has a slight environmental benefit relative to the use of conventional liquid fuels such as gasoline and diesel, the environmental performance of natural gas can be greatly improved by procuring the gas from renewable sources. We estimate the supply curves of producing natural gas from four renewable sources: (1) dairy manure, (2) municipal solid waste, (3) wastewater treatment plants, and (4) landfill gas. We also evaluate how the production of RNG will respond to California's Low Carbon Fuel Policy (LCFS) and compare the welfare impacts of the LCFS policy to an equivalent carbon tax