The Global Rebound Effect Versus California’s Low-Carbon Fuel Standard

Global Energy Policy Center Research Paper No. 09-04

8 Pages Posted: 2 Oct 2009 Last revised: 22 Mar 2015

Date Written: October 1, 2009

Abstract

Displacing gasoline with a new source of biofuel, as California’s low-carbon fuel standard proposes to do, will reduce the global demand for oil. This will reduce the world oil price, which will cause an increase in oil use outside of California - the global rebound effect. Conventional wisdom views this effect as negligible.

But the global rebound effect applies to discovering and pumping new oil, just as it applies to producing new biofuel. And if rebound is negligible, this paper shows that pumping new oil harms the environment negligibly, contradicting conventional wisdom.

In fact, the global rebound effect is likely to be near 25 percent or greater, and biofuels will likely reduce carbon by that much less than anticipated. Some biofuels may be credited with helping, even while they harm the climate.

Keywords: low-carbon fuel, rebound effect, California, energy, climate

JEL Classification: D24, Q41, Q54

Suggested Citation

Stoft, Steven, The Global Rebound Effect Versus California’s Low-Carbon Fuel Standard (October 1, 2009). Global Energy Policy Center Research Paper No. 09-04, Available at SSRN: https://ssrn.com/abstract=1481556 or http://dx.doi.org/10.2139/ssrn.1481556

Steven Stoft (Contact Author)

Retired Economist ( email )

2910 Elmwood Court
Berkeley, CA 94705
United States
(510) 644-9410 (Phone)

HOME PAGE: http://stoft.com

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