The Effects of the Renewable Fuel Standard (RFS) on the Production of Fuel Ethanol in the U.S.

32 Pages Posted: 17 Sep 2013 Last revised: 22 Mar 2015

See all articles by Jay P. Kesan

Jay P. Kesan

University of Illinois College of Law

Timothy A. Slating

University of Illinois Energy Biosciences Institute

Hsiao-Shan Yang

University of Illinois at Urbana-Champaign

Date Written: September 17, 2013

Abstract

The Renewable Fuel Standard (RFS) program, which mandates the commercialization of bio-fuels through 2022, is the U.S.’s most significant renewable energy policy. It was first established in 2005 in order to create a viable market for bio-fuels based on the policy goals of enhancing U.S. energy security, reducing transportation-related GHG emissions, and stimulating rural economic development. In this Paper, we provide the first empirical study addressing whether the RFS is an effective policy instrument to incentivize the efficient development of an economically sustainable bio-fuels industry. Our analysis focuses on data associated with the first-generation bio-ethanol industry and suggests that the RFS contributes to increasing production-related economies of scale. More specifically, our empirical findings suggest that the RFS has a positive significant effect on: (1) the survival rate of first-generation bio-ethanol plants; and (2) the production capacity of first-generation bio-ethanol plants.

Keywords: Renewable Fuel Standard, bio-fuels, regulation, ethanol

Suggested Citation

Kesan, Jay P. and Slating, Timothy A. and Yang, Hsiao-Shan, The Effects of the Renewable Fuel Standard (RFS) on the Production of Fuel Ethanol in the U.S. (September 17, 2013). Illinois Public Law Research Paper No. 13-58, Illinois Program in Law, Behavior and Social Science Paper No. LBSS 14-16, Available at SSRN: https://ssrn.com/abstract=2327112 or http://dx.doi.org/10.2139/ssrn.2327112

Jay P. Kesan (Contact Author)

University of Illinois College of Law ( email )

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HOME PAGE: http://www.jaykesan.com

Timothy A. Slating

University of Illinois Energy Biosciences Institute ( email )

2122 Institute for Genomic Biology
1206 W. Gregory Dr.
Urbana, IL 61801
United States

Hsiao-Shan Yang

University of Illinois at Urbana-Champaign ( email )

601 E John St
Champaign, IL 61820
United States

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