Campus Units

Supply Chain and Information Systems

Document Type

Article

Publication Version

Accepted Manuscript

Publication Date

Fall 2020

Journal or Book Title

Transportation Journal

Volume

59

Issue

4

First Page

399

Last Page

419

DOI

10.5325/transportationj.59.4.0399

Abstract

With the increasing public awareness on global warming, the demand for low greenhouse gas emission (GHG) transportation fuel, such as biofuel, is growing rapidly. In the U.S., like many other countries, the government is providing monetary incentives for biofuel displacement of fossil fuel. From the standpoint of biofuel proliferation, it is important that biofuel producers utilize these incentives in the most effective way, because better utilizations of incentives will lead to reduced costs for producers, which in turn will lower biofuel retail prices. Currently, however, biofuel producers are not taking full advantage of these incentives. This industry note introduces a new approach that allows U.S. biofuel producers to improve their practice of using an incentive program called the LCFS (California Low Carbon Fuel Standard). Our method, which is relatively simple, is based on a recent research project conducted with a biofuel manufacturing firm, which aimed to maximize the benefit gained from the LCFS incentive program. We show, by performing numerical experiments with realistic settings, that the method matches or outperforms the current practice, in terms of maximizing gains extracted from the incentive program, under all conditions.

Comments

This accepted article is published as Denizel, M.E.K., Suzuki, Y., Anderson, C., Increasing Biofuel Proliferation via the Optimal Use of Government Incentives. Transportation Journal, 2020 59(4); doi: 10.5325/transportationj.59.4.0399. Posted with permission.

Copyright Owner

The Pennsylvania State University

Language

en

File Format

application/pdf

Published Version

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