Abstract
The Low Carbon Fuel Standards (LCFS) represents a new policy approach designed to reduce carbon dioxide emissions by applying standards to all stages of motor fuel production. We use the synthetic control and difference-in-differences econometric methods, and Lasso machine learning to analyze the effect of the LCFS on emissions in California’s transportation sector. The three different techniques provide robust evidence that the LCFS reduced carbon dioxide emissions in California’s transportation sector by around 10%. Furthermore, our calculations show that improved air quality, due to the application of the LCFS, may have benefited California in the magnitude of hundreds of millions of dollars through an increase in worker’s productivity.
Highlights
California’s transportation sector is the largest carbon dioxide producer in the state, accounting for nearly 37% of total emissions [1, 2]
Increased environmental concerns have resulted in the application of new economic and energy policy tools
The Low Carbon Fuel Standards (LCFS) is an entirely new approach in environmental policy-making that aims at limiting the carbon dioxide footprint of on-road vehicles with the help of life-cycle accounting principles
Summary
The Low Carbon Fuel Standards (LCFS) represents a new policy approach designed to reduce carbon dioxide emissions by applying standards to all stages of motor fuel production. We use the synthetic control and difference-in-differences econometric methods, and Lasso machine learning to analyze the effect of the LCFS on emissions in California’s transportation sector. The three different techniques provide robust evidence that the LCFS reduced carbon dioxide emissions in California’s transportation sector by around 10%. Our calculations show that improved air quality, due to the application of the LCFS, may have benefited California in the magnitude of hundreds of millions of dollars through an increase in worker’s productivity
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