Work

Investment in Cellulosic Biofuel Refineries: Do Waivable Biofuel Mandates Matter?

Year: 2012

Type: article

Abstract: We develop a conceptual model to study the impact of mandate policies on stimulating investment in cellulosic biofuel refineries. In a two‐period framework, we compare the first‐period investment level (FIL) under three scenarios: laissez‐faire, non‐waivable mandate (NWM) policy, and waivable mandate (WM) policy. Results show that when plant‐level marginal costs are increasing then both NWM policy and WM policy may stimulate FIL. The WM policy has a smaller impact than does the NWM policy. When the plant‐level marginal costs are constants, however, WM policy does not increase FIL but does increase the expected profit of more efficient investors.

Source: American Journal of Agricultural Economics

DOI: 10.1093/ajae/aar142

Authors: Ruiqing Miao, David A. Hennessy, Bruce A. Babcock

Institution: Iowa State University

Language: English

Topic: Capital Investment and Risk Analysis

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Affordable and clean energy

Open Access status: green

Funder: U.S. Department of Energy