Such a project could provide land managers and law enforcement with the support they need to adequately monitor areas and respond accordingly. It could also encourage individuals to write to governmental officials and create pressure for policy makers to act. Mexican DTOs are the foremost cultivator group and have the single largest impact on the marijuana industry. The same organizations responsible for the majority of marijuana production on California public lands are the heart of the bloody Mexican drug war. President Obama met with officials in Mexico City and augmented “ongoing US aid to Mexico under the Merida initiative: a three-year, $1.4 billion package aimed at helping Mexico fight the drug cartels with law enforcement training, military equipment and improved intelligence cooperation.”However, this money is yet to incur any noticeable effect on drug cartels.In order to disrupt DTOs, the United States needs to halt the flow of money and weapons from the US to Mexico. By upholding current regulations, we empower cartels to continue their destructive, violent practices. Marijuana cultivation on public lands is a significant problem with viable solutions, but without essential changes in law enforcement strategies and nationwide public policy, it is a problem we can expect to continue,vertical grow rack system putting the future of our lands and our people at risk. The US war against marijuana has increasingly escalated since its conception because it is not a war that can be won.
Drug production has become increasingly destructive and dangerous despite an estimated $7.7 billion spent annually by the US Government to enforce marijuana laws.Such regulation inflates the steady revenue flowing to criminal organizations that in turn generate widespread crime and violence. Regardless of the legal status of marijuana, as long as it remains in high demand there will be a market to supply it, regulated or unregulated. Government-imposed prohibition gives rise to black market systems that are dominated by major criminal organizations that control production and distribution. This system of perpetual crime and punishment is sustained at the cost of all parties involved, and requires a fundamental change in the system itself. Public policy plays the most crucial role in dictating the status of marijuana markets and their effects on governance and fiscal resources. The most powerful mechanism for opposing cultivation trends is to change the role of marijuana in California and the United States through legalization. California legislator Tom Ammiano proposed the Marijuana Control, Regulation, and Education Act in 2009 in an effort to take marijuana cultivation out of cultivator control and put it to use for the government through tax revenues. It was estimated that marijuana taxes could generate over a billion dollars in tax revenues while saving the state of California hundreds of millions more in enforcement, legal, and incarceration costs. The Regulate, Control & Tax Cannabis Act, Proposition 19, was put on the California ballot in November, 2010, to legalize marijuana and control it like alcohol. Though Prop 19 failed by a narrow margin, widespread legalization could bring marijuana out of the black market and into the mainstream, enabling governmental controls that are impossible under the current system, such as barriers to marijuana access for youth.
On a national scale, such a system would de-incentivize DTO operations by reducing their profit margins, and removing black market demand. Legalization would create a legitimate marijuana industry through which cultivators can be regulated, resulting in more efficient and less damaging practices. Consumers could then buy less harmfully produced marijuana because it would be available through established institutions. Finally, alternative uses of hemp including fibers, oil, and protein could be re-established within legitimate and competitive industries. Decarbonization of the U.S. and global economies requires a transition away from fossil fuels to renewables, especially in the transportation sector – the largest contributor to U.S. greenhouse gas emissions.The environmental costs associated with the production and combustion of petroleum fuels have not been internalized by producers and consumers, respectively, prompting government intervention. Federal and state governments have increasingly looked to market-based environmental policies to reach their decarbonization goals, often by enacting credit trading schemes for markets to meet an annual standard. This dissertation studies the most prominent of such U.S. public policies that incentivize displacement of petroleum fuels with renewable and low carbon transportation fuels. The Renewable Fuel Standard is the largest program to support renewable fuels in the U.S., requiring a variety of bio-fuels to be blended in the national fuel supply. The RFS is criticized for being technology biased, as it specifies how much of which biofuels must be used to reach its emissions reduction goals. State and other federal governments now increasingly look to carbon intensity standards in the transportation sector, which provide a technologyneutral policy option.
The largest of such policies is California’s Low Carbon Fuel Standard , which sets a carbon intensity standard for the state’s transportation fuel supply. This dissertation explores the past, present, and future of low-carbon fuel incentive programs. Chapter 1 begins with the present, addressing an important ongoing challenge associated with these policies – namely incomplete pass-through of incentives and costs to fuel prices. Chapter 2 looks ahead a decade, forecasting a range of compliance outcomes for California’s LCFSthrough 2030. Finally, lessons from the last decade are drawn in Chapter 3, exploring trends in the three standing carbon intensity policies worldwide using publicly available historical data. Chapter 1 provides an empirical analysis of credit revenue pass-through. Specifically, time series techniques are used to estimate the extent to which implicit taxes and subsidies generated from the RFS, LCFS, and CFP are passed through to a variety of diesel fuel prices. In a second best policy framework, an efficient RFS and LCFS achieve their respective GHG targets while minimizing compliance costs. If fuel blenders have market power, they have the incentive to drive up compliance costs, leading to an inefficient outcome. The findings from Chapter 3 suggest that obligated parties completely pass through their implicit taxes from the RFS, LCFS, and CFP to wholesale diesel prices. They suggest incomplete pass through, on the other hand, of bio-diesel subsidies to rack blended diesel prices. The RFS, LCFS, and other carbon intensity standards all tout an attractive feature: revenue neutrality. These policies are revenue neutral to the transportation system because the implicit tax revenue generated from obligated parties purchasing compliance credits is used to lower the price of alternative fuels, effectively subsidizing them. Market imperfections, however, may restrict how much of the credit revenue is being fully passed through to consumers in the form of lower prices for alternative fuels. Chapter 2 assesses if and how California is likely to achieve the 20 percent CI reduction target by 2030 set forth by their LCFS. Using a Vector Error Correction model, LCFS credit demand is projected through 2030 under business-as-usual uncertainty. The model is trained using 30 years of historical trends in gasoline and diesel demand, vehicle miles travelled, oil prices, and other economic indicators. Several policy scenarios are simulated and evaluated against a baseline scenario, which extrapolates current trends. Biomass-based diesel, the marginal fuel for LCFS compliance, makes up between about 60 and 80 percent of finished diesel in 2030 in the baseline scenario, reflecting a substantial increase from current levels. Under most alternative policy scenarios,vertical grow system and especially in the case of rapid electric vehicle deployment, compliance is met with significantly less biomass-based diesel. The first two chapters analyze the LCFS and CFP, which are a relatively new policy instruments used to reduce transportation emissions reductions. As more and more states continue to adopt similar carbon intensity standards, it is imperative to understand similar existing programs have performed, however comprehensive analyses on them are relatively scant.
Aiming to fill that gap, the final chapter, Chapter 3, reviews the three standing carbon intensity standards in California, Oregon, and British Columbia using publicly available data and information. British Columbia was the first jurisdiction to implement a CI standard in 2010, followed shortly after by California in 2011, and later followed by Oregon in 2016. California’s program is the largest given the state’s voluminous population and fuel demand. Low CI scores associated with avoided emissions have brought about staggering growth in the use diesel alternatives such as bio-diesel, renewable diesel, and biogas in the three jurisdictions. In California, diesel alternatives generated the majority of LCFS credits, generating nearly two billion dollars in revenue in 2020 alone, a third of the total. Since diesel are so critical to compliance, this dissertation pays special attention to that side of the transportation sector and seeks to impart an understanding of how diesel markets and alternative fuel policies interact.Renewable and low carbon fuels are becoming an important part of decarbonization strategies worldwide. Several policies have been, or are being planned to be, implemented in the United States. There are three policies, one federal and two state, that lead this effort. The U.S. Renewable Fuel Standard requires certain percentages of gasoline and diesel be displaced by renewable fuels each year. California’s Low Carbon Fuel Standard and Oregon’s Clean Fuels Program set targets to reduce the CI of transportation energy in their states. The RFS, LCFS, and CFP all rely on systems of tradeable credits for compliance which prompt implicit tax-subsidy schemes in fuel markets. Firms pay a penalty on their petroleum products and the revenue is transferred to alternative fuel producers effectively in the form of a subsidy. The efficacy and efficiency of these policies hinge on the implicit taxes and subsidies propagating through fuel supply chains. This paper studies pass through across two dimensions in the diesel sector: implicit taxes placed on petroleum diesel and implicit subsidies awarded to bio-diesel. Implicit taxes and subsidies from the RFS stack with those from the LCFS and CFP in California and Oregon, respectively, and therefore are evaluated both separately and together. There are three points in fuel supply chains where pass through is relevant, this paper studies two of them: the wholesale market to blenders and blenders to retailers. This paper does not investigate pass through from retailers to consumers, which must also be complete to achieve efficacy of the policies. The pass through of bio-diesel subsidies to retail prices of blended diesel is an important area for future research, especially given evidence of incomplete pass through of ethanol RIN subsidies to E85 retail prices in the literature . U.S. crude oil refiners and petroleum importers are required to purchase Renewable Identification Numbers , the compliance credits in the RFS, for each gallon of gasolineand diesel supplied, which act as an implicit tax. California and Oregon refiners and importers face a similar obligation under the LCFS and CFP, respectively, namely deficits that are generated for each gallon of gasoline and diesel consumed in-state. There are robust markets for RINs, LCFS, and CFP credits and the market price, along with the stringency of the policies, determine the level of the taxes and therefore the cost of compliance. Fuel blenders purchase bio-fuels with a RIN attached to it. Once the fuel is blended, the RIN is separated from the fuel and can be sold on the RIN market. The value of the RIN then, acts as an implicit subsidy on the bio-fuel. If blenders have market power in selling RINs, they have the incentive to drive up RIN prices, which in turn, raises compliance costs for refiners and consumers. How much of the RIN tax that is passed through by refiners will determine the incidence of the increased RIN prices resulting from the incomplete pass through of the RIN subsidy. The same relationship between the tax and subsidy is present in the LCFS and CFP. This paper is the first to analyze RIN pass through on both sides of the tax-subsidy mechanism, the first to examine pass through of bio-diesel subsidies, and the first to consider either the LCFS or CFP. Indeed, most studies to date on pass-through for implicit taxes and subsidies for fuels have focused on the federal RFS and the gasoline industry, with much less focus on state policies and the diesel industry. Diesel fuels accounted for 27 percent of total transportation energy in 2020.3 Biomass-based diesel earns the lion’s share of credits in California’s LCFS and a growing proportion in Oregon’s CFP, making diesel an important piece of the transition to lower carbon fuels. Furthermore, pass-through results from the gasoline industry may not hold for the diesel industry because of differences in costs, production, storage, and blending constraints, demand and supply elasticities, and market structure.