Abstract:We develop a two-region partial equilibrium model of the global market for liquid fuel and analyze different policies, such as biofuel mandate, emission standard, and fuel carbon tax. We rank these policies under different criteria, such as greenhouse-gas (GHG) emissions, expenditure on fuel imports, the impact on fuel consumers and producers, the quantity of biofuel, etc. Our analysis suggests that supporting the domestic biofuel industry and reducing energy imports appear to be the main goals for policy makers in adopting the U.S. Renewable Fuel Standard while GHG emission reduction appears to be the main criterion in adopting the Low Carbon Fuel Standard (LCFS) in California. The nonadoption of GHG tax suggests that supporting the domestic renewable fuel industry and limiting the impact on fuel consumers are also important criteria for policy makers.