From Costs to Reductions in Carbon Intensity: Market Signals and Electric Vehicle Charging Infrastructure in Oregon's Clean Fuels Program for Sustainable Development

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ABSTRACT This study examines the long‐run determinants of ethanol carbon intensity (CI) under Oregon's Clean Fuels Program (CFP). The study emphasizes how biofuel costs, credit market dynamics, and electric vehicle (EV) infrastructure interact to shape low‐carbon transitions. Using monthly data from 2018 to 2024, we apply a set of econometric techniques, including fully modified ordinary least squares (FMOLS), instrumental variables (IV‐2SLS), dynamic OLS with robust and quantile estimators, bootstrap simulations, and nonlinear specifications, to ensure rigorous and reliable inference. The results reveal three central findings. First, average credit prices are consistently linked to reductions in ethanol CI. This confirms the fundamental role of market‐based incentives in driving decarbonization. However, this relationship is nonlinear: Compliance responses strengthen with moderate credit increases but taper at higher price levels. Second, biodiesel (B5) and ethanol (E10) costs are associated with lower ethanol CI. This reflects the CFP's performance‐based structure, where rising costs coincide with stronger credit generation and cleaner fuel blending. Third, the expansion of EV infrastructures, such as DC fast‐charging infrastructure, supports additional CI reductions, though with diminishing marginal gains as network density increases. Interaction analysis further shows that credit prices are most effective in areas with more developed EV infrastructure. This underscores the combined effect between market signals and technological deployment. Therefore, the research findings demonstrate that Oregon's CFP effectively integrates economic incentives and infrastructure investment to advance sustainable, low‐carbon transportation fuel transitions.

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