Renewable energy policy alternatives for the future

There are many different policy paths that can be followed in the development of renewable or alternative fuels. The article illustrates how several of the important alternatives and how policy designed specifically to internalize the national security and global warming externalities could function. If the US were to adopt a cap and trade climate change policy, the greenhouse gas emissions externality would be handled through cap and trade, and the subsidy/fuel standard policies would need to handle only the energy security externality.