Federal Financial Incentives to Induce Early Experience Producing Unconventional Liquid Fuels (Technical Report)

The government, as a principal, may seek to induce a private investor, as an agent, to build and operate an unconventional-oil production plant to promote early production experience with such plants. Facing significant uncertainty about the future, it also wants to limit the cost to the public of doing this. This report offers an analytic way to design and assess packages of policy instruments that the government can use to achieve its goal.