Regulatory Policies Reported to Hinder Commercialization of Biofuel Innovations

With the potential of better energy security and better environmental quality, biofuels development has become a national policy agenda in many countries. Various forms of regulatory schemes, such as federal income tax provisions, biofuel-mandated blending and agricultural program subsidies, are placed in order to provide incentive for  the use of biofuels. However, law professors from the University of  Illinois Energy Biosciences Institute recently argue that the current regulatory framework also hinders the commercialization of the innovations in the biofuel industry.  

In their paper, they first provided a normative analysis of the regulatory schemes incentivizing and governing the commercialization of biofuel-related technological innovations. Then, they applied the insights via a detailed case study that focuses on biobutanol, an emerging biofuel with the potential to act as a socially optimal alternative to petroleum-based transportation fuels. Finally, they provided suggestions that will help mitigate unjustified regulatory hurdles to the commercialization of biofuel-based technological innovations. According to the researchers, the two main reasons in current regulatory schemes that hinder commercialization of biofuel innovation are: (1) legally accepted biofuel must be substantially similar to the current commercial biofuel; and (2) the time-consuming and costly process of getting regulatory approval for new biofuels. The full paper is available at the Social Science Research Network website (URL above).