Biofuel Policy Follies

In this Policy Outlook, Institute CEO William O’Keefe examines federal biofuels policy concluding that history of federal subsidies and mandates for ethanol and its derivatives (notably, cellulosic ethanol) have failed.

O’Keefe argues that federal mandates and monetary supports for biofuels have had little positive impact, but have come at great cost to the American public. He argues: “For almost 30 years, the U.S. pursuit of a biofuels policy to reduce dependence on foreign oil and improve air quality has been a case study in misguided policy and unintended consequences, namely, promoting crony capitalism. “
A particularly acute example of policy folly is the decision to mandate specific targets and timetables for use of cellulosic ethanol, O’Keefe says.  Energy legislation approved in 2007 mandated use of 100 million gallons of cellulosic ethanol in 2010, growing to 16 billion gallons in 2022.
“The mandate in EISA, as well as the commitment in the 2006 State of the Union, reflects breath-taking ignorance and political hubris,” states O’Keefe.” The notion that government believes it can mandate specific targets and timetables when no facility and no technology existed to achieve any of the mandate’s goals is incomprehensible.”

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