Biofuels Policy in Limbo

Philip Martin....................................9 Any game works better when the rules are enforced consis­ tently, whether it is the Superbowl or Monopoly around the kitchen table. If the referee is indecisive, then the players are uncertain about how to play and the game degenerates. Transportation fuel markets in the United States currently resemble a game with inconsistently enforced rules. The EPA plays the role of the referee. It is charged with implementing federal leg­ islation known as the Renewable Fuel Standard (RFS), which requires ambi­ tious quantities of biofuels such as ethanol and biodiesel to be blended into motor fuels. Until recently, the fuel industry was able meet the RFS mandate without too much difficulty. However, the mandate now requires more biofuel than the fuel industry can easily absorb, and the EPA has vacillated on whether it will enforce the standard. We are almost at the end of the year, and the EPA still has not told the industry how much biofuel it must use in 2014. This article explains how we got to this point and outlines the future pros­ pects for biofuels policy.