A literature review of the market effects of federal biofuel policy and recommendations for future policy

Abstract

The United States has had a federal biofuels policy since the 1970s. The purpose of this policy was to help the development of a biofuel industry during a time of high fuel prices in order to provide a domestic alternative to expensive foreign oil. Later the policy was changed to help lower the environmental impact caused by conventional fuels. Since that time the industry has grown and currently produces around 15 billion gallons of biofuels every year. The current federal biofuel policy is largely based on one program, the Renewable Fuel Standard (RFS), which mandates the production and blending of several different classes of biofuels and provides a form of subsidy to the biofuel industry. This paper The VEETC was allowed to expire along with the ethanol import tariff leaving the RFS as the only major biofuel policy still in place