How Good Politics Results in Bad Policy: The Case of Biofuel Mandates
AbstractBiofuels have become big policy and big business. Government targets, mandates, and blending quotas have created a growing demand for biofuels. Some say that the U.S. biofuels industry was created by government policies. But recently, biofuels have become increasingly controversial. In this paper Lawrence argues that the growing list of concerns about the impact of biofuel targets and mandates--are the predictable result of a failure to follow the basic principles of good policy-making. Good policy-making requires developing a policy goal or target (i.e., reducing greenhouse gas emissions, reducing oil consumption, or increasing rural economic development) and designing an instrument to efficiently meet that particular goal. The more precise the goal, the better. In addition, for each target, there should be at least one policy instrument. You cannot meet two goals with only one instrument. Lawrence argues that the current U.S. biofuels mandates do not represent the most efficient or precise instrument to meet any of the policy's stated goals. While this paper argues against mandates, it should not be understood as an attack on all biofuels policies. Three are especially worthy of consideration. First, there are good reasons for the government to subsidize research on different alternative sources of energy such as biofuels. Second, there may be a role for government coordination and investment in biofuels infrastructure which are essentially public goods that private actors cannot undertake on their own. And third, there are also good reasons for removing the tariffs that are imposed by both the European Union and the United States on imported ethanol and biodiesel. These trade barriers not only reduce any potential environmental benefits that could be achieved from using these products, but also limit the development benefits than poor countries might enjoy from producing them.
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Bibliographic InfoPaper provided by Harvard University, John F. Kennedy School of Government in its series Working Paper Series with number rwp10-044.
Date of creation: Sep 2010
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Other versions of this item:
- Lawrence, Robert Z., 2010. "How Good Politics Results in Bad Policy: The Case of Biofuel Mandates," Scholarly Articles 4553312, Harvard Kennedy School of Government.
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- F18 - International Economics - - Trade - - - Trade and Environment
- L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
- Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
- Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
- Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
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- Geir H. Bjertnæs, 2013. "Biofuel mandate versus favourable taxation of electric cars. The case of Norway," Discussion Papers 745, Research Department of Statistics Norway.
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