The U.S. fuel ethanol industry has experienced phenomenal
growth in recent years, with roughly a 3.6-fold
increase in ethanol production since 2005 (RFA, 2012).
A fuel blender’s credit (the Volumetric Ethanol Excise Tax
Credit), a secondary tariff on imported ethanol, and mandatory
use of renewable fuels supported the development
of the industry. However, two of these three policy instruments—
the federal tax credit and the secondary tariff—
were allowed to lapse at the end of 2011. The Renewable
Fuels Standard (RFS)—which sets annual mandates for
renewable transportation fuels sold in the United States—
has been maintained and currently requires 15.2 billion
gallons of renewable fuel, an increase of roughly 9% from
last year, to be contained in motor vehicle fuels in 2012
(EPA, 2011).
In an earlier assessment of U.S. biofuels policies (Yano,
Blandford and Surry, 2010), we argued that the mix of policies
did not make economic sense, particularly in terms
of their impact on international trade. In this article we
examine whether things have changed and focus on the key
issue of whether the RFS should continue to be applied.
