The Cellulosic Ethanol Debacle
Congress mandated purchase of 250 million gallons in 2011. Actual production: 6.6 million.
http://online.wsj.com/article/SB10001424052970204012004577072470158115782.html
Yes, what is described in the article (forcing refineries to buy products, then penalizing them when they can’t because the products don’t exist) is brain dead stupid, but the problem isn’t in the intention (creating an environment to help alternatives reach economies of scale), it is with the implementation (mandating scientific breakthroughs). It is worsened by the inevitable politics and favoritism inherent in awarding such large sums of money for specific technology implemented by specific companies (Obama’s insistent backing of failed Solyndra is a perfect example). The government actually already has in place effective ways to promote research and commercialize that which is successful: SBIR (Small Business Innovative Research) grants. Small sums of money (I would say a wee bit too small, so small that it becomes essentially impossible for someone like me to work on speculative research, but if they only doubled or tripled the minimum amounts then people like me might be able to actually afford to do some research (if I could convince them to actually fund me, but that is another issue)) spread over a very large number of users vastly increases the probability of success. I am not sure, but suspect that the money pissed away into the Solyndra black hole is likely more than is spend on the entire SBIR program, system wide, how much more effective would it be to spend it piecemeal instead?
Also, my complaint is that the parameters are way too narrow to allow for real creativity. DARPA does a much better job (in general) of clearly defining outcomes without speculating at all on ways of achieving those outcomes. If, for instance, instead of saying cellulosic ethanol had to be used, instead say some sort of fuel equivalent from renewable sources had to be used. That would allow people like me who want to turn grass into diesel equivalents to be eligible. Also, the reward should be strictly on a per-use basis, meaning if I produce 100 gallons of whatever that I could sell it for some subsidized price to a guaranteed customer. For instance, if I can prove that my product works equally as well as diesel (or gasoline) and the government subsidized it at a dollar a gallon, then I should be able to sell my product for a dollar more a gallon. Further, the government should guarantee the sale of the product (as long as it meets the standards (which should be very inexpensive and fast to test)) and act as the purchaser of last resort. That way, I, as a little guy, can justify spending my time and effort on some highly speculative research that I can personally be rewarded with. Thus, you remove even the need to compete for SBIR resources and the government only pays for success.
Too bad our government is dedicated to making the wealthy even more rich and not actually interested in supporting the ordinary Joe in his efforts to make the world a better place.
