Limits to policy-led innovation and industry development in US biofuels

ABSTRACT Renewable energy industries that replace fossil fuels with biomass-based alternatives are at the forefront of a shift to and an advanced bioeconomy. In the United States, government policies promote second-generation liquid biofuels that use non-food feedstocks like switchgrass to foster industry development. Although government policies and related industry activity created a market niche for switchgrass biofuels, geographic, technical, and institutional barriers limit industry development and regional branching. Policy alone has not been enough to disrupt an industry path dominated by corn-based production. Formation of a switchgrass-based biofuel industry depends on stabilisation of production around a series of inter-related process innovations. Unlike corn-based biofuels, switchgrass and other cellulosic biofuels have no single existing related industry value chain to use to resolve coordination problems. The experience with switchgrass sheds light on the innovation process in general by drawing attention to the early stage of science and technology development.