We’ve been trying to document all the different pieces of state legislation out there that have impacts on the biodiesel industry. This blog entry posted by John Gartner on Autopia – Wired News, I think, kind of sums up what the effects might be if the 11 states… Florida, Connecticut, Missouri, California, Oregon, Mississippi, Arkansas, Nebraska, Montana, Tennessee and New Mexico… raise their biodiesel requirements from two to five percent, and other states look at reducing taxes on biodiesel:
You can view this as interventionist government messing with the free market for both food and fuel. Or, you can say it is the states creating a minimum market that ensures interest from growers and refiners to establish demand that is necessary to battle oil dependency (for national security reasons) or for environmental purposes.
Another option would be that states (or the federal government) could use their purchasing power to create the market. If all government vehicles used only biofuels, it would provide the certainty that producers need while reducing the effect on the free market. This is done all of the time with emerging technologies, so it shouldn’t be a surprise if it happens here.