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Unpublished Paper
Making Regulatory Innovation Keep Pace with Technological Innovation
ExpressO (2011)
  • Jay P. Kesan, University of Illinois - College of Law
  • Timothy A. Slating
Abstract
Recent world events are forcing us to reconsider the ways in which the energy needs of the U.S. can and should be met. In regards to renewable energy options in general, the public response to the nuclear crisis at Japan’s Fukushima Daiichi power plant will likely stymie President Obama’s call for an increase in our reliance on nuclear energy. Additionally, the increasing political unrest in the Middle East and North Africa is once again reminding us that solutions must be found to mitigate our heavy dependence on foreign-produced oil. Newly emerging liquid biofuels not only hold the promise of enhancing U.S. energy security in a sustainable fashion, but also provide the potential to mitigate climate changing greenhouse gas emissions and serve as a driver for rural economic development. Nevertheless, regulatory hurdles to their successful commercialization abound. In this article, we provide a thorough normative analysis of the regulatory schemes incentivizing and governing the commercialization of biofuel-related technological innovations. We urge that regulatory innovation is needed to keep pace with these technological innovations and, in doing so, we build upon the established principles that regulatory burdens should not outweigh the harms they are intended to mitigate, and that regulatory innovation is often called for to efficiently capture the social value of regulated activities. Next, we apply these insights via a detailed case study that focuses on biobutanol, an emerging biofuel with the potential to act as a socially optimal alternative to petroleum-based transportation fuels. This biobutanol case study not only describes and elaborates on the effects of the federal Renewable Fuel Standard, but also on the Clean Air Act’s regulatory framework for the commercialization of new fuels and fuel additives. After analyzing these frameworks, we provide suggestions for distinct ways in which different forms of regulatory innovation will help mitigate unjustified regulatory hurdles to the commercialization of biofuel-based technological innovations and allow us to more efficiently capture their inherent social value. Our analysis and prescriptions also find resonance in the context of other emerging new fuels and bioenergy developments.
Keywords
  • Regulation,
  • Reform,
  • Biofuels,
  • Renewable,
  • Energy
Disciplines
Publication Date
April 3, 2011
Citation Information
Jay P. Kesan and Timothy A. Slating. "Making Regulatory Innovation Keep Pace with Technological Innovation" ExpressO (2011)
Available at: http://works.bepress.com/jay_kesan/3/