Is There A Future to Biofuel Innovation?

Significance 

Global concern about the availability and cost of petroleum has been on the rise since the price increases of the 1970s and more recently. A promising alternative to fossil fuels, biofuel has been advocated since the mid-twentieth century. Biofuels, i.e. fuels that are produced through contemporary biological processes and are thus renewable, have been found to be economically marginal in the marketplace, yet are socially and politically more acceptable than fossil fuels. This makes biofuels an important target of policies.

Governments in several countries have introduced deployment policies to foster the adoption of clean energy technologies. Biofuel policies sort into two types: technology-push and demand-pull, the latter aided by mandated fuel blends. These policy approaches are individually appropriate for different generations of biofuel technologies. Government support, and the productivity of research inputs, are important factors in considering whether to invest in biofuel research. To date, however, there has been no consistent way to measure research productivity.

Recently, Utah State University scientists Michelle Arnold and Joseph Tainter, together with Deborah Strumsky of Arizona State University, examined the productivity of research in the technologies used to produce biofuels, using data from the U.S. Patent and Trademark Office. Their goal was to ascertain the direction of innovation productivity in biofuel technologies, and to suggest policy approaches commensurate with their findings. Their work is currently published in the research journal Energy Policy.

Productivity of innovation within a sector or industry is difficult to calculate directly since firms consider such information proprietary. An alternative approaches was developed to assess the productivity of innovation, and whether an industry is experiencing diminishing returns to R&D inputs. Using data provided from the U.S. Patent and Trademark Office, the researchers constructed a database of liquid biofuel technologies patented since 1976. “We carefully read each patent to determine which ones pertained to biofuels,” says Arnold. “Our goal,” observed Tainter, “was to avoid false positives.” Methanol was considered in a separate category since it has many industrial uses. Overall, 2610 patents were retained for the analysis. Lastly, the research team gathered information on the number of authors, class number, quantity of class numbers assigned to each patent, and how the patent pertained to biofuel innovation.

The number of authors per patent is a key measure of costs. Interdisciplinary teams are more expensive than lone scholars, and often require more institutional support. Patents per author then became the measure of productivity. This is equivalent to the standard measure of productivity in the economy as a whole, output per worker.

The authors found that the productivity of innovation in biofuel technologies is declining. The trend is true of each biofuel generation, and of methanol technologies. This matches the results of earlier research by the authors (with Temis Taylor of Stony Brook University and José Lobo of Arizona State University) in technical innovation as a whole, and in many technological sectors. “In R&D as a whole, we find increasing complexity and costliness in the research process,” says Tainter, “producing diminishing returns to research inputs.” For example, in biofuels, third generation technologies are more complex than those of earlier generations.

In a nutshell, their study showed clearly and consistently that the productivity of innovation in biofuel technologies is diminishing, evidenced by declining patents per author. Continuation of this trend will in time force reductions in research investments in biofuel technologies. The authors recommended alternative policy approaches for the problem, especially giving greater emphasis to demand-pull policies, such as mandated fuel blends, that guarantee a large market.

About the author

Michelle Arnold is a Ph.D. student at Utah State Univeristy. Her research addresses the many aspects of liquid biofuel growth and development in the United States. Along with assessing biopysical limitations of liquid biofuel production in country, Michelle studies trends in innovation productivity and social desirability. This research will better inform policy makers, private investors, and the public about the past and current state of liquid biofuels, helping to inform decision making into the future. Michelle also is the Executive Communications Director for the International Society of BioPhysical Economics and teaches at Utah State University.

About the author

Joseph Tainter is Professor of Sustainability in the Department of Environment and Society, Utah State University. He is the author of The Collapse of Complex Societies, and co-author of Supply-Side Sustainability and Drilling Down: The Gulf Oil Debacle and Our Energy Dilemma.

Dr. Tainter’s research has been consulted in the United Nations Environment Programme, UNESCO, the World Bank, the Rand Corporation, the International Institute for Applied Systems Analysis, the Beijer Institute of Ecological Economics, the Earth Policy Institute, the Technology Transfer Institute/Vanguard, and other institutions.

His research has been applied in economic development, energy, environmental conservation, health care, information technology, urban studies, and the challenges of security in response to terrorism.

About the author

Deborah Strumsky is an assistant professor at Arizona State University (ASU) in Tempe, Arizona. Her research has focused on the study of innovation, invention, and technological change, and their relationship to economic growth. More recent work has explored technological change in renewable energy systems. She has several longstanding collaborations with researchers at the Santa Fe Institute in Santa Fe, NM.

She currently has appointments in the ASU-SFI Center for the Study of Biosocial Complex Systems, the School for the Future of Innovation and Society, and the ASU School of Sustainability. In addition to ASU, she is also an External Faculty Fellow at the Jönköping International Business School in Jönköping, Sweden.

Reference

Michelle Arnold, Joseph A. Tainter, Deborah Strumsky. Productivity of innovation in biofuel technologies. Energy Policy, volume 124 (2019) page 54–62.

Go To Energy Policy

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