regulation can create markets that drive innovation. they work best when rather simple ...
all cars will get at least 30 mpg. period. that sort of thing. from there folks innovate.
tax and revenue policy does drive innovation, the stuff humans know today about biofuels dwarfs a billion times over what was known 15 years ago, and one can largely assign that to tax policy and government investment.
one can poo poo it and say e.g. ethanol hasn't changed the carbon footprint (actually it really has but some think not) or that ethanol has been a cash cow for big Ag (and it has) and that it has wildly restructured food prices, farming income and so on (and it has) ... so it has been abused and profiteered from ... BUT we know billions of times more about it than we did 15 years ago. in the absence of government leadership, the whole biofuels program (not just drop-in fuels like ethanol or butanol, but biodiesel, alkanes, through pyrolysis e.g.) is miles and mile sfurther along. government did that. the technology is valuable and will see use at some point, the cost curves still point to things like fracking, but the research has a 15 year head start.
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