Do green tech policies need to pass the consumer test?: The case of ethanol fuel

This paper investigates a question sometimes overlooked by policymakers and regulators, namely the need of a robust value proposition for green technologies to successfully enter the market. In particular, results from consumer choice models are used to develop measures of consumer acceptance of ethanol blends and flex-fuel vehicles is studied, a fuel-vehicle system that has received attention in a variety of federal and state policies. The analysis suggests that, under projected fuel prices and given the characteristics of the competing vehicle-fuel systems, consumers are unlikely to substitute ethanol blends for gasoline. The analysis also highlights the need for further research in this area.