Productivity of innovation in biofuel technologies

Biofuels are a regular focus of public policy. The productivity of innovation in biofuel technologies is rarely addressed either in research or policy. Yet as innovation in any field grows complex and costly it can experience reductions in productivity and diminishing returns to investments. We examine here the productivity of investments in the technologies used to produce biofuels, using data from the U.S. Patent and Trademark Office. The results show that the productivity of innovation in biofuel technologies is declining. Continuation of this trend will in time force reductions in research investments in biofuel technologies. We discuss policy approaches to address declining returns to research investments.