Breetz+Dissertation.Pdf

Fueled by Crisis: U.S. Alternative Fuel Policy, 1975-2007 by Hanna L. Breetz B.A. Government Dartmouth College, 2002 SUBMITTED TO THE DEPARTMENT OF POLITICAL SCIENCE IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY IN POLITICAL SCIENCE AT THE MASSACHUSETTS INSTITUTE OF TECHNOLOGY FEBRUARY 2013 ©2013 Hanna L. Breetz. All rights reserved. The author hereby grants to MIT permission to reproduce or to distribute publicly paper and electronic copies of this thesis document in whole or in part of any medium now known or hereafter created. Signature of Author: ______________________________________________________ Department of Political Science December 21, 2012 Certified by: _____________________________________________________________ Kenneth A. Oye Associate Professor of Political Science Thesis Advisor Accepted by: ____________________________________________________________ Roger D. Petersen Arthur and Ruth Sloan Professor of Political Science Chair, Graduate Program Committee 1 2 Fueled by Crisis: U.S. Alternative Fuel Policy, 1975-2007 by Hanna L. Breetz Submitted to the Department of Political Science on December 21, 2012 in partial fulfillment of the requirements for the degree of Doctor of Philosophy in Political Science ABSTRACT This dissertation investigates the policy-making process that led to three “crash programs” for alternative fuels after energy shocks in the 1970s and early 2000s: (1) the proposed Energy Independence Authority in 1975-1976, (2) the Synthetic Fuels Corporation in 1979-1980, and (3) the revised Renewable Fuel Standard in 2007. These were massively ambitious programs, with enormous budgets and unachievable technological goals. What makes them truly puzzling, though, is that they were major policies that emerged without major advocates. Although various interest groups and constituencies supported the development of alternative fuels, neither the powerful industry lobbies (oil, coal, corn, ethanol) nor the public interest groups (environment) had previously advocated for interventions of this scope and scale. This presents a fundamental empirical puzzle for public policy scholars, as it contradicts our understanding of the drivers of policy change. Typically, the policy process literature portrays radical policy change as resulting from the strategic efforts of interest or advocacy groups during a window of opportunity. Here, however, radical policy change occurred in the absence of lobbying or advocacy efforts. What explains this phenomenon? How do we account for the creation of these programs? What conditions and sequence of decision-making led to these policy outcomes? This dissertation develops an alternative model of “politician-driven policy- making.” Public alarm over a deepening national crisis is the catalyst for this process. It gives rise to two coupled mechanisms: “bidding up,” in which the President and Congress compete for leadership during the crisis, and “signing on,” in which interest groups and minority Congressional groups bargain and often bandwagon with the legislative proposals. Thesis Supervisor: Kenneth A. Oye Title: Associate Professor of Political Science 3 4 Table of Contents Abstract…………………………………………………………………3 Chapter 1: Introduction…………………………………………………7 Chapter 2: Theories of Policy Change…………………………………19 Chapter 3: Methodology……………………………………………….59 Chapter 4: Energy Independence Authority, 1975-1976………………89 Chapter 5: Synthetic Fuels Corporation, 1979-1980………………….132 Chapter 6: Renewable Fuels Standard, 2007………………………….197 Chapter 7: Conclusions………………………………………………..288 Bibliography…………………………………………………………..296 5 6 CHAPTER 1: INTRODUCTION Technological policies can be no better than the decision-making processes used to arrive at them. - Patrick Hamlett1 Introduction: The Puzzle of Radical Change Crises may be the best of times for bold policy change – “grand opportunities,” in the words of Charles Lindblom2 - but they are the worst of times for crafting good policy. This dissertation explores this tension by tracing the policy-making processes leading to “crash programs” for alternative fuels in the wake of oil shocks in the 1970s and mid- 2000s. The programs emerging from these periods tended towards grandiosity, with massive budgets and wildly over-optimistic technological timelines and targets. It is not without some basis that they have been derided as “irrational” and “boondoggles.” And indeed, they proved unsuccessful in their goals of catalyzing industries for synthetic fuels (in the 1970s) and advanced biofuels (in the 2000s). What is remarkable about these policies, though, is not so much their overzealous goals as the fact that these dramatic industrial policies were produced by the U.S. political system even though not a single actor specifically pushed for them. Although various interest groups and political constituencies supported the development of alternate energy technologies, neither powerful industry lobbies (oil, coal, corn) nor public-interest groups (environment, in particular) advocated for government policies of the grand scope and scale that actually emerged. Far from pushing for expansive 1 Hamlett, Patrick W. 1987. “Technological Policy Making in Congress: The Creation of the U.S. Synthetic Fuels Corporation.” In: The Unfulfilled Promise of Synthetic Fuels: Technological Failure, Policy Immobilism, or Commercial Illusion. Eds. Ernest J. Yanarella and William C. Green. New York: Greenwood Press, 53-69. 2 Braybrooke, David and Charles E. Lindblom. 1963. A Strategy of Decision: Policy Evaluation as a Social Process. New York: The Free Press of Glencoe. 7 policies, key interest groups were largely taken aback when the legislative proposals were announced. These were, in short, major policies that emerged without major advocates. This development presents a fundamental empirical puzzle for public policy scholars. Typically, scholars envision radical policy change resulting from the advocacy or lobbying efforts of key groups or constituents at a time of crisis. Here, however, radical change emerged at a time of crisis despite the absence of lobbying or advocacy efforts. What explains this development? That is, how do we account for the creation of these radical programs? What sequence of decision-making processes led to these policy outcomes? In short, why do we get radical change without radical advocacy? The Existing Consensus: Advocating for Change and Change from Advocacy The policy process literature contends that radical policy change occurs when advocates in the policy subsystem take advantage of a window of opportunity – for example, in the wake of a crisis – to redefine an issue, mobilize public attention, thrust an issue onto the national agenda, and thereby push for their preferred policies. Indeed, the three major models of policy change all posit that strategic advocacy is a core driver of policy change after crisis. The Multiple Streams (MS) model, offered by Kingdon, suggests that policy entrepreneurs opportunistically attach their solutions to salient problems and thus generate support.3 The Punctuated Equilibrium Theory (PET) advanced by Baumgartner and Jones argues that advocates seek to expand a given issue and their preferred solutions to Presidential-Congressional “macropolitics” by issue 3 Kingdon, John W. 1995. Agendas, Alternatives, and Public Policies [2nd Edition]. New York: Harper Collins. 8 framing, group mobilization, and venue-shopping.4 In the Advocacy Coalition Framework (ACF) suggested by Sabatier et al., advocates can “skillfully exploit” a systemic shock to tip the balance of power among participants in policy-making, thereby bringing new beliefs and information into the decision-making process.5 Although the three models differ in their proposed processes and internal causal logic, each has at its core the notion that advocates from within the policy subsystem are the actors that bring about radical policy change. An Alternative Approach: Politician-Driven Policy Making This dissertation develops an alternative model: “politician-driven policy- making.” In this model, policy proposals arise not from the strategic, self-interested maneuvering of entrepreneurs in the energy policy subsystem, but from a competition among the macropolitical actors – in the American case, the President versus Congress, the Senate versus the House of Representatives, the Senate Energy Committee versus the Banking Committee, and so on – to seize leadership and “do something big” during a sustained energy crisis. After initially modest responses by Congress, the White House introduces a transformative proposal that sets high stakes for this competition. In all three cases in this dissertation, the White House’s policy formulation process is critical in explaining the scale of the alternative fuel commercialization plans. These proposals were developed by ad hoc working groups in the White House rather than by formal interagency processes. The staffers drafting the proposals were often 4 Baumgartner, Frank R. and Bryan D. Jones. 1993. Agendas and Instability in American Politics. Chicago: University of Chicago Press. 5 Sabatier, Paul A. 1988. “An Advocacy Coalition Framework of Policy Change and the Role of Policy- Oriented Learning Therein.” Policy Sciences 21(2): 129-68. 9 relatively new to energy issues. Due in part to limited familiarity with the challenges of energy technology commercialization, they tended to draft unfeasibly ambitious technological goals. Congress has an opportunity to reign in these

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