People will pay more for biofuel, WSU study says

Source: By Wilson Criscione, Inlander • Posted: Wednesday, December 21, 2016

A new WSU study suggests drivers may be willing to stomach a higher cost of fuel if it helps the environment.

The research, led by WSU economics professor Jill McCluskey, studied consumers’ willingness to pay for second-generation biofuel — fuel made from sustainable biological non-food sources. It found that the average respondent would pay an 11 percent premium for biofuel over conventional fuel.

“I was surprised,” McCluskey says. “I didn’t think it would be that large [of a difference].”

McCluskey was asked to research the market for second-generation biofuel by Shulin Chen, a WSU professor who researches new biofuels. McCluskey says the study shows there is “clearly” a market for biofuel.

In conducting the survey, researchers gave some participants information about second-generation biofuels. Respondents to the survey were then asked if they would pay a certain amount. If they said no, researchers asked if they would pay a lower amount. If they said yes, researchers would increase the price.

The participants who were given information before answering questions were more likely to pay more. That, McCluskey says, suggests that marketing would help improve the perception of biofuel.

The research focused on consumers in three different cities: Portland, Minneapolis and Boston. The willingness to pay for second-generation biofuel was higher in Portland than in Minneapolis or Boston.

People who drove more were not as willing to pay for biofuel, the study found. People who were more likely to purchase organic foods, meanwhile, were more likely to pay more for biofuel.

WSU has received a grant from the National Science Foundation to study biofuels. McCluskey says researchers are working on a separate study looking at what it would cost to make second-generation biofuel.

“Energy is one of the most important issues of our time, so I would encourage exploring new energy opportunities and new research into new energy to make sure it’s economically viable to try to emphasize new energy that is good for the environment,” McCluskey says.