Right now, all across the US, producers of an alternative fuel called “biodiesel” are in a state of panic.

Over the next year, up to three-quarters of them may have to shut down, eliminating nearly a third of this infant green industry’s capacity and thousands of jobs.

These are precisely the kind of relatively high-paying jobs that the Obama administration has claimed that it wants to promote, especially given the slowdown in job growth nationwide. Yet the fact is that this infant green industry, otherwise a success story for smart government policy, is being undone by sheer bureaucratic mismanagement.

On the surface, this crisis has all the makings of a classic Grimm Brothers fairy tale – libertarian style: relentless government regulation binding the wings of free market forces. Undoubtedly, many in Congress will try to spin it this way, as both the House and the Senate carry out investigations in the next few months.

In fact, the real story is almost precisely the opposite.

via The Rise and Imminent Fall of Biodiesel – Forbes.