Lexidyne's Corey Peck and Steve Peterson worked with the National Renewable Energy Laboratory to publish a study in Biofuels on the potential long-term impacts and systemic effects of incentives in the biofuels industry. Such incentives are of great interest to the industry and to decision makers, particularly with regards to forthcoming mandates for biofuels. They used the Biomass Scenario Model (BSM), a System Dynamics simulation, to build a theoretical understanding of the role of incentives on the evolution of the biomass-to-biofuels market. It models a broad range of biofuels such as renewable gasoline, diesel, and aviation fuel. In this paper, we focus on cellulosic ethanol as we describe model-based insights into potential incentives that are aimed at stimulating industry growth while tempering overall incentive-related government expenditures. Subsequent research can test the key insights gained through BSM simulations against actual policy implementation and actual outcomes.