Thanks to action steps laid out this month by President Obama, U.S. biofuel production is set to undergo both short- and long-term growth.
This month, President Barack Obama announced three actions that the federal government is taking to boost U.S. biofuel production. The measures include: the final rule from the U.S. Environmental Protection Agency (EPA) to implement the Renewable Fuels Standard (RFS) of 36 billion gallons by 2022; a proposed rule from the U.S. Department of Agriculture (USDA) for its Biomass Crop Assistance Program, which provides financing to increase the production of biomass for bioenergy; and the release of Growing America's Fuel, the first report from the president's Biofuels Interagency Working Group. The report lays out a strategy to advance the development and commercialization of a sustainable biofuels industry.
The primary measure is the change in the RFS program, required by the Energy Independence and Security Act of 2007, which mandates that biofuel production will grow from last year's 11.1 billion gallons to 36 billion gallons in 2022. The 2022 goal includes 21 billion gallons to come from advanced biofuels, defined as those that cut lifecycle greenhouse gas emissions by at least 50 percent and that are not derived from cornstarch. For the first time, all renewable fuels must also achieve lifecycle greenhouse gas (GHG) emission reductions of 20 percent, compared to the gasoline and diesel fuels they displace, in order to be counted toward the volume standards.
Most existing biofuel plants are exempt from the GHG standard, but new plants will need to meet it. In establishing the final rule, the EPA continued to include indirect GHG emissions caused by land-use changes, but the agency used updated data on ethanol production to conclude that most new ethanol plants will produce fuel with a lower GHG impact than gasoline, thereby allowing corn ethanol to count toward the volume standards. According to the EPA, meeting the 2022 goal could reduce U.S. dependence on oil by more than 328 million barrels per year.
The EPA final rule sets the Renewable Fuel Standard for 2010 at 12.95 billion gallons of renewable fuel, all of which must be used in transportation fuels over the course of the year. For the first time, the EPA has also set volume requirements for specific categories of renewable fuels. For 2010, the cellulosic biofuel standard is 6.5 million gallons, and the total volume of advanced biofuels must be at least 950 million gallons. Biomass-based diesel is expected to contribute 650 million gallons of that total, but because a regulatory structure was not implemented to achieve the 2009 requirement of 500 million gallons of biomass-based diesel, the new rule combines the two years, requiring a total of 1.15 billion gallons of biomass-based diesel for 2009 and 2010. See the full EPA rule.
The Obama Administration also released Growing America's Fuel, the first report from the Biofuels Interagency Working Group, which was created by the president last May and led by DOE, the USDA and the EPA. The report warns that the United States, which now produces 12 billion gallons of biofuels annually, is not on the road to reach the goal of 36 billion gallons by 2022. To address the potential shortfall, the report focuses on both short-term growth and a long-term roadmap for biofuel growth, suggesting strategies such as strategic public-private partnerships to develop the biofuels supply chain, further research and development of feedstocks, and accelerated development of "drop-in" biofuels, such as biobased gasoline, diesel fuel and aviation fuel. The report also calls for increased government consumption of biofuels along with an integrated management approach, relying on the oversight of a small, centrally-located team accountable to the new president's Biofuels Interagency Working Group.
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