Next-Generation Biofuels: Near-Term Challenges and Implications for Agriculture

Next-generation U.S. biofuel capacity should reach about 88 million gallons in 2010, thanks in large measure to one plant becoming commercially operational in 2010, using noncellulosic animal fat to produce green diesel. U.S. production capacity for cellulosic biofuels is estimated to be 10 million gallons for 2010, much less than the 100 million gallons originally mandated for use by the 2007 Energy Independence and Security Act. In early 2010, the Environmental Protection Agency lowered the cellulosic biofuel mandate to 6.5 million gallons, more in line with production prospects. Even so, expansion of next-generation fuels will have to be rapid to meet subsequent annual mandates and the longer-term goal of 16 billion gallons for cellulosic biofuel use by 2022. Near-term sector challenges include reducing high capital and production costs, acquiring financial resources for precommercial development, and developing new biomass supply arrangements, many of which will be with U.S. farmers. Overcoming the constraints of ethanol’s current 10-percent blending limit with gasoline, or expanding E85 markets, would improve prospects for cellulosic ethanol. An alternative is production of green gasoline and green diesel, biobased fuels equivalent to fossil fuels that could be used in unlimited volumes with existing vehicles and in the existing fuel distribution system.