AAAS Policy Brief: Biofuels

Issue Summary | Resources

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In an era of rising concern over climate change and energy security, the United States and other nations are increasingly turning to biofuels as an alternative energy source to traditional fossil fuels. The Energy Security and Independence Act of 2007 requires 36 billion gallons of renewable fuel to be blended into transportation fuel by 2022, with interim targets each year. In 2009, the U.S. produced 10.6 billion gallons of ethanol, which displaced the need for 364 million barrels of oil.¹ As biofuel production increases, key areas under discussion include:

Sources of Biofuels
Greenhouse Gas Reductions and the Renewable Fuel Standards Program
The Economics
Food v. Fuel
Environmental Impacts
Infrastructure
The State of R&D

Recent News

• On January 21, 2011, the EPA announced a second waiver (following the first waiver announcement on October 13, 2010) on the limitation that restricts ethanol content in commercially available fuel to 10 percent. Fuel that is 15 percent ethanol, more commonly known as E15, will now be commercially available – although not mandated – to light duty vehicle for model years 2001 and afterward. On June 23, 2011, the EPA issued regulations to help reduce the potential for vehicles, engines, and equipment not covered by the partial waiver decisions to be misfueled with E15. The House Science, Space, and Technology Committee Energy and Environment Subcommittee held a hearing on July 7, 2011 to discuss the waivers and associated regulations designed to prevent misfueling.

• On December 21, 2010, the EPA finalized its Renewable Fuel Standards program (RFS2), which was designed to meet the alternative fuel production goals set by the Energy Independence and Security Act of 2007 (EISA). EISA required the EPA to apply lifecycle greenhouse gas performance threshold standards to ensure that each category of renewable fuel emits fewer greenhouse gases than the petroleum fuel it replaces. The EPA's final analysis found that corn-based ethanol reduces emissions by 21% as compared to gasoline, allowing it to be used to meet renewable fuel targets.


• On February 3, 2010, the Interagency Biofuels working group issued a set of recommendations intended to promote cooperation between the EPA, USDA, and DOE on biofuels-related issues. The proposed division of responsibilities gives the EPA a central role in enforcement, while the DOE will focus on basic research and the USDA will work on feedstock development.²

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Sources of Biofuels

Biofuels, derived from plant or animal materials ("biomass") such as corn, sugar cane, and perennial grasses, provide a stored source of energy that can be used as a transportation fuel.

First-generation ethanol biofuels are produced using sugar and starch biomass primarily from corn and sugarcane. The overwhelming majority of ethanol produced in the United States is corn-based. In late 2008, there were 170 biorefineries across 26 states producing 9 billion gallons of ethanol per year, a 34% increase over 2007.³ 2009 was another record year, as 200 biorefineries generated 10.6 billion gallons of ethanol, and by January 2010, capacity was estimated to be 11.8 billion gallons per year and rising.⁴

Sugarcane is a simple sugar that uses a process that is faster and less expensive to convert to ethanol than corn.⁵ Sugarcane is currently grown in over 100 countries⁶ and requires a tropical environment to thrive. Brazil, the world's second largest producer of ethanol, uses sugarcane ethanol.

Second- and third-generation biofuels are referred to as advanced biofuels. Cellulosic ethanol, based on a complex carbohydrate material, is considered a second-generation fuel. Cellulosic ethanol is derived from non-grain plants or plant parts including switch grass, prairie grasses, trees and forestry waste. In contrast to conventional ethanol, which uses grain as biomass, cellulosic ethanol biomass consists of two sugars: cellulose and hemicellulose. To utilize the sugars, the cell wall, which is made of lignin, must be destroyed. Companies are working on new ways to "pre-treat" plant cells in order to quickly degrade lignin and on designing plants that have less lignin in their cell walls. Industry leaders have stated that commercialization of cellulosic ethanol plants is not far off, as over a dozen demonstration biorefineries are already online. However, production remains limited in scale, forcing the EPA to reduce its 2010 cellulosic ethanol production mandate from 100 million gallons to 6.5 million gallons.⁷

Third-generation biofuels include fuel that is made from algae, sometimes referred to as oilgae or algal fuel. Microalgae produce bio-oil, which can be used to produce biodiesel, biogasoline, green jet fuel, and other advanced biofuels.⁸ According to the Department of Energy, algae can potentially produce 100 times more oil per acre than any other terrestrial oil-producing crop. R&D on algal fuels is currently being conducted by the federal government and by industry.

Biobutanol has been in existence longer than ethanol, though its higher price has put it at a competitive disadvantage. It can be derived from either cellulose or conventional feedstock, such as sugar and corn, and differs from ethanol in the way the feedstock undergoes fermentation. Biobutanol has a higher energy density than ethanol, though it is still not as energy dense at gasoline.⁹

Biodiesel, the alternative to petroleum diesel, is derived from palm oil, animal fats, and oilseed crops such as soybeans. While the biodiesel industry is still relatively small in the United States, Europe imports large quantities of palm oil from Southeast Asia and is the world's leading producer of biodiesel.

Wood-based biofuels are another alternative, and include a variety of traditional and high-tech practices. Wood can be used to make ethanol, generate electricity, or to make feedstock for chemical synthesis. In electrical generation, wood can be burned alone to produce steam to drive a generator, or it can be co-fired with coal, a practice that can reduces emissions of SO2 and NOx.¹⁰

One technique being developed to improve the processing of forestry biomass is pyrolysis. In this process, biomass is heated in absence of air to make a combination of liquid, air, and solid products. Gas created from pyrolysis, called synthesis gas or syngas, can either be burned to create electricity or turned into chemical products. Fast pyrolysis makes bio-oil which can be used for power generation in systems that cannot use direct biomass.¹¹

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Greenhouse Gas Emissions Reduction and the Renewable Fuel Standards Program

Biofuels have gained attention in recent years as a way to reduce fossil fuel emissions that contribute to global climate change; however, the ability of corn-based ethanol to lower contributions of greenhouse gases has been called into question. Biofuels discharge significantly less CO2 when burned than conventional fossil fuels. However, CO2 reductions are less substantial when emissions from the entire life cycle of the biofuel are taken into account. This would include the energy required to produce, harvest, and transport the fuel, as well as indirect land use effects. Indirect effects can occur as biofuel-driven demand for corn causes farmers to clear new land for production. The amount of land that is cleared, and whether it is forest or grassland, can substantially offset the short-term carbon benefits of biofuels. Over the long term, biofuels fare much better, as CO2 release due to land use change only occurs once while reduced emissions due to reduced fossil fuel use are cumulative.

The Energy Independence and Security Act of 2007 outlines standards for greenhouse gas reduction that must be met for a fuel to be considered renewable. In December 2010, the EPA finalized a set of Renewable Fuel Standard regulations (RFS2) establishing the necessary level of greenhouse gas reduction as compared to the emissions of the 2005 baseline average gasoline or diesel fuel that it replaces.  These reductions are calculated based on a lifecycle analysis and include indirect emissions from land use changes associated with each fuel.¹²

In classifying corn-based ethanol as a renewable fuel, the EPA avoided near-certain opposition from Corn Belt members of Congress. Dissatisfaction over the EPA's use of indirect land use effects in its preliminary rule-making in calculating greenhouse gas emissions was made clear in 2009, when House Agriculture Committee Chair Collin Peterson of Minnesota introduced legislation that would have limited the EPA's ability to account for international indirect land use changes in its regulations.¹³ It is notable that despite this opposition, the RFS2 rules support the use of indirect land use effects in classifying fuels and leave room for future rule changes in response to scientific developments.

Under the Renewable Fuel Standards program, the agency mandates that a certain volume of the fuel distributed by gasoline refiners, blenders and importers come from non-oil sources. This end is accomplished via the use of Renewable Identification Numbers, which are assigned to a given batch of renewable fuel upon production. RINs are transferred with the renewable fuel until the fuel is purchased by a gasoline refiner, blender or importer. At that point they can be traded, allowing the industry to meet its EPA mandate as efficiently as possible.¹⁴

The Economics

Historically, the United States has invested most heavily in ethanol. A 51 cent per gallon ethanol blenders' tax credit, established in 1978, and the 54 cent per gallon import tariff established in 1980 were put in place to protect the domestic ethanol industry.¹⁵ The Food, Conservation, and Energy Act of 2008 (P.L. 110-246, H.R. 6124), also known as the Farm Bill, created a cellulosic biofuels producer tax credit for up to $1.01 per gallon. However, during the 2011 deficit and debt negotiations, a large, bipartisan group in the U.S. Senate discussed eliminating for corn-based ethanol for fiscal reasons.

Many argue that corn-based ethanol independent of government subsidies and tariffs would not be competitive in the energy market, although that could change in a carbon-constrained economy. Some industry experts have noted that it is difficult for growers to produce biomass for cellulosic ethanol instead of corn for ethanol, because government subsidies and a ready market provide too many incentives to grow corn. Thus, the debate regarding subsidies for corn-based ethanol are likely to continue.

The federal agency charged with developing the supply of biomass feedstock is the USDA. Its Biomass Crop Assistance Program (BCAP), established by the 2008 Farm Bill, is designed to promote production of biomass for heat, power, chemical feedstock, or fuel. BCAP rules issued on October 27, 2010 provide a subsidy for the production of biomass and also include a provision to cover up to 75% of the cost of establishing perennial biofuel crops. Participation in BCAP under preliminary rules issued in a 2009 Notice of Funding Availability has been much higher than expected, and $517 million was allocated for the first quarter of 2010.¹⁶ Other legislation currently in effect includes the Volumetric Ethanol Excise Tax Credit, which maintains a 45 cent per gallon corn ethanol subsidy. Most of this credit flows to the producers. While the subsidy has been panned as unnecessary in light of the biofuel mandates associated with RFS2, supporters say it is necessary to protect American manufacturers from foreign competition.¹⁷

A July 2010 Congressional Budget Office study concluded that 98 percent of the eleven billion gallons of biofuel produced in 2009 was corn-based ethanol and the cost of biofuel tax credits was $6 billion dollars. Not including the $0.45 credit, producers of corn based ethanol, cellulosic ethanol, and biodiesel receive $0.73, $1.62, and $1.08, respectively, to produce the energy equivalent of one gallon of gasoline. The study also concluded that the biofuel tax credit reduces the equivalent of one metric ton of CO2 at a cost of $750 for ethanol, $275 for cellulosic ethanol, and $300 for biodiesel. These costs would be even higher if these estimates accounted for increased emissions resulting from land use changes associated with biofuel crop production.¹⁸

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Fuel v. Food

One of the central concerns raised about biofuel production is that biofuels made from food crops such as corn compete with the food supply. The United States produces almost 40 percent of the world's total corn, distributing food domestically and internationally, particularly in poorer countries. In addition, corn is the feedstock for much of the dairy, meat and poultry industries. Many experts fear that the high demand for corn in the biofuels industry is raising the price of corn, with resulting increases in the price of food in the U.S. and abroad. With increased biofuel production worldwide, the International Food Policy Research Institute suggests that corn prices may increase 41 percent by 2020.

On June 12, 2008, the Senate Energy and Natural Resources Committee held a hearing on the influence of biofuel production on world food prices. Testimony from DOE and USDA officials suggested that the impacts were minimal, although the director of the International Food Policy Research Institute provided findings that showed up to 30 percent of the rise in global grain prices between 2000 and 2007 may have been due to increased production of biofuels from food grains such as corn.

Some economists predict that the biofuels production may also inflate the price of other grains, such as rice and wheat, if farmers begin to replace these cheaper crops with highly-demanded corn. For example land dedicated to the cultivation of cassava, sub-Saharan Africa's high starch staple food, has been targeted for ethanol production.

Proponents of corn-based ethanol refute these arguments as exaggerations and argue that science and technology will continue to improve the efficiency of growing corn, allowing corn growers to produce more corn on the same amount of acreage. One study by the USDA suggests that the United States has enough forestland and agriculture acreage to produce 1.3 billion tons a year, the amount of biomass required to meet 30 percent of the country's gasoline demand while still meeting food demands. The EPA's RFS2 rules reflect the belief that corn ethanol production will have a limited effect on food prices, projecting a $10 dollar per person per year increase in food prices in 2022 due to demand for biofuels.

Supporters of cellulosic ethanol have pointed out that cellulosic ethanol production would enable the food and fuel industries to utilize different parts of the corn plant like the inedible, thereby reducing competition between food and fuel. In addition to concerns about rising food prices, some question the efficiency of using corn as a fuel rather than a food. A 2007 research project found that a 25-gallon tank full of 100 percent ethanol requires over 450 pounds of corn, which amounts to a year's worth of adequate caloric intake for one person.

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Environmental Impacts

Corn-based ethanol requires large amounts of energy, water and fertilizer. In addition, corn-based ethanol stores only two thirds of the energy content of oil, meaning that more biofuel is needed than gasoline to travel a comparable distance. Scientific studies have found that corn uses more energy than other feedstock, producing only 25 percent more energy than it consumes.¹⁹

The use of fertilizer for corn has raised further environmental concerns. Fertilizer-rich runoff can lead to groundwater pollution areas of extremely low oxygen, known as "dead zones," like that found in the Gulf of Mexico. Cellulosic feedstock requires less petroleum-based fertilizer and replanting than corn.²⁰

Increasing scale of production raises environmental concerns about deforestation. Environmentalists are troubled by the vast deforestation occurring in Southeast Asia to make way for oil palm production, which has tripled in a single decade. They argue that biodiesel made of palm oil produced on deforested land hurts rather than helps the efforts to mitigate global warming. Recent reports of protected forest lands in Uganda being sold to an ethanol company have also fueled serious alarm in the environmental community.²¹

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Infrastructure

Currently, ethanol is most commonly used as a fuel additive. Ethanol is blended into most conventional gasoline fuel because it enhances the octane level of gasoline, which improves air quality. Conventional vehicles are capable of running on E10, a 10 percent ethanol and 90 percent gasoline blend. The EPA  announced in October 2010 that it would increase the allowable ethanol content of gasoline to 15 percent for cars and trucks produced after 2007. In January 2011, this waiver was extended to light duty vehicles built between 2001 and 2006 as well. Fuel mixes with significantly high levels of ethanol such as E85 (85 percent ethanol and 15 percent gasoline) require flex-fuel vehicles that are equipped with alcohol-tolerant parts such as stainless steel fuel tank and Teflon-lined fuel hoses.²²

Likewise, ethanol cannot be transported through the same pipelines currently used for conventional gasoline, as it can easily absorb water and corrode pipes. Consequently, ethanol cannot be blended into gasoline at refineries; it must be separately transported closer to filling stations and blended onsite using an inefficient and expensive distribution infrastructure that relies on trucking and railing ethanol to destinations.

Recent efforts have been made to encourage biofuels technology that is compatible with existing infrastructure. In February 2009, DOE announced it would award $30 million in biofuel infrastructure grants to 17 companies.²³

While many bills have been introduced in Congress to promote the construction of ethanol pipelines, none have been passed into law. Most recently, Rep. Leonard Boswell (D-IA) introduced H.R.4674, which would authorize loan guarantees for renewable fuel pipelines.²⁴

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The State of R&D

Industry leaders are stressing the need for more efficient production of biofuels, as well as the debut of second and third generation technologies, with calls for more R&D into increasing crop yields and developing crops with favorable characteristics to facilitate the fuel conversion process. R&D in cellulosic ethanol is focused largely on increasing cellulose, which is converted by enzymes to sugars for ethanol reducing lignin, which locks cellulose molecules firmly in place and makes them difficult to break down. Congress and the Administration are responding with a variety of funding approaches.

In 2006, President Bush announced an Advanced Energy Initiative, which greatly increased Department of Energy funding for biofuels research.²⁵

In February of 2007, the Department of Energy (DOE) announced plans to invest $485 million in six cellulosic ethanol plants over four years in an effort to encourage commercialization of cellulosic ethanol.²⁶ A month later, the DOE announced that it would invest another $23 million in five cellulosic ethanol conversion projects.²⁷ The projects are intended to research ways to improve cellulosic conversion into fuel, making it a more cost-effective process. In December of 2008, DOE announced it would invest $200 million over six years in pilot- and demonstration-level projects that produce advanced biofuels, such as biobutanol, algae-derived fuels, and green gasoline.²⁸

Additionally, the DOE funds three Bioenergy Research Centers: the DOE BioEnergy Science Center (BESC), the DOE Great Lakes Bioenergy Research Center, and the DOE Joint BioEnergy Institute (JBEI).²⁹ Also, the DOE has various labs, such as Argonne National Laboratory, National Renewable Energy Laboratory, and Oak Ridge National Laboratory, which try to advance biofuel production through scientific research.³⁰

The 2008 Farm Bill contains a number of provisions designed to encourage the production of biofuels as well as $20 million in competitive research grants in fiscal year 2009.³¹ The bill also includes biorefinery loan guarantees and a biomass crop assistance program.³²

The Emergency Economic Stabilization Act of 2008 (H.R.1424), which was signed into law on October 3, 2008 (P.L. 110-343), contains several incentives for biofuel research and production. These include new tax credits for cellulosic biofuel production, increases in the tax credits for production of biodiesel, and extension and expansion of the alternative fuel credit.

On May 5, 2009, President Obama signed a presidential directive to advance biofuels research and commercialization. He announced the creation of the Biofuels Interagency Working Group, which will develop steps to increase the biofuels market. President Obama also announced that DOE would invest $786.5 million in advanced biofuels research and development and for biorefinery demonstration project as part of the American Recovery and Reinvestment Act (ARRA).³³

Third-generation biofuels have also received a recent boost from federal R&D efforts. NASA has announced research efforts in creating clean energy biofuel from algae. Algal fuel research and development also recently supported by the ARRA, which designated $50 million to create an algal biofuels consortium through the Department of Energy.³⁴ In June 2010, the Department of Energy released a National Algal Biofuels Technology Roadmap.

In August 2011, the Navy, Department of Agriculture and Department of Energy announced a $510 million initiative to produce advanced marine and aviation biofuels (link http://www.rurdev.usda.gov/SupportDocuments/DPASignedMOUEnergyNavyUSDA.pdf.). The agencies are hoping to leverage private funding to reach a total investment of $1 billion.

The private sector has also started investing in R&D. ConocoPhillips plans to establish an eight-year, $22.5 million research program at Iowa State University that will focus on conversion technology and improved crop production. BP has granted $500 million to University of California, Berkeley to establish an Energy Biosciences Institute to develop biofuels technologies and improve crops. Exxon Mobil³⁵, Chevron³⁶, and Dow Chemical³⁷ have each announced partnerships with start-up companies to fund research and development efforts for algal-based biofuels. Industry giants BP and DuPont formed a partnership in 2003 to develop and commercialize what they consider the next generation of biofuels in biobutanol. In April 2009, major oil and gas company Total announced investments in the biobutanol company Gevo.³⁸

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¹Renewable Fuels Association. Ethanol Facts: Energy Security
2Biofuels Interagency Working Group, February 3, 2010
³Renewable Fuels Association, February 2009
⁴ Renewable Fuels Association, February 2010.
⁵Science, 16 March 2007
⁶WWF Better Sugarcane Initiative
⁷EPA, 10 February, 2010
⁸ Department of Energy, 14 October 2008
⁹ Biofuel Review, 20 April 2007
¹⁰US Department of Energy, January 2004
¹¹National Renewable Energy Lab, 2 February, 2010
¹²EPA, 10 February, 2010
¹³National Farmer's Union, 21 May, 2009
¹⁴Beveridge and Diamond, P.C. 18 July, 2007
¹⁵Renewable Fuels Association, 30 June 2005
¹⁶Wood Resources International, 11 February 2010
¹⁷CongressDaily, 19 March 2010
¹⁸Using Biofuel Tax Credits to Achieve Energy and Environmental Policy Goals July 2010
¹⁹Science Daily, July 2006
²⁰National Journal, 8 March 2009
²¹New Scientist.com News Service, April 2007
²²Renewable Fuels Association, March 2010
²³ Department of Energy, 23 January 2009
²⁴GovTrack, 24 March 2010
²⁵Advanced Energy Initiative, February 2006
²⁶Department of Energy, 21 February 2007
²⁷Department of Energy, 27 March 2007
²⁸ Department of Energy, 22 December 2008
²⁹DOE Bioenergy Research Centers
³⁰National Laboratories and Technology Centers
³¹US Department of Agriculture, August 2008
³²US Department of Agriculture, 19 November 2008
³³Department of Energy, 6 May 2009
³⁴Department of Energy, 5 May 2009
³⁵New York Times, July 2009
³⁶San Francisco Chronicle, 23 January 2008
³⁷New York Times, 28 June 2009
³⁸ Gevo, 27 April 2009