Next-generation biofuels - Near-term challenges and implications for agriculture

May 2010

Next-generation biofuels refer to biofuels made using advanced technologies that greatly expand the potential to use widely available biomass, including woody biomass and wood waste; crop residues; dedicated energy crops such as switchgrass, energy cane, and biomass sorghum; municipal solid waste; and algae. Some next-generation biofuels, however, such as biobutanol and green gasoline and green diesel may use traditional feedstocks such as sugar beets, corn, sugarcane, animal fats, and vegetable oils.
Rising oil prices through the past decade, along with strong public-sector support, significant venture capital interest, joint arrangements with large multinational companies, and affiliations with universities, have spurred the creation of several dozen next-generation biofuel companies in the United States. Public-sector support for next-generation biofuels is driven by:
• national interests in reducing the economy’s dependence on imported petroleum
• minimizing the price impacts on food crops
• mitigating greenhouse gas emissions, and
• enhancing rural employment opportunities.
The focus of this report is on the outlook for production of next-generation biofuels, key near-term challenges for the sector, and the implications for feedstock supply from U.S. 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 non-cellulosic 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 pre-commercial 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.

By: W. T. Coyle (USDA)

 
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