Meeting the Renewable Fuel Standard (RFS)
Mandate for Cellulosic Biofuels:
Questions and Answers
Kelsi Bracmort
Analyst in Agricultural Conservation and Natural Resources Policy
July 13, 2011
Congressional Research Service
7-5700
www.crs.gov
R41106
CRS Report for Congress
P
repared for Members and Committees of Congress
Meeting the RFS Mandate for Cellulosic Biofuels: Questions and Answers
Summary
The Renewable Fuel Standard (RFS) was expanded under the Energy Independence and Security
Act of 2007 (EISA; P.L. 110-140) in an effort to reduce dependence on foreign oil, promote
biofuel use, and stabilize transportation fuel prices, among other goals. Over a 15-year period, the
RFS seeks to establish a market for biofuels in the transportation sector by requiring that
increasing amounts of biofuels—36 billion gallons by 2022—be blended into transportation fuel.
The mandate is to be accomplished with an assortment of advanced biofuels, including cellulosic
biofuels—fuels produced from cellulosic materials including grasses, trees, and agricultural and
municipal wastes. However, analysis suggested the United States did not have sufficient
cellulosic biofuel production capacity to meet the 2010 and 2011 RFS mandate instituted by
Congress in EISA, and this is likely to continue for the 2012 mandate.
The U.S. Environmental Protection Agency (EPA) is required to lower the cellulosic biofuel
standard if the projected volume of cellulosic biofuel production is less than the applicable
volume specified in the statute. The cellulosic biofuel allotment in the mandate, as established by
Congress in EISA, was 100 million gallons due in 2010, 250 million gallons in 2011, and 500
million gallons in 2012, increasing to 16 billion gallons by 2022. EPA lowered the RFS cellulosic
biofuel mandate to 6.5 million gallons in 2010 and 6.6 million gallons in 2011. For the 2012
cellulosic biofuels mandate, EPA proposed a range of volumes from 3.55 to 15.7 million ethanol-
equivalent gallons from which to consider a value. EPA is accepting comments on what the final
value should be. The cellulosic biofuel community may fare better at achieving the lower
mandates set and proposed by EPA if certain obstacles are overcome. Roadblocks include
unknown levels of feedstock supply, expensive conversion technology that has not yet been
applied commercially, and insufficient financial support from private investors and the federal
government.
EPA reports that there are very few, if any, facilities consistently producing cellulosic biofuel for
commercial sale. Some financial support from the Departments of Energy and Agriculture is
available to expedite cellulosic biofuel production. For example, the Biomass Crop Assistance
Program (BCAP), created under the Food, Conservation, and Energy Act of 2008 (2008 farm bill;
P.L. 110-246), is to support establishment and production of crops for conversion to bioenergy in
selected areas, and to assist agricultural and forest land owners and operators with collection,
harvest, storage, and transportation of eligible material for use in a biomass conversion facility.
Also, the Department of Energy’s Loan Guarantee Program, created under the Energy Policy Act
of 2005 (EPAct05, P.L. 109-58), distributes loan guarantees to eligible commercial-scale
renewable energy systems, including cellulosic biofuel plants, although criticisms have been
raised that the program has been slow to get started.
Many questions regarding cellulosic biofuels and the RFS may arise as the 112th Congress
engages in energy legislation debates. EPA compliance data indicate that there was no
commercial production of cellulosic biofuel (RINS or volume) under the RFS for 2010. Can and
will the 2011, 2012, and future RFS mandates for cellulosic biofuels be met? What impact will
the continued lowering of the cellulosic ethanol mandate have on investment in cellulosic ethanol
production? What are the next steps the 112th Congress could take to influence cellulosic biofuel
production? This report, in a question and answer format, discusses some of the concerns facing
the cellulosic biofuel community, including feedstock supply estimates, and potential legislative
options to address cellulosic biofuel production uncertainty for the RFS.
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Meeting the RFS Mandate for Cellulosic Biofuels: Questions and Answers
Contents
Introduction ................................................................................................................................ 1
What Are Cellulosic Biofuels? .................................................................................................... 1
What Is the Relationship Between Cellulosic Biofuels and the Renewable Fuel Standard?........... 2
What Challenges Are Associated with Cellulosic Biofuels Production? ....................................... 4
Was the Revised 2010 RFS Mandate for Cellulosic Biofuels Met? Will the 2011
Cellulosic Biofuel Mandate Be Met? ........................................................................................ 6
What Impact Will Significantly Lowering the 2010, 2011, and 2012 RFS Mandates Have
on Investment in Cellulosic Biofuel Production? ...................................................................... 8
How Much Cellulosic Feedstock Exists for Conversion to Biofuels? ........................................... 9
How Many Commercial Cellulosic Biofuel Plants Exist? .......................................................... 14
What Policy Options Are Available to Meet the Congressionally Mandated RFS for
Cellulosic Biofuels? ............................................................................................................... 15
Figures
Figure 1. Geographical Areas with Biomass Resources.............................................................. 10
Figure 2. Cellulosic Feedstock Available from Crop Residues in the United States..................... 11
Figure 3. Cellulosic Feedstock Available from Forest Residues in the United States................... 12
Tables
Table 1. Selected Examples of Cellulosic Ethanol Plant Cost Estimates, 2010 ............................. 4
Table 2. Projected 2012 RFS Cellulosic Biofuel Selected Production Estimates ........................... 8
Table 3. Theoretical Ethanol Production Yields for Selected Feedstocks .................................... 10
Table 4. Cellulosic Feedstock Supply Estimates of Availability and Need .................................. 13
Contacts
Author Contact Information ...................................................................................................... 15
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Meeting the RFS Mandate for Cellulosic Biofuels: Questions and Answers
Introduction
The Renewable Fuel Standard (RFS) was intended to ensure that domestic transportation fuel
contains a specified volume of biofuels, including advanced biofuel, cellulosic biofuel, and
biomass-based diesel.1 The RFS requires that increasing amounts of biofuels be included in
transportation fuel over a 15-year period, with the goal of using 36 billion gallons of biofuels
annually by 2022. The mandate is to be accomplished in large part with cellulosic biofuels.
Congress in the Energy Independence and Security Act of 2007 (EISA; P.L. 110-140) mandated
cellulosic biofuel standards that began with 100 million gallons in 2010, 250 million gallons in
2011, and 500 million gallons in 2012, and increased to 16 billion gallons by 2022. The U.S.
Environmental Protection Agency (EPA) issued a final rule under its waiver authority established
in EISA for the RFS lowering the 2010 cellulosic biofuel mandate to 6.5 million gallons2 and the
2011 mandate to 6.6 million gallons.3 For the 2012 cellulosic biofuels mandate, EPA proposed a
range of volumes from 3.55 million to 15.7 million ethanol-equivalent gallons from which the
agency will consider a value.4
A concern for the 112th Congress may be whether enough cellulosic biofuel can be produced to
satisfy the RFS mandate in future years. A lack of cellulosic feedstock supply, financial
assistance, and technology advancement are considered among the most pressing issues that
could thwart cellulosic biofuel production. More than three years after EISA was enacted,
progress toward meeting the cellulosic biofuels mandate has been delayed on multiple fronts
(e.g., financial, administrative, and technical), despite government financial incentives, estimates
of adequate feedstock availablility, and technological developments. With the reduction in the
RFS cellulosic biofuel mandate level in 2010 and 2011 and a proposed reduction in the 2012
mandate, Congress may reconsider the configuration of the RFS, determine whether additional
resources are necessary for cellulosic biofuel production, and assess the success rate of this effort
compared to other renewable energy efforts.
What Are Cellulosic Biofuels?
Cellulosic biofuels are liquid, solid, or gaseous fuels made from cellulose material. Cellulose—a
complex carbohydrate—is the organic matter found in plant walls that, along with hemicellulose
and lignin, helps to give a plant its rigid structure. Cellulose feedstock includes agricultural
residues (e.g., corn stover), forestry residues (e.g., wood chips), energy crops (e.g., switchgrass),
tree crops (e.g., hybrid poplar), and urban sources of waste (e.g., municipal solid waste).
1 The RFS was expanded under the Energy Independence and Security Act of 2007 (EISA; P.L. 110-140). For more
information on the expanded RFS, see CRS Report R40155, Renewable Fuel Standard (RFS): Overview and Issues, by
Randy Schnepf and Brent D. Yacobucci
2 U.S. Environmental Protection Agency, “Regulation of Fuels and Fuel Additives: Changes to Renewable Fuel
Standard Program; Final Rule,” 75 Federal Register, March 26, 2010.
3 U.S. Environmental Protection Agency, “Regulation of Fuels and Fuel Additives: 2011 Renewable Fuel Standards;
Final Rule,” Federal Register, December 9, 2010.
4 U.S. Environmental Protection Agency, “Regulation of Fuels and Fuel Additives: 2012 Renewable Fuel Standards,
Proposed Rule,” 76 Federal Register 38844-38890, July 1, 2011.
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Meeting the RFS Mandate for Cellulosic Biofuels: Questions and Answers
The most widely discussed cellulosic biofuel is cellulosic ethanol for transportation.5 Cellulosic
ethanol differs from the corn ethanol currently blended into transportation fuel; it is made from
feedstock with no food value, potentially results in fewer greenhouse gas emissions, and has a
higher energy balance.6 Converting cellulosic feedstock to ethanol, however, is more expensive
and difficult than converting corn to ethanol. The conversion of cellulose to ethanol generally
happens in three phases—pretreatment, hydrolysis, and fermentation to ethanol. Pretreatment
weakens the plant wall structure so that the cellulose is easier to obtain during hydrolysis.
Hydrolysis—acid or enzymatic—separates the cellulose into sugars. Fermentation converts the
sugars into ethanol. Cellulose can also be converted to liquid fuels through processes other than
fermentation (e.g., thermochemical processes).7
Analysis suggests that increased use of cellulosic biofuels for transportation could potentially
help to reduce U.S. dependence on foreign oil, stabilize energy prices, strengthen rural
infrastructure, and improve the environment. In addition, cellulosic feedstocks may fare better in
the food-energy debate, since crop residue, and not the crop itself, is used for cellulosic biofuel
production. Some contend, however, that cellulosic biofuels require a substantial feedstock
supply that has yet to be verified, may be in competition for use as a biopower feedstock, may
cause environmental degradation (e.g., by removing residues that furnish nutrients and stability to
the soil),8 and may hinder efforts to promote energy efficiency.
What Is the Relationship Between Cellulosic
Biofuels and the Renewable Fuel Standard?
The RFS established in Section 202 of EISA called for 100 million gallons of cellulosic biofuels
to be included in the national transportation fuel supply in 2010, and the mandate increases to 16
billion gallons by 2022.9 Data and analysis presented during the RFS debate and ultimate passage
of EISA in 2007 supported the idea that these levels of cellulosic biofuel production capacity
would be achievable. Some reasoned that plentiful feedstock was available10 and that the
conversion technology was on the brink of being certified as commercially viable. Moreover,
some presumed that the federal government would provide substantial financial support and
enhance the infrastructure needed to spur a commercial cellulosic biofuels market.11 Others were
5 For more information on cellulosic biofuels, see CRS Report RL34738, Cellulosic Biofuels: Analysis of Policy Issues
for Congress, by Kelsi Bracmort et al.
6 For more information on ethanol, see CRS Report RL33290, Fuel Ethanol: Background and Public Policy Issues, by
Brent D. Yacobucci.
7 Cellulose feedstocks can also be used to provide heat or generate electricity via gasification, combustion, anaerobic
digestion, and other conversion processes. For more information on anaerobic digestion, see CRS Report R40667,
Anaerobic Digestion: Greenhouse Gas Emission Reduction and Energy Generation, by Kelsi Bracmort.
8 R. M. Cruse and C .G. Herndl, “Balancing Corn Stover Harvest for Biofuels with Soil and Water Conservation,”
Journal of Soil and Water Conservation, vol. 64, no. 4 (July/August 2009), pp. 286-291.
9 For more information on the RFS, see CRS Report R40155, Renewable Fuel Standard (RFS): Overview and Issues,
by Randy Schnepf and Brent D. Yacobucci.
10 U.S. Dept. of Energy, U.S. Dept. of Agriculture, Biomass as Feedstock for a Bioenergy and Bioproducts Industry:
The Technical Feasibility of a Billion-Ton Annual Supply, April 2005, http://www1.eere.energy.gov/biomass/pdfs/
final_billionton_vision_report2.pdf.
11 Diane Greer, “Creating Cellulosic Ethanol: Spinning Straw into Fuel,” BioCycle, April 2005; Biotechnology Industry
Organization, Achieving Sustainable Production of Agricultural Biomass for Biorefinery Feedstock, Washington, DC,
(continued...)
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Meeting the RFS Mandate for Cellulosic Biofuels: Questions and Answers
leery about the time frame provided to meet the RFS cellulosic biofuel mandate given capacity
restrictions, weather impacts, and uncertainty about technology advancements.12
EPA has the authority to waive completely or in part the cellulosic biofuel consumption mandates
established in EISA, given certain circumstances.13 For instance, the Administrator may waive the
cellulosic biofuel requirement if the Administrator determines, after public notice and opportunity
for comment, that there is an inadequate domestic supply.14 In March 2010, EPA lowered the
2010 cellulosic biofuel mandate set forth in EISA by roughly 93% with the issuance of a waiver
that expires after one year:
EISA requires the Administrator to evaluate and make an appropriate market determination for
setting the cellulosic standard each year. Based on an updated market analysis considering
detailed information from pilot and demonstration scale plants, an Energy Information
Administration analysis, and other publically and privately available market information, we are
setting the 2010 cellulosic biofuel standard at 6.5 million ethanol-equivalent gallons. While this
volume is significantly less than that set forth in EISA for 2010, a number of companies and
projects appear to be poised to expand production over the next several years.15
The 2011 renewable fuel standard for cellulosic biofuels was 250 millions gallons. However, EPA
announced in November 2010 that it would lower this mandate to 6.6 million gallons (actual
volume).16 EPA based its assessment of the 2011 production capabilities of planned and existing
production facilities, on projections provided by the Energy Information Administration (EIA), as
well as data provided by other government agencies and its own contact with many of the
companies. EPA computed the 2011 cellulosic biofuel production volume, in part, by tracking the
progress of more than 100 cellulosic biofuel production facilities.17
The 2012 renewable fuel standard for cellulosic biofuels is 500 million gallons, and EPA
proposed to significantly lower the mandate to a value in the range of 3.55 to 15.7 million
ethanol-equivalent gallons. The lower portion of the range is a set of values that EPA has more
confidence could be produced using established or demonstration facilities. EPA has relatively
more uncertainty that the higher values within the range could be achieved because these
estimates are based on production plans, not actual capacity. EPA estimates that nine facilities
have the potential to make volumes of cellulosic biofuels available for transportation use in 2012.
EPA will make a final determination on a 2012 cellulosic biofuel mandate by November 30, 2011,
based on comments received in response to its proposal, an estimate of projected biofuel capacity,
and other information that becomes available.
(...continued)
2006, http://www.bio.org/ind/biofuel/SustainableBiomassReport.pdf; and Biotechnology Industry Organization,
“Energy Bill Biofuels Mandates Will Be Achievable with Biotechnology Advances,” press release, November 18,
2007, http://bio.org/news/pressreleases/newsitem.asp?id=2007_1218_01&p=yes.
12 Ian Talley, “Renewed Energy: US Biofuel Mandate Calls for Big Production Boost,” Dow Jones International News,
December 18, 2007, at http://www.factiva.com/.
13 For more information on EPA’s waiver authority, see CRS Report RS22870, Waiver Authority Under the Renewable
Fuel Standard (RFS), by Brent D. Yacobucci.
14 42 U.S.C. 7545(o)(7).
15 EPA, “Changes to Renewable Fuel Standard; Final Rule,” p. 14.
16 U.S. Environmental Protection Agency, “Regulation of Fuels and Fuel Additives: 2011 Renewable Fuel Standards;
Final Rule,” Federal Register, December 9, 2010.
17 Ibid.
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What Challenges Are Associated with Cellulosic
Biofuels Production?
Since the RFS was expanded under EISA to include 250 million gallons of cellulosic biofuel
starting in 2011,18 U.S. cellulosic biofuel production capacity has not increased. Impediments to
increasing capacity to meet the cellulosic biofuel mandate include technology setbacks, escalating
prices for certain feedstocks, lack of feedstock availability, and delayed financial support. Limited
access to capital has been indicated as one of the primary reasons that timely completion of many
cellulosic biofuel plants has stalled. Commercial cellulosic biofuel facilities are estimated to cost
hundreds of millions of dollars (see Table 1), roughly three times as much as a corn ethanol plant.
Some lenders find it extremely risky, perhaps even cost-prohibitive, to provide financial backing
to cellulosic biofuel plants, mainly because the conversion technology has not been applied or
proven on a large scale.19
Table 1. Selected Examples of Cellulosic Ethanol Plant Cost Estimates, 2010
Production
Capital
Company
Capacity (mgy)
Feedstock Required
(millions)
BlueFire (California
Plant)a
3.9
190 wet tons/day of post-
sorted municipal solid waste
$120
BlueFire
19
550 tons/day of wood waste
$250
(Mississippi Plant)a
(mostly forest residues)
Enerkem
(Mississippi Plant)b
10
300 dry tons/day of post-
sorted municipal solid waste
$118
POET (Iowa Plant)c
770 dry tons/day (mostly
25
corncobs with some corn
$200
residue)
ZeaChem Inc.
0.25
10 dry tons/day of hybrid
$73
(Oregon Plant)d
polar trees
Source: Compiled by CRS.
Notes: In comparison, a 40 mgy corn ethanol plant costs approximately $80 million to construct.20
a. Conversation with Arnold Klann from BlueFire Ethanol Inc., February 2, 2010.
b. E-mail from Marie-Helene Labrie of Enerkem, February 3, 2010.
c. Conversation with Jim Sturdevant from POET, February 2, 2010.
d. Conversation with Carrie Atiyeh from ZeaChem Inc., February 2, 2010.
The government provides financial assistance primarily through two programs to encourage
investment in cellulosic biofuel production technologies and feedstock supply. To increase
investment, the government established the Department of Energy (DOE) Loan Guarantee
18 The original RFS established by § 1501 of EPAct05 required 4.0 billion gallons of renewable fuel for 2006,
ascending to 7.5 billion gallons by 2012. The original RFS would have required that 250 million gallons of the
renewable fuel be derived from cellulosic biomass starting in 2013.
19 For more information on federal spending for cellulosic biofuels, see CRS Report RL34738, Cellulosic Biofuels:
Analysis of Policy Issues for Congress, by Kelsi Bracmort et al.
20 Clean Fuels Development Corporation, Nebraska Ethanol Board, and U.S. Dept. of Agriculture, A Guide for
Evaluating the Requirements of Ethanol Plants, 2006, http://www.ethanol.org/pdf/contentmgmt/
guide_for_evaluating_the_requirements_of_ethanol_plants.pdf.
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Meeting the RFS Mandate for Cellulosic Biofuels: Questions and Answers
Program (LGP).21 Loans may not exceed 80% of total project costs. Over 90% of the projects that
have received funding to date are pilot- or demonstration-scale projects that are seen as likely to
become a commercial technology.22 Some are concerned that the LGP is not being carried out at a
pace responsive to market momentum for cellulosic biofuels.23 The Government Accountability
Office (GAO) reviewed DOE’s execution of the Loan Guarantee Program and recommended that
DOE develop performance goals reflecting the LGP’s policy goals and activities; revise the loan
guarantee process to treat applicants consistently unless there are clear, compelling grounds not to
do so; and develop mechanisms for administrative appeals and for systematically obtaining and
addressing applicant feedback.24
The second government program is the U.S. Department of Agriculture’s (USDA’s) Biomass
Crop Assistance Program (BCAP).25 The two main program components of BCAP are to support
the establishment and production of eligible crops for conversion to bioenergy in selected areas,
and to assist agricultural and forest land owners and operators with collection, harvest, storage,
and transportation of eligible material for use in a biomass conversion facility. USDA issued the
BCAP final rule on October 27, 2010, implementing both program components. Some have
concerns regarding the program’s eligibility requirements, sustainability, and funding.
Additionally, the government provides a tax credit to support cellulosic ethanol production. The
2008 farm bill offers a production credit of $1.01 per gallon of ethanol produced from qualifying
cellulosic feedstocks.26 The credit is set to expire at the end of 2012. The value of the credit is
reduced by the amount of the volumetric ethanol excise tax credit (VEETC) and the small ethanol
producer credit. As the VEETC and/or the small ethanol producer credits decrease, the per-gallon
credit for cellulosic ethanol production increases by the same amount.27 Some Members of
Congress support immediately discontinuing the VEETC, set to expire at the end of 2011.
21 A loan guarantee is defined as a “pledge with respect to the payment of all or a part of the principal or interest on any
debt obligation of a non-federal borrower to a non-federal lender.” The LGP was first authorized under Title XVII of
EPAct05 and then amended under the American Recovery and Reinvestment Act of 2009 (P.L. 111-5). DOE may issue
loan guarantees to eligible projects that “avoid, reduce, or sequester air pollutants or anthropogenic emissions of
greenhouse gases” and “employ new or significantly improved technologies as compared to technologies in service in
the United States at the time the guarantee is issued.” Eligible projects include commercial-scale renewable energy
systems. EISA authorized the DOE to issue loan guarantees in part to support renewable energy projects. Funding
information for the loan guarantee program is provided in CRS Report R41150, Energy and Water Development:
FY2011 Appropriations, coordinated by Carl E. Behrens.
22 DOE considers a bioenergy project commercial-scale if it converts, at a minimum, 700 tons of biomass per day to
energy. Dan Tobin, “Biomass Summit,” The DOE Loan Guarantee Program: A Status Report, Washington, DC,
October 20, 2009.
23 Renewable Fuels Association, “2010 State of the Industry Address,” 2010 National Ethanol Conference, Orlando,
FL, February 16, 2010, http://www.ethanolrfa.org/objects/documents/2772/2010_state_of_the_industry.pdf?
utm_medium=email&utm_source=Emailmarketingsoftware&utm_content=313532555&utm_campaign=
2010SOTI+_+osdik&utm_term=StateoftheIndustryaddress.
24 U.S. Government Accountability Office, Further Actions Are Needed to Improve DOE’s Ability to Evaluate and
Implement the Loan Guarantee Program, GAO-10-627, July 2010, http://www.gao.gov/new.items/d10627.pdf.
25 BCAP receives its authorization from Title IX of the Farm Security and Rural Investment Act of 2002 (P.L. 107-171)
and was amended by Title IX of the Food, Conservation, and Energy Act of 2008 (P.L. 110-246). For more information
on BCAP, see CRS Report R41296, Biomass Crop Assistance Program (BCAP): Status and Issues, by Megan Stubbs,
or visit http://www.fsa.usda.gov/FSA/webapp?area=home&subject=ener&topic=bcap.
26 For more information on the blender tax credit, see CRS Report RL34130, Renewable Energy Programs in the 2008
Farm Bill, by Megan Stubbs.
27 For more information, see CRS Report R40110, Biofuels Incentives: A Summary of Federal Programs, by Brent D.
Yacobucci
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In addition to financing issues, other challenges to cellulosic biofuel production include the
definitions of biomass in various laws. The renewable biomass definition for the RFS under EISA
does not allow biomass removal from federal lands, and the law excludes crops from forested
lands.28 Some argue that opening up federal lands for biomass removal could provide an
inexpensive supply of cellulosic feedstock that would be immediately available to biorefineries
for cellulosic biofuel production. Others contend that biomass removal from federal lands is a
short-term response to the cellulosic feedstock source problem and might not be carried out in a
sustainable manner, leading to deterioration of the nation’s parks and recreation areas. The
definition of biomass under EISA also excludes most municipal solid waste (MSW), which some
view as a potential source for conversion to biofuels.
Also challenging for cellulosic biofuel production are the time periods of feedstock contracts.
Agricultural and forestry producers may not agree to a contract that requires a lengthy time
commitment. For example, it generally takes three years for switchgrass crops to reach maturity.29
A producer may have to commit his land to one particular cellulosic feedstock crop for a number
of years, thus limiting the producer’s choice to grow certain crops on an annual basis depending
upon market demand.
Was the Revised 2010 RFS Mandate for Cellulosic
Biofuels Met? Will the 2011 Cellulosic Biofuel
Mandate Be Met?
Even before enactment of EISA, reported production data indicated that overcoming any or all of
the hurdles to increase cellulosic biofuel production to meet the original 2010 RFS mandate of
100 million gallons set by Congress was unlikely. Compliance for the 2010 cellulosic biofuels
mandate is difficult to ascertain as the year 2010 was a transition year for the RFS, going from the
RFS first established under EPAct05, RFS1, to the RFS established under EISA, RFS2.30 RFS1
had different cellulosic biofuels production requirements31 than RFS2 and had a 2.5-to-1 ratio
where each gallon of cellulosic ethanol counted as 2.5 gallons toward the EPAct05 mandate.
Based on EPA Moderated Transaction System (EMTS) data (reported only July 1 to December
31) on RFS2 renewable identification numbers (RINS), zero RINs or production volume were
registered for the 2010 RFS2 cellulosic biofuel mandate of 6.5 million gallons.32 However, the
28 For more information on biomass definitions, see CRS Report R40529, Biomass: Comparison of Definitions in
Legislation Through the 111th Congress, by Kelsi Bracmort and Ross W. Gorte.
29 University of Tennessee, Growing and Harvesting Switchgrass for Ethanol Production in Tennessee, SP701-A,
http://www.utextension.utk.edu/publications/spfiles/SP701-A.pdf.
30 Congress first established an RFS with the enactment of the Energy Policy Act of 2005 (EPAct, P.L. 109-58). This
initial RFS is referred to as RFS1. Two years later, the Energy Independence and Security Act of 2007 (EISA, P.L.
110-140) expanded the biofuels mandate. This expanded RFS is referred to as RFS2.
31 The original RFS (RFS1) did not require a cellulosic biofuel production volume until 2013, when 250 million gallons
were mandated.
32 EMTS is a system that manages renewable identification number (RIN) transactions under the RFS. As of July 1,
2010, the RFS2 regulations require renewable fuel producers and importers, gasoline and diesel refiners, renewable fuel
exporters, RIN owners, and any other RFS2 regulated party to submit all RIN generation information and other RIN
transactions to EMTS. Using data generated from EMTS, EPA provides aggregated monthly data on RIN generation
and renewable fuel volume production for specific fuel categories, such as cellulosic biofuel. A RIN is a unique 38-
character number that is issued (in accordance with EPA guidelines) by the biofuel producer or importer at the point of
(continued...)
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design of the RFS2 transition program allowed for RFS1 cellulosic RINs to be used towards
compliance under the RFS2 program. Therefore, it is possible that compliance with the 2010
standards could have been satisfied in whole or in part with the RFS1 cellulosic RINs. Currently,
EMTS is not depicting any cellulosic biofuel registered thus far toward the 2011 mandate of 6.6
million gallons. However, the statute allows companies to purchase cellulosic biofuel waiver
credits in lieu of submitting RINs in years when EPA lowers the mandate, and compliance for
2011 may come through use of these waiver credits instead of through the use of cellulosic
biofuel RINs.
In its 2011 RFS final rule, EPA projected that the 2011 RFS cellulosic biofuel production mandate
would be met primarily by four companies: DuPont Danisco, Fiberight, KL Energy, and Range
Fuels.33 However, in the 2012 RFS proposed rule, EPA reports that the Range Fuels plant—
expected to provide more than one-third of the 2011 mandate34—produced a small volume of
ethanol in early 2011, but shut down, and EPA does not know when the facility will restart.35
Thus, EPA does not expect any production from this facility in 2012. KL Energy is expected to
produce cellulosic ethanol soon after the completed modification of its facility in 2011. Fiberight
anticipates ethanol production will begin in 2012. DuPont Danisco predicts they will meet their
2011 target of 150,000 gallons.
EPA acknowledges that the “task of projecting the volume of cellulosic biofuel production for
2012 remains a difficult one.”36 Cellulosic biofuel producers “face not only the challenge of the
scale up of innovative, first-of-a-kind technology, but also the challenge of securing funding in a
difficult economy.”37 Thus, some argue, it is difficult to state with certainty how much cellulosic
biofuel will be produced and over what time frame. Anticipated fuel production to meet the 2012
mandate is provided in Table 2. According to EPA, roughly 15.7 million gallons of cellulosic
biofuel could be produced in 2012 assuming there are no further construction or financing delays,
and if pathways for certain cellulosic fuels to register under the RFS2 are approved by EPA.
(...continued)
biofuel production or the port of importation. See http://www.epa.gov/oms/fuels/renewablefuels/compliancehelp/
rfsdata.htm#2010.
33 U.S. Environmental Protection Agency, “Regulation of Fuels and Fuel Additives: 2011 Renewable Fuel Standards;
Final Rule,” Federal Register, December 9, 2010.
34 U.S. Environmental Protection Agency, Renewable Fuel Standard Program (RFS2) Regulatory Impact Analysis,
EPA-420-R-10-006, Washington, DC, February 2010, p. 175, http://www.epa.gov/oms/renewablefuels/420r10006.pdf.
35 U.S. Environmental Protection Agency, “Regulation of Fuels and Fuel Additives: 2012 Renewable Fuel Standards;
Proposed Rule,” 76 Federal Register 38844-38890, July 1, 2011.
36 U.S. Environmental Protection Agency, “Regulation of Fuels and Fuel Additives: 2012 Renewable Fuel Standards;
Proposed Rule,” 76 Federal Register 38844-38890, July 1, 2011.
37 Ibid.
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Table 2. Projected 2012 RFS Cellulosic Biofuel Selected Production Estimates
2012 Potentially
Capacity
Available
Ethanol
Company
(million
Earliest
Volume (million
Equivalent
Name
Fuel
gallons/year)
Production
gallons)
(million gallons)
DuPont Danisco
Ethanol
0.25
Online
0.25
0.25
Fiberight Ethanol 6.0 Online 3.0
3.0
KiOR
Gasoline,
0.20 Online 0.2
0.3
(demonstration
Diesel
facility)a
KiOR
Gasoline,
10.0 Mid
2012 4.0
6.4
(commercial
Diesel
facility)a
KL Energy
Ethanol
1.5
Online
1.0
1.0
Fulcrum
Ethanol 10.5 Late
2012 0.5
0.5
Bioenergy
INEOS Bio
Ethanol
8.0
May 2012
3.0
3.0
Terrabonb Gasoline 1.3 2012
0.7
1.0
ZeaChem Ethanol 0.25 2011 0.25
0.25
Source: U.S. Environmental Protection Agency, “Regulation of Fuels and Fuel Additives: 2012 Renewable Fuel
Standards; Proposed Rule,” 76 Federal Register 38844-38890, July 1, 2011.
a. KiOR has not yet registered under the RFS2 program. However, if their facility enhancement plans occur,
they may be able to produce cellulosic fuel for the 2012 mandate.
b. Terrabon is expected to produce cellulosic gasoline for which there currently is no EPA pathway to
generate renewable identification numbers (RINs) to register the biofuel for the RFS. However, EPA plans
to initiate a rulemaking to create a pathway for cellulosic gasoline.
What Impact Will Significantly Lowering the 2010,
2011, and 2012 RFS Mandates Have on Investment
in Cellulosic Biofuel Production?
As noted above, EPA has the authority to waive the cellulosic biofuel mandate on a yearly basis.
Indeed, EPA issued a waiver to substantially lower the 2010 and 2011 cellulosic biofuel
mandates, and proposes to do the same for 2012. EPA’s waiver authority creates uncertainty for
investors in cellulosic biofuel ventures. Investors may fear that the full cellulosic biofuel mandate
will never be required by EPA. Some lenders may deny financing due to lack of confidence in
federal support for cellulosic biofuels.38 If the cellulosic biofuel community was unable to
produce 7% of the cellulosic biofuel mandate, as established in EISA, for its first year of
inclusion in the RFS (in 2010), some may wonder about the viability of this advanced biofuel
type over the long term.39 Others contend that the cellulosic biofuel community hit a stumbling
38 Dan Chapman, “Bio Energy Backers Stay Upbeat Despite Setbacks,” Atlanta Journal-Constitution , January 13,
2010.
39 Russel Gold and Siobhan Hughes, “Biofuel Production Fall Far Short of Targets,” Wall Street Journal, February 4,
(continued...)
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block mainly due to a bad economy, and that production will drastically increase over the coming
years.40 The advanced biofuels community asserts that the enactment of “meaningful and long-
term tax incentives to spur construction of the first-commercial advanced biofuel plants ... ”
would allow the industry to meet the RFS targets. Furthermore, the waivers and subsequent
cellulosic biofuel waiver credits may also be undercutting the market.
How Much Cellulosic Feedstock Exists for
Conversion to Biofuels?
A significant criterion in evaluating whether a commercial cellulosic biofuel production plant will
be a favorable investment is whether a steady feedstock supply exists at a location suitable to the
biorefinery.41 However, determining actual availability of feedstock is difficult. Quantifying
feedstock available for conversion to biofuels requires information about feedstock sources,
production rates, accessibility, and location restrictions (e.g., public versus private lands if the
feedstock is to be used for certain energy purposes). Investors must make feedstock predictions
based on data from weather patterns and land use change, as well as handling, storage, and
transportation costs, among other things. This is a particularly important problem where a growth
season of four to five months must provide biomass feedstock for 12 months of plant operation.
To make the supply available throughout the year, special equipment may be required for
feedstock harvest, handling, collection, storage, or transport, as cellulosic feedstock is often too
bulky for average farming equipment to handle.
The amount of cellulosic feedstock necessary for conversion to a biofuel depends on the
feedstock type, the conversion process, and the desired biofuel (see Table 3). Biofuel conversion
yield is measured in gallons per ton. Feedstock, or crop, yield is measured in tons per acre. Total
yield, measured in gallons per acre, depends on both the feedstock yield and the conversion yield.
Some argue that current estimated cellulosic feedstock yields will need to increase markedly over
the next decade to meet the RFS mandate of 16 billion gallons of cellulosic biofuel production per
year by 2022. Others contend that a significant growth of cellulosic feedstock is not essential, as
advances in conversion technologies will afford the opportunity to produce more cellulosic
biofuel with less feedstock. If cellulosic feedstock yields do increase, the traditional geographic
areas for feedstock cultivation may be subject to additional energy, environmental, and
agricultural policy scrutiny (see Figure 1).
(...continued)
2010.
40 Renewable Fuels Association, “Obama Administration on Right Track with Biofuels,” press release, February 3,
2010, http://renewablefuelsassociation.cmail1.com/T/ViewEmail/y/9C2814171DC11FF6/
F83B91963160BD91C5EC08CADFFC107B.
41 A biorefinery is a facility that processes biomass into biofuels.
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Table 3. Theoretical Ethanol Production Yields for Selected Feedstocks
Ethanol
Feedstock
(gallons per dry ton of feedstock)
Corn Grain
124.4
Corn Stover
113.0
Rice Straw
109.9
Cotton Gin Trash
56.8
Forest Thinnings
81.5
Hardwood Sawdust
100.8
Bagasse 111.5
Mixed Paper
116.2
Switchgrass 96.7
Source: U.S. Dept. of Energy, Biomass Program, http://www1.eere.energy.gov/biomass/
ethanol_yield_calculator.html and U.S. Dept. of Energy, National Ethanol Feedstock Resources,
http://www.afdc.energy.gov/afdc/ethanol/feedstocks_resources_national.html.
Note: Actual yield commonly ranges from 60% to 90% of theoretical yields.
Figure 1. Geographical Areas with Biomass Resources
Source: U.S. Department of Energy, http://www.energysavers.gov/images/biomass_map.gif.
Few studies have estimated the current or long-term cellulosic feedstock supply available for
conversion to biofuels on a national basis. Estimates of the amount of cellulosic feedstock
available in recent years (2003-2007) range from 5,000 to 300,000 tons per year (Figure 2 and
Figure 3). Assuming a yield of 100 gallons per ton, this would equate to between 0.5 and 30 mgy
of potential fuel production from that feedstock. This is well below the 100 million gallons
needed to meet the 2010 mandate originally set by Congress, but is within range of the 6.6
million gallons production volume set by EPA for 2011.
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Long-term cellulosic feedstock supply projections—for varying time periods beginning in 2020
and continuing to 2050—range from roughly 500 million to more than 1 billion tons per year,
capable of producing biofuels well beyond the 16 billion gallons needed to meet the 2022
mandate (Table 4).42
Figure 2. Cellulosic Feedstock Available from Crop Residues in the United States
Source: U.S. Department of Energy, National Renewable Energy Laboratory, http://www.nrel.gov/gis/images/
map_biomass_crop_residues.jpg. Feedstock estimate based on five-year average for 2003 to 2007 from the U.S.
Department of Agriculture, National Agricultural Statistics Service.
Notes: The following crops were included in this analysis: corn, wheat, soybeans, cotton, sorghum, barley, oats,
rice, rye, canola, dry edible beans, dry edible peas, peanuts, potatoes, safflower, sunflower, sugarcane, and
flaxseed. The quantities of crop residues that can be available in each county are estimated using total grain
production, crop to residue ratio, and moisture content, taking into consideration the amount of residue left on
the field for soil protection, grazing, and other agricultural activities. USDA, National Agricultural Statistics
Service, five-year average, 2003-2007 data.
42 The estimates provided in Table 4 are based on numerous assumptions and modeling techniques unique to each
study. While general categories may appear similar in name (e.g., agricultural lands), one should refer to the table
footnotes for clarification on the category makeup.
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Figure 3. Cellulosic Feedstock Available from Forest Residues in the United States
Source: U.S. Department of Energy, National Renewable Energy Laboratory, http://www.nrel.gov/gis/images/
map_biomass_forest_residues.jpg. Feedstock estimate based on U.S. Forest Service Timber Product Output
database for 2007.
Note: Forest residues include logging residues and other removable material left after carrying out silvicultural
operations and site conversions. Logging residue comprises unused portions of trees cut or killed by logging and
left in the woods. Other removable materials are the unutilized volumes of trees cut or killed during logging
operations. USDA, Forest Service’s Timber Product Output database, 2007.
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Table 4. Cellulosic Feedstock Supply Estimates of Availability and Need
Source Feedstock
Quantity
(Tons)
Comments
Estimates of Availability
USDA / DOE Billion-Ton Study 1.366 billion available on a yearly
The agricultural land component of the
(2005)a
basis roughly around the mid-21st
estimated total includes grains (corn and
century
soybean) used for ethanol and biodiesel
which are not cellulosic feedstock.
• 368 million from forest lands
(27% of estimated total)
The study included biomass available for
bioenergy in general (e.g., wood for
• 621 million from agricultural
electricity).
landsb (45% of estimated total)
The Billion-Ton Study may have
• 377 million for dedicated energy overestimated the amount of feedstock
cropsc (28% of estimated total)
that can be economical y harvested
because it did not calculate costs
associated with harvesting potential
feedstocks using existing technology. The
study also included woody biomass from
federal forest lands, but EISA
subsequently excluded such biomass from
qualifying under the RFS. An updated
study is expected to be published later
this year.d
National Academy of Sciences
548 million available in 2020
The study estimates that the cel ulosic
(2009)e
feedstock can be available sustainably for
• 124 million from forest lands
conversion to liquid fuel in 2020.
(23% of estimated total)
• 160 million from agricultural
landsf (29% of estimated total)
• 164 million from dedicated
energy crops (30% of estimated
total)
Estimates of Need
Sandia National Laboratories /
775 million
The study estimates that 775 million tons
General Motors’ R&D Center
of biomass are required to produce 70
(2009)g
• 126 million tons from forest
billion gallons/year (BGY) of cellulosic
lands (16% of estimated total)
ethanol by 2030
• 182 million from agricultural
lands (23% of estimated total)
• 467 million from dedicated
energy crops (60% of estimated
total)
Biomass Research and
240 million
The study estimates, for one scenario out
Development Initiative (2008)h
of the three provided, that 240 million
• 153 million from agricultural
tons of biomass are required to produce
landsi (64% of estimated total)
36 BGY of cel ulosic ethanol by 2022.
• 85 million from dedicated
Assumptions for the scenario include
energy crops (35% of estimated
meeting the 36 BGY of cellulosic ethanol
total)
with corn-based ethanol of 15 BGY,
soybean diesel of 1 BGY, 20 BGY from
cropland biomass, 0 BGY from forestland
biomass, and 0 BGY from imports.
Source: Compiled by CRS.
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a. DOE, USDA, Biomass as Feedstock for a Bioenergy and Bioproducts Industry: The Technical Feasibility of a Billion-
Ton Annual Supply, April 2005, http://www1.eere.energy.gov/biomass/pdfs/
final_billionton_vision_report2.pdf.
b. Agricultural lands include crop residues, grains, and animal manure.
c. Perennial crops (e.g., grasses) are generally considered dedicated energy crops.
d. U.S. Government Accountability Office, Biofuels: Potential Effects and Challenges of Required Increases in
Production and Use, GAO-09-446, August 2009, http://www.gao.gov/new.items/d09446.pdf.
e. National Academy of Sciences, National Academy of Engineering, National Research Council, Liquid
Transportation Fuels from Coal and Biomass: Technological Status, Costs, and Environmental Impacts, Washington,
DC, 2009, http://www.nap.edu/catalog.php?record_id=12620.
f.
Agricultural lands include corn stover, wheat and grass straw, hay, and animal manure.
g. Sandia National Laboratories, 90-Billion Gallon Biofuel Deployment Study, February 2009,
http://hitectransportation.org/news/2009/Exec_Summary02-2009.pdf. E-mail from Todd West of Sandia
National Laboratory, February 10, 2010. Estimates vary based on the assumptions made for conversion
yields, feedstock availability and relative cost, and more.
h. Biomass Research and Development Initiative, Increasing Feedstock Production for Biofuels Economic Drivers,
Environmental Implications, and the Role of Research, December 2008, http://www.brdisolutions.com.
i.
Agricultural lands include corn stover and straw.
How Many Commercial Cellulosic Biofuel
Plants Exist?
EPA reports that there are very few, if any, facilities consistently producing cellulosic biofuel
for commercial sale.43 There are a few operational plants.44 Proposed cellulosic ethanol plants
span an array of production capacities—ranging from 20,000 gallons per year to 100 mgy.45
Industry sources anticipate that many of the plants will be fully operational by 2012.
Approximately two dozen demonstration- or pilot-scale cellulosic ethanol plants are reported to
exist currently in the United States.46
43 U.S. Environmental Protection Agency, “Regulation of Fuels and Fuel Additives: 2012 Renewable Fuel Standards;
Proposed Rule,” 76 Federal Register 38844-38890, July 1, 2011.
44 See Table 2.
45 Renewable Fuels Association, U.S. Advanced and Cellulosic Ethanol Projects Under Development and
Construction, February 25, 2010, http://www.ethanolrfa.org/page/-/rfa-association-site/Outlook/
CurrentAdvancedCelluloseBiofuelsProjects2-25-10.pdf?nocdn=1.
46 Wallace E. Tyner and Sarah Brechbill, “Cellulosic Biofuels: Feedstocks, Conversion Technologies, Economics, and
Policy Issues,” CRS Workshop on the Development of the U.S. Cellulosic Biofuels Industry, Washington, DC, October
6, 2009; and conversation with Wallace Tyner from Purdue University, February 2, 2010; EPA, Renewable Fuel
Standard Program (RFS2) Regulatory Impact Analysis, EPA-420-R-10-006, Washington, DC, February 2010, pp. 171
and 186, http://www.epa.gov/oms/renewablefuels/420r10006.pdf.
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What Policy Options Are Available to Meet the
Congressionally Mandated RFS for Cellulosic
Biofuels?
Congress may decide to take legislative action to address the limited cellulosic biofuel production
capacity for the RFS. Some options were introduced in the 111th Congress.47 Other possible
options available to Congress are lowering the cellulosic biofuel mandate, modifying the DOE
Loan Guarantee Program, implementing new financial support mechanisms, or making federal
lands available for biomass removal. Cellulosic biofuel advocates may find it beneficial for
Congress to make the cellulosic biofuel mandate more attainable in the near term (e.g., two to
five years). Opponents may view any additional congressional action to assist the cellulosic
biofuel community as harmful to the entire renewable energy market in the long run.
Congress may also choose to monitor EPA’s implementation of the RFS. EPA is responsible for
implementing the RFS and revising the RFS when necessary. EPA’s initial waiver was issued on
the first year that cellulosic biofuel was to contribute to the advanced biofuels portion of the RFS.
Some suggest the waiver was issued partly due to the economic hardships faced by the industry.48
Whether the cellulosic biofuel industry can scale up production to meet the RFS targets in coming
years is unclear.
Author Contact Information
Kelsi Bracmort
Analyst in Agricultural Conservation and Natural
Resources Policy
kbracmort@crs.loc.gov, 7-7283
47 The 111th Congress considered legislation that would have affected cellulosic biofuel production if enacted. Section
129 of the American Clean Energy and Security Act of 2009 (H.R. 2454, also known as Waxman-Markey) would have
amended the Loan Guarantee Program to incorporate renewable fuel pipeline construction.47 Title I of the American
Clean Energy Leadership Act of 2009 (ACELA, S. 1462) would have amended the Loan Guarantee Program and
created a Clean Energy Deployment Administration, under DOE, to advance lending and implementation of
commercial clean energy technologies. H.R. 2283 and S. 943 would have waived the lifecycle greenhouse gas emission
reduction requirements for renewable fuel production.
48 Renewable Fuels Association, January 2010, personal consultation.
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