Renewable Fuel Standard: Potential Economic and Environmental Effects of U.S. Biofuel Policy (2011)Board on Agriculture and Natural Resources
Each report is produced by a committee of experts selected by the Academy to address a particular statement of task and is subject to a rigorous, independent peer review; while the reports represent views of the committee, they also are endorsed by the Academy. Learn more on our expert consensus reports.
Report in Brief >>
Biofuels offer an alternative to petroleum-based fuels. Interest in biofuels stems from their potential to improve U.S. energy security because they are produced from renewable domestic sources and from their potential to provide life-cycle greenhouse-gas benefits compared to fossil fuels. The Renewable Fuel Standard, which is a subtitle of the Energy Independence and Security Act enacted by Congress in 2007, mandates that 35 billion gallons of ethanol-equivalent biofuels and 1 billion gallons of biomass-based diesel be consumed in the United States by 2022.
The United States already has the capacity to produce 14 billion gallons of corn-grain ethanol (an amount close to the consumption mandate for conventional biofuels in 2022) and has infrastructure for producing 2.7 billion gallons of biomass-based diesel. However, the consumption mandate for cellulosic biofuels will not likely be met. Although the United States can likely produce adequate cellulosic feedstock to be converted into biofuels to meet the mandate, there are currently no commercially viable biorefineries to convert such plant matter into fuel. Even if commercial-scale technology was available by 2015, aggressive deployment of this technology—where capacity build rate would double the build rate for corn-grain ethanol seen in recent years—would be needed to meet the 2022 goal. However, policy uncertainty and high production costs may deter investors from supporting aggressive deployment in the timeframe necessary to meet the mandate.
Even if the Renewable Fuel Standard could be achieved, it may not be effective in addressing global greenhouse-gas emissions. Some of the key factors that influence environmental effects of biofuels are site specific and depend on the type of feedstocks produced, the management practices used to produce them, prior land use, and any land-use changes that their production might incur. In addition to greenhouse-gas emissions, production and use of biofuels affect air quality, water quality, water use, and biodiversity.
Click here to download an audio file (in .MP3 format) of the briefing which accompanied the report's release.
- Absent major technological innovation or policy changes, the RFS2-mandated consumption of 16 billion gallons of ethanol-equivalent cellulosic biofuels is unlikely to be met in 2022.
- Only in an economic environment characterized by high oil prices, technological breakthroughs, and a high implicit or actual carbon price would biofuels be cost competitive with petroleum-based fuels.
- RFS2 may be an ineffective policy for reducing global GHG emissions because the effect of biofuels on GHG emissions depends on how the biofuels are produced and what land-use or land-cover changes occur in the process.
- Absent major increases in agricultural yields and improvement in the efficiency of converting biomass to fuels, additional cropland will be required for cellulosic feedstock production; thus, implementation of RFS2 is expected to create competition among different land uses, raise cropland prices, and increase the cost of food and feed production.
- Food-based biofuel is one of many factors that contributed to upward price pressure on agricultural commodities, food, and livestock feed since 2007; other factors affecting those prices included growing population overseas, crop failures in other countries, high oil prices, decline in the value of the U.S. dollar, and speculative activity in the marketplace.
- Achieving RFS2 would increase the federal budget outlays mostly as a result of increased spending on payments, grants, loans, and loan guarantees to support the development of cellulosic biofuels and foregone revenue as a result of biofuel tax credits.
- The environmental effects of increasing biofuels production largely depend on feedstock type, site-specific factors (such as oil and climate), management practices used in feedstock production, land condition prior to feedstock production, and conversion yield. Some effects are local and others are regional or global. A systems approach that considers various environmental effects simultaneously and across spatial and temporal scales is necessary to provide an assessment of the overall environmental outcome of increasing biofuels production.
- Key barriers to achieving RFS2 are the high cost of producing cellulosic biofuels compared to petroleum-based fuels and uncertainties in future biofuel markets.