Advanced biofuels aren’t where U.S. lawmakers expected them to be, but that failure is in the rear-view mirror. The question now is about the road ahead, and the pro-renewables group E2 is forecasting steady growth – but whether that growth will come fast enough to meet the growing requirements of the U.S. renewable fuel standard seems doubtful.
Advanced biofuels are important because unlike corn-based ethanol and soy-based biodiesel, cellulosic and hydrocarbon-based fuels made from nonfood feedstocks as well as waste materials and algae might be able to directly replace gasoline and other fuels in gas tanks and refineries without warping food markets.
E2, in its 2013 Advanced Biofuels Market Report [PDF], sees “technical” compliance with the U.S. RFS possible in 2016 with some growth and with refiners using accumulated credits to offset production shortfalls, but mandates further down the line “could prove difficult on the specific timeline currently in the RFS rule.”
That would mean the regulators at the Environmental Protection Agency would be called on to “modify the program and adjust to market realities” – and that’s a familiar story.
Last month, the agency set a 6 million gallon target for cellulosic biofuels use in 2013, less than half the level in the proposed rule issued in February, and far below the 1 billion gallon target set out by law in 2007.
Not that there haven’t been some signs of life from the industry. In March, Bloomberg New Energy Finance reported that the cost of enzymes, pretreatment and fermentation for cellulosic ethanol had fallen “significantly,” putting the fuel “on course to be cost-competitive with corn-based ethanol by 2016.”
The E2 report said barriers to faster development included “securing feedstock, as well as keeping feedstock costs low.” It said the business model of locating production facilities in proximity to biomass sources – as with a KiOR plant in Mississippi and a Ineos plant in Florida – could help overcome that problem.