The Renewable Fuel Standard (RFS): Cellulosic Biofuels

Congressional research reportAug 31, 2015

Ask Donna

What actually matters in this document.

Text

The Renewable Fuel Standard (RFS):

Cellulosic Biofuels

(name redacted)

Specialist in Agricultural Conservation and Natural Resources Policy

August 31, 2015

Congressional Research Service

7-....

www.crs.gov

R41106

The Renewable Fuel Standard (RFS): Cellulosic Biofuels

Summary

The Renewable Fuel Standard (RFS) was established under the Energy Policy Act of 2005

(EPAct05, P.L. 109-58), and was later expanded under the Energy Independence and Security Act

of 2007 (EISA; P.L. 110-140), in accordance with efforts at that time to reduce dependence on

foreign oil, promote biofuel use, and stabilize transportation fuel prices, among other goals. Over

15 years, the RFS requires that increasing amounts of biofuels—36 billion gallons by 2022—be

used in transportation fuel. The mandate is to be accomplished in part with advanced biofuels,

including cellulosic biofuels—fuels produced from cellulosic materials, including grasses, trees,

and agricultural and municipal wastes—which would increase over time to comprise some 44%

of the RFS in 2022.

The U.S. Environmental Protection Agency (EPA) is required to set the annual standard (i.e.,

usage requirement) for cellulosic biofuels under the RFS if the projected volume of cellulosic

biofuel production is less than the volume specified in the statute (i.e., the mandate). Under this

circumstance, EPA can lower the annual cellulosic biofuels standard to the volume expected to be

available for that year. If EPA lowers the standard for a given year, it is required to do so by

November 30 of the preceding year, and it must issue cellulosic biofuel waiver credits that

obligated parties may purchase for that compliance year in lieu of actual fuel requirements. EPA

concluded that the nation lacked sufficient production capacity to meet the RFS cellulosic

biofuels mandate each year from 2010 to 2016. In 2010, EPA reduced the mandate from the

statutory volume of 100 million gallons to 6.5 million (ethanol-equivalent) gallons, in 2011 from

250 million gallons to 6.0 million gallons, in 2012 from 500 million gallons to 10.45 million

gallons, and in 2013 from 1 billion gallons to 810,185 gallons. In May 2015, EPA announced its

proposal to lower the 2014 mandate from 1.75 billion gallons to 33 million gallons, the 2015

standard from 3 billion gallons to 106 million gallons, and the 2016 standard from 4.25 billion

gallons to 206 million gallons and to rescind the 2011 cellulosic biofuel standard. EPA intends to

finalize the RFS volume requirements for 2014, 2015, and 2016 by November 30, 2015. This

delay in issuing the annual standards—EPA is currently one year and eight months past the

statutory deadline for 2014 and eight months past the deadline for 2015—raises significant

uncertainty for biofuel producers, feedstock growers, and refiners.

The 2010-2012 reduced cellulosic biofuel mandates were not met by actual cellulosic biofuel

production, which EPA reports was limited. Instead, these mandates were largely met with waiver

credits. Official compliance data for 2013 and 2014 is unavailable at this time as the compliance

deadline for these years has not been finalized.

Actual cellulosic biofuel production has fallen significantly short of the RFS mandates. However,

in 2014, the industry opened three commercial-scale cellulosic ethanol plants in Iowa and Kansas

with a combined production capacity of up to 52 million gallons per year. In addition, a large

portion of cellulosic biofuel production for 2014 and 2015 is being met with two newly approved

cellulosic biofuel pathways—renewable compressed natural gas and renewable liquefied natural

gas. There was also the November 2014 bankruptcy filing by the company KiOR, which had

commenced operations of the first commercial-scale cellulosic fuel facility in 2012 in

Mississippi. While these milestones are significant for a nascent cellulosic biofuel industry, given

the many challenges the industry has faced on multiple fronts, and given past performance, it may

be likely that the cellulosic biofuel volumes set in statute will not be met in the near term.

Evaluating the viability of the cellulosic biofuel component of the RFS is difficult. Many factors

have impacted and may continue to impact what can be accomplished. Factors to consider include

the uncertainty stemming from EPA’s implementation of the RFS, Congress’s action on biofuel

Congressional Research Service

The Renewable Fuel Standard (RFS): Cellulosic Biofuels

programs and tax incentives, industry’s difficulty in producing cellulosic biofuel, and the

unknown impact of current oil and gasoline prices.

Congressional Research Service

The Renewable Fuel Standard (RFS): Cellulosic Biofuels

Contents

Introduction ..................................................................................................................................... 1

The EISA RFS Cellulosic Biofuel Standard .................................................................................... 2

Waiver Authority ....................................................................................................................... 3

RFS Compliance ....................................................................................................................... 3

EPA Annual Cellulosic Biofuel Projections, 2010-2016 ................................................................. 5

EPA Reported Cellulosic Biofuel Compliance ................................................................................ 6

2010-2012 ................................................................................................................................. 6

2013-2014 ................................................................................................................................. 8

Legislative Context.......................................................................................................................... 8

The Role of Congress ................................................................................................................ 9

The Role of EPA ...................................................................................................................... 11

Legal Challenges ..................................................................................................................... 12

Uncertainty .................................................................................................................................... 13

Background on Cellulosic Biofuels ............................................................................................... 14

Potential Benefits of Cellulosic Biofuels ...................................................................................... 15

Energy Security ....................................................................................................................... 15

Environment ............................................................................................................................ 15

Rural Economic Development ................................................................................................ 16

Potential Challenges for Cellulosic Biofuels ................................................................................. 16

Financing ................................................................................................................................. 16

Feedstock Eligibility ............................................................................................................... 17

Feedstock Supply .................................................................................................................... 17

Existing Plant Capacity ........................................................................................................... 18

Financial Assistance ................................................................................................................ 19

Conclusion ..................................................................................................................................... 20

Tables

Table 1. RFS Biofuels Mandate in EPAct05 and EISA: Total Renewable Fuels and

Cellulosic Biofuels ....................................................................................................................... 4

Table 2. Selected Legislation from the 114th, 113th and 112thCongresses Pertaining to

Cellulosic Biofuels ....................................................................................................................... 9

Contacts

Author Contact Information .......................................................................................................... 21

Congressional Research Service

The Renewable Fuel Standard (RFS): Cellulosic Biofuels

Introduction

The Renewable Fuel Standard (RFS), created by the Energy Policy Act of 2005 (EPAct05, P.L.

109-58) and expanded under the Energy Independence and Security Act of 2007 (EISA, P.L. 110140), mandates that domestic transportation fuel contain specified volumes of biofuels—

including conventional biofuels (e.g., cornstarch ethanol) and advanced biofuels (e.g., cellulosic

biofuel, biomass-based diesel). Given the economic and policy environments at the time the RFS

was enacted, there was discussion that the RFS could help to reduce dependence on foreign oil,

promote biofuel use, and stabilize transportation fuel prices, among other goals.1 The revised RFS

under EISA requires that increasing amounts of biofuels be included in transportation fuel, with

volume requirements identified in statute over a 15-year period. These requirements start with 9

billion gallons of total renewable fuel in 2008 and build up to 36 billion gallons annually by

2022.2 The mandate is to be accomplished in large part with increasing volumes of cellulosic

biofuels, with 16 billion gallons required by 2022. Thus far, the yearly cellulosic biofuels volume

requirements identified in the statute have not been met.

The RFS contains annual volume standards (i.e., usage requirements) for each of its biofuel

categories, including for cellulosic biofuels. Recognizing that the cellulosic biofuel industry was

in its infancy at the time of the RFS’s passage, Congress gave the U.S. Environmental Protection

Agency (EPA) waiver authority to adjust the annual cellulosic biofuel standard under certain

conditions. For instance, if the projected volume of cellulosic biofuel production is less than the

volume specified in the statute (i.e., the mandate) for a given year, EPA is required to lower the

cellulosic biofuel standard by November 30 of the preceding year and to issue cellulosic biofuel

waiver credits to be used in lieu of actual cellulosic fuel for obligated parties to purchase for that

compliance year. Due to a lack of U.S. cellulosic biofuel production capacity, the EPA, in

successive years from 2010 to 2013, issued final rules under its waiver authority that lowered the

cellulosic biofuel standard.3 EPA also proposes to lower the 2014, 2015, and 2016 cellulosic

biofuel standards.4

In the years since the inception of the cellulosic biofuels mandate for the RFS, there have

continued to be questions about whether cellulosic biofuels can be produced in sufficient

quantities to satisfy the RFS mandate in the near term and in future years. Progress toward

meeting the cellulosic biofuels mandate has been delayed due to several issues; specifically,

feedstock supply, financial viability and financing, and technology advancement are considered

among the most significant limiting factors for cellulosic biofuel production. Given that the EPA

has lowered the RFS cellulosic biofuel standard for four consecutive years and proposes to do so

again for 2014, 2015, and 2016, and for various other reasons, some contend that Congress

For more information on the expanded RFS, see CRS Report R43325, The Renewable Fuel Standard (RFS): In Brief,

by (name redacted).

Volume requirements for years following 2022 are to be determined by the U.S. Environmental Protection Agency

(EPA) in future rulemaking.

Additional information about the volume adjustments, including the federal court order to vacate the 2012

requirement and an EPA proposal to rescind the 2011 requirement, is provided in the cellulosic biofuel compliance

section of this report. EPA, “Regulation of Fuels and Fuel Additives: Changes to Renewable Fuel Standard Program;

Final Rule,” 75 Federal Register, March 26, 2010; EPA, “Regulation of Fuels and Fuel Additives: 2011 Renewable

Fuel Standards; Final Rule,” Federal Register, December 9, 2010; EPA, “Regulation of Fuels and Fuel Additives: 2012

Renewable Fuel Standards; Final Rule,” Federal Register, January 9, 2012; EPA, “Regulation of Fuels and Fuel

Additives: 2013 Renewable Fuel Cellulosic Biofuel Standards; Direct Final Rule,” 79 Federal Register, May 2, 2014.

EPA, “Renewable Fuel Standard Program: Standards for 2014, 2015, and 2016 and Biomass-Based Diesel Volume

for 2017; Proposed Rule,” 80 Federal Register 33099, June 10, 2015.

Congressional Research Service

The Renewable Fuel Standard (RFS): Cellulosic Biofuels

should repeal the RFS. Others want to reconsider its configuration, determine whether additional

resources are necessary for cellulosic biofuel production, and/or assess the success of this effort

compared to other renewable energy efforts. Still others assert that the current structure provides

adequate incentives and measures to address any cellulosic biofuel production shortfalls.

The EISA RFS Cellulosic Biofuel Standard

The expanded RFS established in Section 202 of EISA requires that a certain volume of cellulosic

biofuels be included in the national transportation fuel supply.5 The required volume increases

incrementally each year. The RFS calls for 100 million gallons of cellulosic biofuels in 2010, 3

billion gallons in 2015, 10.5 billion gallons in 2020, and 16 billion gallons by 2022 (see Table 1).

Cellulosic biofuels would comprise some 44% of the mandate if 16 billion gallons of cellulosic

biofuels were actually produced in 2022.

Cellulosic Biofuel Requirement Differences Between the RFS1 and the RFS2

Cellulosic biofuel requirements under the expanded RFS established by EISA, sometimes referred to as RFS2, are

more substantial than the requirements under the original RFS (or RFS1) established by §1501 of EPAct05. There are

three points in particular where differences exist between the expanded RFS and the original RFS: cellulosic biofuel

type, cellulosic biofuel volume, and the production time frame. First, the original RFS had a narrower definition of

what constituted a cellulosic biofuel, limiting the mandate to only cellulosic biomass ethanol. The original RFS did have

a broader definition as to what counted as cellulosic material. The expanded RFS has a broader definition for

cellulosic biofuels, accepting a variety of biofuel types from cellulosic material. Second, under the expanded RFS, the

cellulosic biofuel volumes required are much larger. Third, the time frame to produce the biofuels is expedited under

EISA. The original RFS was much smaller in scope, requiring 4.0 billion gallons of total renewable fuel for 2006,

ascending to 7.5 billion gallons by 2012. Further, the original RFS would have required that 250 million gallons of the

renewable fuel be derived from cellulosic biomass starting in 2013, whereas the expanded RFS required 250 million

gallons of cellulosic biofuel in 2011.

Limited analyses exist that provide information on how the EISA RFS annual cellulosic biofuel

volume requirements were determined.6 Data and analysis presented during the RFS debate and

ultimate passage of EISA in 2007 supported the idea that the required levels of cellulosic biofuel

production capacity could be achieved. Some argued that plentiful feedstock would be available7

and that the conversion technology was close to being proven 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.8 Others were

The EISA statute defines ‘cellulosic biofuel’ as renewable fuel derived from any cellulose, hemi-cellulose, or lignin

that is derived from renewable biomass and that has lifecycle greenhouse gas emissions, as determined by the EPA

administrator, that are at least 60% less than the baseline lifecycle greenhouse gas emissions of conventional fuel. More

information is provided in the cellulosic biofuels section of this report.

One case study suggests that the expanded RFS volume requirements, overall and for individual biofuel categories,

had “no reference within the energy policy subsystem.” For more information, see H. L. Breetz, “Fueled by Crisis: U.S.

Alternative Fuel Policy, 1975-2007” (Doctoral dissertation, Dartmouth College, 2012).

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.

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,

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.

Congressional Research Service

The Renewable Fuel Standard (RFS): Cellulosic Biofuels

leery about the time frame provided to meet the RFS cellulosic biofuels mandate, given the asyet-undeveloped production capacity.9

Waiver Authority

Congress gave the EPA administrator waiver authority to adjust the renewable fuel volume

amounts identified in statute under certain circumstances.10 More specifically, Congress provided

EPA with three waivers it may use to adjust the volume requirements—a general waiver, a

cellulosic biofuel waiver, and a biomass-based diesel waiver. The cellulosic biofuel waiver may

be used by the administrator to reduce the cellulosic biofuel mandate when the projected volume

amount for a given year is less than what is identified in statute.11 Should EPA decide to lower the

cellulosic biofuel mandate in a given year, it is required to set the volume by November 30 of the

preceding year and must issue waiver credits for obligated parties to purchase for that compliance

year.12 Additionally, EPA may use the general waiver authority to waive the RFS, or any specific

category of the RFS, if there is evidence that full implementation may cause severe economic or

environmental harm.13

RFS Compliance

EPA monitors RFS compliance by fuel blenders and other obligated parties according to their

reported accumulation of renewable identification numbers (RINs) for each biofuel’s yearly

volumetric standard. 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 biofuel production or the port

of importation. Each qualifying gallon of renewable fuel has its own unique RIN. The EPA uses

its Moderated Transaction System (EMTS) to manage RIN transactions.14 Using data generated

from the EMTS, EPA provides aggregated monthly data on RIN generation and renewable fuel

volume production for specific fuel categories, such as cellulosic biofuel.15 In general,

compliance is achieved by an obligated party when the number of RINs submitted to EPA each

year for cellulosic biofuels equates to the volume requirement for that year. Previous-year RINs

may be used to meet current-year compliance, although there are some stipulations.

As noted above, EPA has the authority to waive the cellulosic biofuel mandate on a yearly basis.

In any year that EPA grants a waiver, the agency must also make per-gallon waiver credits

Ian Talley, “Renewed Energy: US Biofuel Mandate Calls for Big Production Boost,” Dow Jones International News,

December 18, 2007, at http://www.factiva.com/.

For more information on EPA’s waiver authority, see CRS Report RS22870, Waiver Authority Under the Renewable

Fuel Standard (RFS); CRS Report R44045, The Renewable Fuel Standard (RFS): Waiver Authority and Modification

of Volumes, by (name redacted).

42 U.S.C. 7545(o)(7)(D).

Waiver credits are discussed in the “RFS Compliance” section of this report.

42 U.S.C. 7545(o)(7)(A).

For more information on EPA’s Moderated Transaction System (EMTS), see http://www.epa.gov/oms/fuels/

renewablefuels/epamts.htm.

Concerns have been raised about fraudulent renewable identification numbers (RINs), especially due to recent

biodiesel fraudulent RIN activity. While RIN fraud is possible as discussed in CRS Report R42824, Analysis of

Renewable Identification Numbers (RINs) in the Renewable Fuel Standard (RFS), by (name redacted)

, there has

been no reported fraudulent cellulosic biofuel RIN activity. In July 2014, EPA issued a final rule that establishes a

voluntary quality assurance program for verifying the validity of RINs. For more information, see EPA, “RFS

Renewable Identification Number (RIN) Quality Assurance Program; Final Rule,” 79 Federal Register, July 18, 2014.

Congressional Research Service

The Renewable Fuel Standard (RFS): Cellulosic Biofuels

available at a set price, the formula for which is set in statute.16 Waiver credits may be used by

obligated parties to comply with the cellulosic biofuel volume obligation in lieu of RINs

generated with the production of the cellulosic biofuel.17 The 2010, 2011, 2012, and 2013 prices

for cellulosic biofuel waiver credits were $1.56, $1.13, $0.78, and $0.42, respectively. The 2014

and 2015 cellulosic biofuel waiver credit prices are $0.49 and $0.64, respectively. If waiver

credits18 are issued (when the mandate is reduced), compliance is to be met when the combination

of waiver credits and RINs equates to the volume requirement for that year.

Table 1. RFS Biofuels Mandate in EPAct05 and EISA: Total Renewable Fuels and

Cellulosic Biofuels

(in billions of gallons)

EISA

EPAct05

Cellulosic biofuels

Year

Total

renewable

fuels

Cellulosic

biomass

ethanol

Total

renewable

fuels

Statute

EPA revised

(ethanol-equivalent volume)

2006

4.0

—

––

2007

4.7

—

––

2008

5.4

—

9.00

0.00

––

2009

6.1

—

11.10

0.00

––

2010

6.8

—

12.95

0.100

0.0065a

2011

7.4

—

13.95

0.250

0.0060b

2012

7.5

—

15.20

0.500

0.0105c

2013

†

0.250

16.55

1.00

0.0008d

2014

†

◊

18.15 (15.93

EPA revised)e

1.75

0.033e

2015

†

◊

20.5 (16.3

EPA revised)e

3.00

0.106e

2020

†

◊

30.0

10.5

—

2022

†

◊

36.0

16.0

—

Sources: EPAct05 (P.L. 109-58) Section 1501, and EISA (P.L. 110-140), Section 202.

Notes: Ethanol-equivalent volume is the volume used for RFS compliance purposes, which takes into account

the energy content of the fuel. † = according to EPAct05 statute, the total renewable fuel amount for 2013 and

thereafter shall be determined by the EPA administrator. ◊ = according to EPAct05 statute, a minimum of 250

million gallons of cellulosic biomass ethanol is required for 2013 and thereafter.

42 U.S.C. 7545 (o)(7)(D)(ii). In April 2015, EPA published a final rule stating that it will announce the cellulosic

biofuel waiver credit price on the agency’s “Renewable Fuels: Regulations & Standards” website to allow for more

expeditious publication of the credit prices. Previously, the prices were published as a part of the rulemaking process in

the Code of Federal Regulations. EPA, “Regulation of Fuels and Fuel Additives: Cellulosic Waiver Credit Price and

Minor Amendments to Renewable Fuel Standard Regulations,” 80 Federal Register, April 3, 2015.

EPA, Questions and Answers on Changes to the Renewable Fuel Standard Program (RFS2), February 2013.

Waiver credits are not allowed to be traded or banked for future use, and are only allowed to be used to meet the

cellulosic biofuel standard for the year that they are offered.

Congressional Research Service

The Renewable Fuel Standard (RFS): Cellulosic Biofuels

U.S. Environmental Protection Agency (EPA), “Regulation of Fuels and Fuel Additives: Changes to

Renewable Fuel Standard Program; Final Rule,” 75 Federal Register, March 26, 2010.

EPA, “Regulation of Fuels and Fuel Additives: 2011 Renewable Fuel Standards; Final Rule,” Federal Register,

December 9, 2010.

Vacated under API vs. EPA. Level originally set by EPA at 0.00865 billion gallons. EPA, “Regulation of Fuels

and Fuel Additives: 2012 Renewable Fuel Standards; Final Rule,” Federal Register, January 9, 2012.

EPA, “Regulation of Fuels and Fuel Additives: 2013 Renewable Fuel Standards; Final Rule,” 79 Federal

EPA, “Renewable Fuel Standard Program: Standards for 2014, 2015, and 2016 and Biomass-Based Diesel

Volume for 2017; Proposed Rule,” 80 Federal Register 33099, June 10, 2015.

EPA Annual Cellulosic Biofuel Projections,

2010-2016

EPA generally conducts its cellulosic biofuels volume projection analysis based on an evaluation

of individual producers’ production plans and progress to date, discussions with cellulosic biofuel

producers, the Energy Information Administration (EIA), the Department of Agriculture (USDA),

and the Department of Energy (DOE), and an assessment of the probabilities associated with

production schedules from each of the producers.19 EPA’s analyses concluded that the United

States did not have sufficient cellulosic biofuel production capacity to meet the scheduled RFS

mandates for 2010 to 2016. Therefore, for 2010 EPA reduced the mandate from the statutory

volume20 of 100 million gallons to 6.5 million ethanol-equivalent gallons;21 for 2011 from 250

million gallons to 6.0 million ethanol-equivalent gallons;22 for 2012 from 500 million gallons to

10.45 million ethanol-equivalent gallons;23 and for 2013 from 1 billion gallons to 810,185

ethanol-equivalent gallons.24

The rulemaking process to determine the 2014, 2015, and 2016 RFS annual standards is still in

progress. The delay in issuing the 2014 and 2015 standards raises significant uncertainty for

biofuel producers, feedstock growers, and obligated parties.25 EPA proposes to lower the 2014

In its proposed rule, EPA reported it tracked the progress of several dozen potential cellulosic biofuel production

facilities. EPA, “Renewable Fuel Standard Program: Standards for 2014, 2015, and 2016 and Biomass-Based Diesel

Volume for 2017; Proposed Rule,” 80 Federal Register 33099, June 10, 2015.

A distinction between which type of gallon is being referred to—straight or ethanol-equivalent—must be made. The

ethanol-equivalent value takes into account the difference in energy content between renewable fuels, and therefore

allows for direct comparisons. An ethanol-equivalence value for a renewable fuel with a higher energy content than

cornstarch ethanol, such as biodiesel, may allow for that fuel to count more per gallon toward a mandate than other

biofuels.

EPA, “Regulation of Fuels and Fuel Additives: Changes to Renewable Fuel Standard Program; Final Rule,” 75

Federal Register, March 26, 2010.

EPA, “Regulation of Fuels and Fuel Additives: 2011 Renewable Fuel Standards; Final Rule,” Federal Register,

December 9, 2010.

EPA, Regulation of Fuels and Fuel Additives: 2012 Renewable Fuel Standards, Final Rule, January 9, 2012. This

rule was vacated by the U.S. Court of Appeals for the D.C. Circuit in API v. EPA. EPA revised the 2012 rule and set

the final required level at zero.

EPA, “Regulation of Fuels and Fuel Additives: 2013 Renewable Fuel Standards; Final Rule,” 79 Federal Register,

May 2, 2014; EPA had previously issued a final rule on August 15, 2013, reducing the 2013 cellulosic biofuel standard

to 6.0 million ethanol-equivalent gallons.

When questioned about its rulemaking timeline for the RFS at a congressional hearing, the EPA responded that it

was committed to getting the rules out in 2015 and meeting deadlines for 2016, although no timeline was provided.

U.S. Congress, House Committee on Oversight and Government Reform, Subcommittee on Energy Policy, Health Care

and Entitlements, Examining EPA’s Management of the Renewable Fuel Standard Program, 113th Cong., December

(continued...)

Congressional Research Service

The Renewable Fuel Standard (RFS): Cellulosic Biofuels

cellulosic biofuel mandate from 1.75 billion gallons to 33 million ethanol-equivalent gallons, the

2015 standard from 3 billion gallons to 106 million ethanol-equivalent gallons, and the 2016

standard from 4.25 billion gallons to 206 million ethanol-equivalent gallons.26 According to EPA,



The 2014 proposed volumes reflect what was actually produced (i.e., EMTS

2014 RIN data).

The 2015 proposed volume reflects what was actually produced for those months

where data are available and estimates for what might be produced in those

months where data are not available.

For the 2016 projection, EPA proposes to use a similar methodology to the 2015

methodology for estimating what might be produced.

There are approximately eight facilities—all with various start dates and

production ranges over the next two years—along with the renewable

compressed natural gas and renewable liquefied natural gas industry that may

produce commercial-scale volumes of cellulosic biofuel by 2016.27 EPA does not

believe that cellulosic biofuel will be imported into the United States, except

from one facility in Canada.

As of May 29, 2015, EPA had not received any projections of cellulosic biofuel

production for 2015 or 2016 from the Energy Information Administration (EIA),

but the agency anticipates that EIA will provide such projections for the final

rule. EPA will take these projections into consideration.

In response to legal challenges of its cellulosic biofuel projection methodology for a specific year,

EPA has in certain years revised the annual cellulosic biofuel standard to zero or proposed to

voluntarily rescind an annual cellulosic biofuel standard.28 This has occurred when the standard as

originally reduced by EPA has not been met. For instance, EPA’s 2012 standard was vacated by a

court decision. As a follow-up to the same court decision, EPA proposes to rescind the 2011

cellulosic biofuel standard.

EPA Reported Cellulosic Biofuel Compliance

2010-2012

In a straightforward scenario, cellulosic biofuel compliance with the RFS requires actual

cellulosic biofuel production, waiver credits, or a combination of both. However, the situation

becomes complicated when cellulosic biofuels are not produced on schedule. Despite the RFS

mandate for cellulosic biofuels starting in 2010, the first registered production of cellulosic

biofuels in the United States was not achieved until 2012.29

(...continued)

10, 2014.

EPA, “Renewable Fuel Standard Program: Standards for 2014, 2015, and 2016 and Biomass-Based Diesel Volume

for 2017; Proposed Rule,” 80 Federal Register 33099, June 10, 2015.

For more information, see “Cellulosic Biofuel Producer Company Descriptions,” memorandum from Dallas Burkholder to

EPA Air Docket EPA–HQ–OAR–2015–0111.

Additional information about these volume adjustments is provided in the “Legal Challenges” section of this report.

EPA reports that the first cellulosic biofuel RINs were registered in 2012 for cellulosic biofuel produced at

demonstration-scale facilities. EMTS records for 2012 show that RINs were generated for cellulosic ethanol and

(continued...)

Congressional Research Service

The Renewable Fuel Standard (RFS): Cellulosic Biofuels

RFS cellulosic biofuel compliance can be separated into two phases: pre-EISA and post-EISA.

There were different stipulations about how compliance was met prior to EISA (under RFS1) and

after EISA (under RFS2). The transition from RFS1 (EPAct05) to RFS2 (EISA) occurred in 2010.

RFS1 had different production requirements than RFS2 for cellulosic biofuels,30 including an

ethanol-equivalency ratio of 2.5-to-1, where each gallon of cellulosic ethanol counted as 2.5

gallons toward the EPAct05 mandate.31 The EPA reports that zero cellulosic biofuel RINs were

produced in 2010 under the RFS2 rules.32 The EPA reports that the majority of compliance for

2010 was met with RINs generated (i.e., production) under RFS1.33 EMTS records show that

12,186 cellulosic biofuel waiver credits were purchased in 2010, which likely made up for the

remainder of 2010 compliance.34

Compliance data following the RFS1-to-RFS2 transition year of 2010 is more straightforward

than other years. EPA reports that zero cellulosic biofuel RINS were produced in 2011.35

Compliance for 2011 was met with excess cellulosic biofuel RINs generated in 2010 under RFS1

and cellulosic biofuel waiver credits.36 EMTS records report that 4,248,388 RFS2 cellulosic

biofuel waiver credits were purchased in 2011.37 EPA reports that there is no “need to address

compliance with the 2012 cellulosic biofuel standard” since there was a federal court decision

that vacated the 2012 standard.38 EMTS reports that 20,069 RINS were generated for cellulosic

ethanol and 1,741 RINS were generated for cellulosic diesel in 2012.39

(...continued)

cellulosic diesel in 2012.

The original RFS (RFS1) did not require a cellulosic biofuel production volume until 2013, when 250 million gallons

were mandated. Further, the definition of cellulosic biofuel was amended by EISA. Under RFS1, cellulosic biofuel

could either be fuel produced from cellulosic feedstocks or fuel from conventional feedstocks using biomass for

process energy. EISA eliminated the latter option of this definition for RFS2.

EISA did not stipulate a 2.5-1 ratio for cellulosic biofuel for the RFS2. Instead, the ethanol-equivalence value

depends on the type of biofuel being produced.

EMTS reports zero RINs available for 2010 cellulosic biofuel and cellulosic diesel. For more information, see

http://www.epa.gov/otaq/fuels/rfsdata/2010emts.htm.

EPA “Regulation of Fuels and Fuel Additives: 2013 Renewable Fuel Standards; Proposed Rule,” 78 Federal

towards compliance under the RFS2 program. The RFS1 cellulosic RINs likely came from non-cellulosic feedstocks

that qualified under the then-effective definition of cellulosic biomass. EPA reports the 2010 cellulosic biofuel standard

could have been met with cellulosic biofuel RINs generated under RFS2 regulations after July 1, 2010, cellulosic

biomass ethanol RINs generated under RFS1 regulations between January 1, 2010, and July 1, 2010, and cellulosic

biomass ethanol RINs generated under RFS1 regulations in 2009. EPA, Questions and Answers on Changes to the

Renewable Fuel Standard Program (RFS2), http://www.epa.gov/otaq/fuels/renewablefuels/compliancehelp/rfs2aq.htm.

See http://www.epa.gov/otaq/fuels/rfsdata/rfs2cellulosicwaivercredits.htm.

EMTS reports zero RINs available for 2011 cellulosic biofuel and cellulosic diesel. For more information, see

http://www.epa.gov/otaq/fuels/rfsdata/2011emts.htm.

The statute allows companies to purchase cellulosic biofuel waiver credits in lieu of submitting RINs in years when

EPA lowers the mandate. EPA, “Regulation of Fuels and Fuel Additives: 2013 Renewable Fuel Standards; Final Rule,”

78 Federal Register, August 15, 2013.

See http://www.epa.gov/otaq/fuels/rfsdata/rfs2cellulosicwaivercredits.htm. If the 2011 cellulosic biofuel standard is

rescinded, EPA reports that it would refund the money paid by obligated parties to purchase cellulosic waiver credits to

comply with the 2011 cellulosic biofuel standard.

EPA, Enviroflash, Update - 2012 Cellulosic Biofuel Standard Mandate Issued, February 27, 2013.

Blue Sugar Corporation is the first company to be issued cellulosic biofuel RINs. EPA reports these RINs were

“retired” because the cellulosic ethanol produced was exported to Brazil. For more information, see

http://www.epa.gov/otaq/fuels/rfsdata/2012emts.htm. EPA, “Regulation of Fuels and Fuel Additives: 2013 Renewable

(continued...)

Congressional Research Service

The Renewable Fuel Standard (RFS): Cellulosic Biofuels

2013-2014

Evaluation of RFS compliance for a given calendar year is best determined once a rulemaking is

complete that announces the annual standards (the statutory deadline for the rulemaking is

November 30 of the preceding year) and once obligated parties have submitted the required

information by the compliance deadline (typically March 31 of the following year). EPA

completed the rulemaking process for the RFS annual standard for 2010-2013. However, the

rulemaking process for 2014-2016 is ongoing. Compliance deadlines for 2010 through 2012 were

met. Although it is eight months past the end of calendar year 2014, EPA has not yet finalized the

compliance deadline for 2013 or 2014. EPA reports that “it is important for obligated parties

preparing a compliance demonstration report for a given calendar year to have an understanding

of their RFS obligations for the next compliance year.”40 Thus, due partly to the lack of a final

rulemaking for the 2014 RFS annual standards, EPA proposes that the 2013 compliance deadline

be January 31, 2016, and that the 2014 compliance deadline be June 1, 2016.41 These proposed

compliance deadlines follow EPA’s anticipated deadline of November 30, 2015, for issuing the

2014, 2015, and 2016 RFS annual standards.

EMTS data for 2013 and 2014 cellulosic biofuel production and RIN generation are available.

EMTS reports that 422,740 RINs were generated for cellulosic renewable gasoline blendstock

and 395,777 RINS were generated for cellulosic diesel for the 2013 standard.42 EMTS reports that

728,509 RINs were generated for cellulosic ethanol; 8,859 RINs for cellulosic diesel; 44,168

RINs for cellulosic renewable gasoline blendstock; 15,208,068 RINs for renewable compressed

natural gas; 17,379,815 RINS for renewable liquefied natural gas; and 50,446 RINs for cellulosic

heating oil.43 The majority of the 2014 cellulosic biofuel mandate is being met with new fuel

pathways approved by EPA in July 2014.44 This trend appears to continue for the first seven

months of 2015, where EMTS records show 49,429,794 cellulosic biofuel RINs (mostly

renewable compressed natural gas and renewable liquefied natural gas) and 173,731 RINs for

cellulosic diesel were generated as of July 29, 2015.

Legislative Context

The shift toward large-scale, economically feasible production of cellulosic biofuels has thus far

proven elusive. Advancements have been made, but not in step with the pace set by Congress for

the RFS. Multiple factors have contributed to the cellulosic biofuels market being at the stage it is

today, with the two major factors being technological issues and a recession that slowed the

(...continued)

Fuel Standards; Final Rule,” 78 Federal Register, August 15, 2013.

EPA, “Renewable Fuel Standard Program: Standards for 2014, 2015, and 2016 and Biomass-Based Diesel Volume

for 2017; Proposed Rule,” 80 Federal Register 33099, June 10, 2015.

Ibid.

For more information, see http://www.epa.gov/otaq/fuels/rfsdata/2013emts.htm.

For more information, see http://www.epa.gov/otaq/fuels/rfsdata/2014emts.htm.

These pathways include compressed natural gas and liquefied natural gas produced from biogas from landfills,

municipal wastewater treatment facility digesters, agricultural digesters, and separated municipal solid waste digesters,

as well as electricity produced from biogas from landfills used to power electric vehicles, municipal wastewater

treatment facility digesters, agricultural digesters, and separated municipal solid waste digesters. EPA, “Regulation of

Fuels and Fuel Additives: RFS Pathways II, and Technical Amendments to the RFS Standards and E15 Misfueling

Mitigation Requirements; Final Rule,” 79 Federal Register 138, July 18, 2014. EPA continues to work on approving

new cellulosic biofuel pathways for the RFS and lists the approved pathways on the RFS new pathways website.

Congressional Research Service

The Renewable Fuel Standard (RFS): Cellulosic Biofuels

economy, including energy demand.45 Due to production shortfalls, EPA has significantly reduced

the cellulosic biofuels mandate each year from 2010 through 2013 and proposes to do so again for

2014, 2015, and 2016. Based on actual cellulosic biofuel production volumes for the 2010 to

2014 time frame, in crafting the legislation, Congress overestimated how much cellulosic biofuel

production would occur on an annual basis. Further, although Congress provided EPA with

waiver authority to align the cellulosic biofuel standard closer to actual production, projecting the

production amount continues to be a challenge for both EPA and the EIA.46 If mandate reductions

and continual production shortfalls signify that the cellulosic biofuels mandate is not working as

intended, Congress could decide that modifications are necessary.

The Role of Congress

Congress continues to have the authority to maintain or amend the RFS statutory mandates.

Should the RFS be continued in its present form, amended, or eliminated completely? What

additional public costs would each of these options engender? When expanding the RFS in EISA,

Congress in effect made a technology choice by selecting a preferred technology (i.e., cellulosic

biofuel) among many unknown technologies. Undoing that commitment by modifying or

repealing the RFS could involve substantial costs to both public and private investors. The

discussion about whether the cellulosic biofuels industry requires additional federal support to

meet the RFS mandate has continued since the establishment of RFS1; however, the discussion

became more pronounced when the RFS was expanded in 2007 to call for a much larger volume

of cellulosic biofuel to be produced in a shorter timeframe. In response, Members of the 112th,

113th, and 114th Congresses proposed a variety of bills that would have affected the cellulosic

biofuels industry (see Table 2).

Table 2. Selected Legislation from the 114th, 113th and 112th Congresses Pertaining to

Cellulosic Biofuels

Congress

114th

113th

Legislation



S. 934 would require the cellulosic biofuel standard to be based on

actual production and would modify the definition of cellulosic

biofuel to exclude compressed natural gas, liquefied natural gas, or

electricity used from biogas.



H.R. 3228 would require EPA to limit the volume of cellulosic

biofuel to be blended into the nation’s fuel supply to what is

commercially available.



H.R. 550 and S. 251 would have modified the way EPA projects

yearly cellulosic biofuel mandates.



H.R. 796 would have required a reduction in the advanced biofuel

mandate if the cellulosic mandate is lowered in any given year.



H.R. 1461 would have repealed the RFS.



H.R. 1462 would have eliminated the non-advanced biofuel portion

of the RFS and modified the way EPA projects yearly cellulosic

biofuel mandates.

These and other cellulosic biofuel production challenges are further explained in the cellulosic biofuels section.

EIA reports that “its forecasts and projections to date have proven to be too optimistic, as volumes have been below

expectations.” U.S. Energy Information Administration, Cellulosic biofuels begin to flow but in lower volumes than

foreseen by statutory targets, February 26, 2013.

Congressional Research Service

The Renewable Fuel Standard (RFS): Cellulosic Biofuels

Congress

112th

Legislation



H.R. 230 would have modified the DOE Loan Guarantee Program,

appropriating funds for EPAct05 Section 1512 Conversion

Assistance for Cellulosic Biomass Waste-Derived Ethanol

Approved Renewable Fuels, establishing a loan guarantee program

for cellulosic ethanol production technology development.



H.R. 424 would have amended the RFS to revert back to RFS1

targets and eliminated all advanced biofuel mandates.



H.R. 851, H.R. 2231, H.R. 884, H.R. 1294 would have implemented

new financial support mechanisms, extending relevant tax

provisions.



H.R. 6047 would have modified the way EPA projects yearly

cellulosic biofuel volume mandates.

Source: CRS.

Notes: Legislation is presented in order of introduction for a given Congress. None of these bills became law.

Congress could decide to modify the cellulosic biofuels mandate, and thus the RFS. This option

could require an analysis of the cellulosic biofuels market and, perhaps more importantly,

consideration of circumstances that were not as prevalent when the RFS was expanded in 2007.

Some of these circumstances include budget concerns, the blend wall,47 military interest in

renewable fuels,48 the slow development of the cellulosic biofuels production sector, and

relatively low gasoline prices. Such an analysis might quantify the amount of federal support

already granted to the cellulosic biofuels industry. One analysis of federal and public funding data

for advanced biofuel projects provided by Environmental Entrepreneurs—an organization of

business leaders—suggested that, since 2007, USDA, DOE, and the Department of Defense

(DOD) have provided $928.4 million in grants and loan guarantees to eight companies that

Environmental Entrepreneurs expects to bring commercial cellulosic biofuel facilities online by

2017.49

Alternatively, Congress could take a wait-and-see approach to address concerns with the

cellulosic biofuels mandate. Given EPA’s consecutive lowering of the mandate by approximately

95% to 99% for 2010 to 2013 and a proposal to do so for 2014, 2015, and 2016, some questions

exists as to whether the cellulosic biofuels industry can ramp up production in the coming years

to meet the scheduled RFS mandates. There may be an upcoming shift where some corn ethanol

facilities plan to transition to cellulosic biofuel production, and it is not known what effect this

might have on cellulosic biofuel production estimates.50 Further, it is not yet known what impact

the additional feedstocks and production pathways (e.g., renewable compressed natural gas)

approved by EPA may have on meeting the RFS cellulosic biofuel mandate, although for 2014

and thus far in 2015 the new renewable natural gas fuel pathways are responsible for the majority

The blend wall is the upper limit to the total amount of ethanol that can be blended into U.S. gasoline without

exceeding the currently utilized 10% level. For more information, see CRS Report R40445, Intermediate-Level Blends

of Ethanol in Gasoline, and the Ethanol “Blend Wall”, by (name redacted).

U.S. Government Accountability Office, Defense Energy: Observations on DOD’s Investments in Alternative Fuels,

GAO-15-674, July 2015.

Environmental Entrepreneurs, E2 Advanced Biofuel Market Report 2014. CRS tallied USDA, DOE, and DOD

funding from Appendix H of the report for those companies with commercial facilities expected to come online in the

United States before 2017 that were identified as producing cellulosic biofuel in Appendix B of the report.

POET LLC, “POET and Agrivida sign technology collaboration joint development agreement,” press release, August

21, 2012. Additionally, it is not known what impact the bolt-on technology employed by Quad County Corn

Processors, which produces cellulosic ethanol from corn kernel fiber, will have on cellulosic biofuel production.

Congressional Research Service

The Renewable Fuel Standard (RFS): Cellulosic Biofuels

of cellulosic biofuel RIN generation.51 Last, Congress may leave it to EPA, as required by the

statute, to modify the applicable volumes of the RFS in its entirety starting in 2016 if certain

conditions are met.52

It is possible that a substantial portion of the cellulosic biofuels volume mandate may be

unattainable for years to come. EIA reports that while “cellulosic biofuels volumes are expected

to grow significantly relative to current levels, they will likely remain well below the targets

envisioned in the Energy Independence and Security Act of 2007.”53 Congress has multiple

options to address the lack of cellulosic biofuels production if it chooses to do so. Congress could

make a statutory change to the definition of cellulosic biofuels for the RFS to open it up to

additional feedstocks that can assist with meeting the annual production targets. Or Congress may

continue to require that the EPA set the cellulosic biofuels mandate based on the best available

evidence—the status quo option.54 In the 114th Congress, some Members have proposed

legislation (e.g., S. 934, H.R. 3328) that would require EPA to base the cellulosic mandate on

actual production or what is currently available. Congress could also eliminate the cellulosic

biofuels portion of the mandate or the RFS entirely.

The Role of EPA

Congress directed EPA to implement the RFS. One of EPA’s roles in implementing the RFS is to

reduce the annual standard for cellulosic biofuels if—after assessing the cellulosic biofuels

market, consulting with EIA, and taking other measures—the volume amount identified in statute

cannot be met. This new reduced standard for a given calendar year is to be determined through

the rulemaking process.

EPA’s administration of the cellulosic biofuel feature of the RFS has its proponents and

opponents. At times the support and opposition for the cellulosic biofuel feature are mingled with

support and opposition for the overall RFS. Some Members of Congress and stakeholders are

dissatisfied with EPA’s implementation of the RFS and with the challenges to comply with the

mandate, among other things.55 Some contend that EPA has not carried out its responsibilities

regarding the RFS as expeditiously as desired.56 Some are not satisfied with the accuracy of EPA’s

annual cellulosic biofuel standard.57 Some Members of Congress support a strong RFS that will

EPA, “Regulation of Fuels and Fuel Additives: RFS Pathways II, and Technical Amendments to the RFS Standards

and E15 Misfueling Mitigation Requirements; Final Rule,” 79 Federal Register 138, July 18, 2014.

More information is provided in the “Uncertainty” section of this report, below.

U.S. Energy Information Administration, Cellulosic biofuels begin to flow but in lower volumes than foreseen by

statutory targets, February 26, 2013.

Although some stakeholders have questioned whether EPA does, in fact, use the best available evidence. American

Petroleum Institute v. EPA, 706 F.3d 474 (D.C. Cir. 2013).

U.S. Congress, House Committee on Science, Space, and Technology, Subcommittee on Energy, The EPA

Renewable Fuel Standard Mandate, 114th Cong., July 23, 2015.

U.S. Congress, Senate Committee on Homeland Security and Governmental Affairs, Subcommittee on Regulatory

Affairs and Federal Management, Re-examining EPA’s Management of the Renewable Fuel Standard Program, 114th

Cong., June 18, 2015; U.S. Congress, House Committee on Oversight and Government Reform, Subcommittee on

Energy Policy, Health Care and Entitlements, Examining EPA’s Management of the Renewable Fuel Standard

Program, 113th Cong., 2nd sess., December 10, 2014; American Petroleum Institute, “EPA incapable of implementing

the RFS, time for repeal,” press release, November 21, 2014.

American Petroleum Institute (API) and the American Fuel and Petrochemical Manufacturers Association (AFPM),

Comment on EPA’s Proposed Rule: Renewable Fuel Standard Program: Standards for 2014, 2015, and 2016 and

Biomass-based Diesel Volume for 2017, July 27, 2015; Institute for Energy Research, Comment on the Environmental

Protection Agency (EPA) Proposed Rule: Regulation of Fuels and Fuel Additives: 2013 Renewable Fuel Standards,

(continued...)

Congressional Research Service

The Renewable Fuel Standard (RFS): Cellulosic Biofuels

“provide the certainty needed to unlock future investments in renewable fuels and necessary

infrastructure, reduce our nation’s dependence on foreign sources of energy, and drive innovation

and progress toward cellulosic, biodiesel, recycled-waste, algal, and other advanced biofuels.”58

Some contend that EPA should raise the cellulosic biofuel requirements for 2015 and 2016 to

amounts greater than what is in the proposed rule, among other things, to “help drive the growth

of the advanced and cellulosic biofuels industry in the manner that Congress intended.... ”59 Some

in the cellulosic biofuel community assert that EPA should better manage its administration of

cellulosic waiver credits so that the number of credits issued by the agency improves the market

conditions for obligated parties to purchase actual cellulosic biofuel, among other things.60 Lastly,

one cellulosic producer reports that it expects to “stop all future U.S. cellulosic investments if

EPA’s proposed base renewable fuel requirements are not strengthened.”61

One could argue that EPA has a difficult job trying to follow through on Congress’s directions,

given the challenges faced by the cellulosic biofuels industry. Further, it could be argued that any

federal agency would likely find it difficult to accurately project when a new technology selected

by Congress, not yet proven at commercial scale, would come online and at what pace. EPA can

modify its projection procedure for cellulosic biofuels, and it can take into account the 2013

federal court decision about how EPA estimates cellulosic biofuel production, but any major

changes to its procedure would likely require additional instruction from Congress.

EPA has not been given much guidance by the courts, or Congress, on how to calculate a

cellulosic biofuels projection, although the methodology the agency used previously was under

scrutiny from the oil industry, among others, as evidenced by the court case concerning the 2012

cellulosic biofuels standard. It is not clear if the current methodology being used for the 20142016 standards will face the same scrutiny. Arguably, setting a standard too low could impact

federal support (e.g., grants, tax incentives) and private investment for the technology. This could

hinder the overall goals of the RFS, such as economic development in rural areas. Prospects for

the cellulosic biofuels industry could be affected if EPA continues to incorrectly project annual

amounts of cellulosic biofuel production.

Legal Challenges

Mainly due to implementation issues, some aspects of the RFS have been challenged in the

courts. Since 2010, seven cases involving the EPA and its administration of the RFS have been

brought before a federal court.62 One case in particular is germane to the cellulosic biofuel

mandate: American Petroleum Institute v. EPA (hereinafter API v. EPA).

(...continued)

March 25, 2013.

Sen. Amy Klobuchar, “As EPA Finalizes Rule, Klobuchar, Grassley, Durbin, Thune, Franken, and Kirk Lead

Bipartisan Group of 37 Senators in Calling for a Strong Renewable Fuel Standard,” press release, April 23, 2015.

Biotechnology Industry Organization (Bio), Comment on EPA’s Proposed Rule: Renewable Fuel Standard Program:

Standards for 2014, 2015, and 2016 and Biomass-based Diesel Volume for 2017, July 27, 2015.

Quad County Corn Processors, Comment on EPA’s Proposed Rule: Renewable Fuel Standard Program: Standards

for 2014, 2015, and 2016 and Biomass-based Diesel Volume for 2017, July 24, 2015.

POET, “POET submits comments to EPA on RFS proposal,” press release, July 27, 2015.

Wyoming Refinery Company v. EPA, 787 F.3d 568 (D.C. Cir. 2015); Lion Oil Company v. EPA, 14-3405 (8th Cir.

2015); Monroe Energy, LLC v. EPA, 750 F.3d 909 (D.C. Cir. 2014); American Petroleum Institute v. EPA, 706 F.3d

474 (D.C. Cir. 2013); Vinmar Overseas, Ltd. v. OceanConnect, LLC, 2012 Westlaw 3599486 (S.D. Tex. Aug. 20,

2012), 2012 Westlaw 5989206 (S.D. Tex. Nov 29, 2012); Grocery Manufacturers Association v. EPA, 693 F.3d 169

(D.C. Cir. 2012); National Petrochemical & Refiners Association v. EPA, 630 F.3d 145 (D.C. Cir. 2010).

Congressional Research Service

The Renewable Fuel Standard (RFS): Cellulosic Biofuels

API challenged the EPA about two aspects of the RFS, and subsequently the challenge was

referred to the U.S. Court of Appeals. The first aspect, which is directly related to cellulosic

biofuels, was an objection to EPA’s 2012 cellulosic biofuels projection (i.e., whether EPA used an

appropriate methodology to estimate the amount of cellulosic biofuels that can be produced). The

court agreed with API and found that EPA’s methodology for making its cellulosic biofuel

projection did not take neutral aim at accuracy, and therefore it was an unreasonable exercise of

agency discretion.63 The court went on to explain that the Clean Air Act tasked EPA with

establishing a projection that aims at accuracy, not at deliberately indulging a greater risk of

overshooting than undershooting.64 The 2012 rule was vacated and remanded to EPA, which set

the final 2012 level at zero. EPA accepted the federal court’s decision to vacate the 2012

cellulosic biofuel standard, and in its 2014 proposed rule proposed to rescind the 2011 standard as

well.65 The second aspect of the petition was an objection to EPA not providing a reasoned

explanation for its refusal to reduce the 2012 advanced biofuels volume standard. The court

rejected this part of the petition. In subsequent rules issued by EPA, the agency appears to address

principles contained in the court ruling, such as, in its 2013 final rule, its responsibility to

accurately project how much cellulosic biofuel will be produced, not to “individually advance a

technology-forcing [cellulosic biofuels] agenda.”66

Uncertainty

One overwhelming theme is associated with the RFS cellulosic biofuel mandate: uncertainty. It

comes from all stakeholders—government and non-government. What will be the revised annual

cellulosic biofuel standard? When will the standard be announced? What federal funding sources

(e.g., tax incentives, farm bill energy provisions) exist for cellulosic biofuel facilities? How many

cellulosic biofuel plants exist? How many are operating? How much cellulosic biofuel will be

produced? Many times, the only known constant seems to be the statute itself. According to

many, such uncertainty can potentially wreak havoc on an emerging industry. This section

discusses some of the uncertainties.

One source of uncertainty, particularly for investors in cellulosic biofuel ventures, concerns EPA’s

waiver authority. Investors may fear that the full cellulosic biofuels mandate will continually be

waived to lower amounts by EPA, thus depriving them of the government-mandated market on

which they had originally based their investment. From this viewpoint, EPA’s proposal to lower

the 2014, 2015, and 2016 overall RFS may further hamper investment.

Another form of uncertainty for all involved parties is the delayed announcement of the proposed

annual renewable fuel standards. Under the Clean Air Act, each year’s standards are required to

be finalized by November 30 of the previous year, although the statute does not stipulate any

penalty or other action if this deadline is missed. The delay may lead to uncertainty in

investments and planning for the biofuel and petroleum industries, among others. EPA issued a

proposed rule for the 2014, 2015, and 2016 RFS annual standards in May 2015 and anticipates

issuing a final rule by November 30, 2015.

706 F.3d 474, *476.

706 F.3d 474, *479.

EPA, Enviroflash, Update - 2012 Cellulosic Biofuel Standard Mandate Issued, February 27, 2013; EPA, “2014

Standards for the Renewable Fuel Standard Program; Proposed Rule,” 78 Federal Register, November 29, 2013.

American Petroleum Institute v. EPA, 706 F.3d 474 (D.C. Cir. 2013).

Congressional Research Service

The Renewable Fuel Standard (RFS): Cellulosic Biofuels

Those in favor of continuing an RFS with a cellulosic biofuels component argue that adequate

production and consumption of cellulosic biofuels can be achieved in a cost-effective manner if

there is consistent federal policy, possibly allaying the concerns of some investors.67 However,

minimal actual production has led some to question the viability of cellulosic biofuels over the

long term.68 Furthermore, a cellulosic biofuels industry that has regularly not produced enough

biofuel to meet the annual standard has drawn criticism from groups—especially the petroleum

industry—that contend they are being unfairly targeted to purchase credits for a fuel that is

unlikely to be produced at the required levels.69 Last, investors and the cellulosic biofuels

community alike may be more apprehensive about the federal policy for advanced biofuels as

2016 draws nearer. This apprehension may be due to a provision in the RFS statute that requires

the EPA administrator, starting in 2016, to modify the applicable volumes of the RFS in their

entirety for subsequent years if the administrator waives the renewable fuel mandate, the

advanced biofuel mandate, the cellulosic biofuels mandate, or the biomass-based diesel mandate

by at least 20% for two consecutive years or by at least 50% for a single year.70

Background on Cellulosic Biofuels

As an important component of the RFS, production of cellulosic biofuels faces significant

technical and economic issues. Further, there are multiple cellulosic feedstocks and conversion

technologies that can be used to produce cellulosic biofuels. Cellulosic biofuels—which can be

liquid, solid, or gaseous—are fuels made from materials containing cellulose. 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), dedicated energy crops (e.g.,

switchgrass, hybrid poplar), and urban sources of waste (e.g., municipal solid waste).

The most widely discussed cellulosic biofuel is cellulosic ethanol for transportation.71 Cellulosic

ethanol differs from the cornstarch ethanol that dominates transportation biofuels in the United

States; it is made from feedstock with no or only limited food value, potentially results in lower

greenhouse gas emissions, and has a higher lifecycle energy balance.72 Converting cellulosic

feedstock to ethanol, however, is more expensive and difficult than converting cornstarch 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).73

John M. Biers, “Non-Food Ethanol Projects Coming to Life,” Dow Jones Newswires, November 20, 2012.

“Zero Dark Ethanol,” The Wall Street Journal, January 30, 2013.

“Oil Industry Sues EPA a Second Time Over RFS Mandate,” The Energy Daily, July 26, 2012.

42 U.S.C. 7545 (o)(7)(F). For more information, see CRS Report R44045, The Renewable Fuel Standard (RFS):

Waiver Authority and Modification of Volumes, by (name redacted).

For more information on cellulosic biofuels, see CRS Report RL34738, Cellulosic Biofuels: Analysis of Policy Issues

for Congress, by (name redacted) et al.

For more information on ethanol, see CRS Report RL33290, Fuel Ethanol: Background and Public Policy Issues, by

(name redacted)

Cellulose feedstocks can also be used to provide heat or generate electricity via gasification, combustion, anaerobic

digestion, and other conversion processes. For more information, see CRS Report R40667, Anaerobic Digestion:

(continued...)

Congressional Research Service

The Renewable Fuel Standard (RFS): Cellulosic Biofuels

Potential Benefits of Cellulosic Biofuels

It has been anticipated that cellulosic biofuel production would assist various energy,

environment, and economic efforts. Cellulosic biofuel production has not yet reached full scale,

making its impact difficult to quantify. However, some general potential benefits can be explored.

Energy Security

Cellulosic biofuel production—at full capacity and with the proper infrastructure—may expand

the fuel types available to the average consumer. This could help to strengthen energy security,

and galvanize a market for services, technologies, and products that are associated with its

production and use. Any such developments are likely to be contingent, at a minimum, on a

cellulosic biofuel that is sustainable and has an energy density suitable to what the energy

industry has come to expect from fossil fuels.

Environment

Cellulosic biofuels, if they can be produced at scale, may result in some environmental benefits,

including greenhouse gas emission reduction, air quality improvement, and the use of more

water-efficient strategies, among other things. EISA requires any cellulosic biofuel registered

with the RFS to have lifecycle greenhouse gas emissions that are at least 60% less than the

baseline lifecycle greenhouse gas emissions (i.e., of the gasoline or diesel it is to replace).74 One

lifecycle greenhouse gas emission analysis of petroleum gasoline, corn ethanol, and cellulosic

ethanol reported that cellulosic ethanol offered the largest reductions in greenhouse gas

emissions.75 Further, within the cellulosic biofuel feedstock arena, it may be that greater

greenhouse gas emissions reductions are possible by using forest-based feedstocks as opposed to

agricultural-based feedstocks.76 Actual greenhouse gas (GHG) emission results for cellulosic

biofuel production will vary based on a number of factors, including the time frame of the

assessment, the feedstock used, the cellulosic biofuel production technology type, and more.

Robust analyses of the GHG emission reduction possible from cellulosic biofuel production will

require more data from biofuel facilities and feedstock suppliers as facilities come online. While

more operational plants are needed to gauge the air quality impact and the water use from

cellulosic biofuel production, it may be that technological advances over time will lead to

adoption of more efficient water use and better air pollution control, based partially on lessons

learned from conventional corn ethanol facilities.77

(...continued)

Greenhouse Gas Emission Reduction and Energy Generation, by (name redacted), and CRS Report R41440, Biopower:

Background and Federal Support, by (name redacted).

42 U.S.C. 7545 (o)(1)(E).

Michael Wang, Jeongwoo Han, and Zia Haq, et al., “Energy and greenhouse gas emission effects of corn and

cellulosic ethanol with technology improvements and land use changes,” Biomass and Bioenergy, vol. 35 (2011).

Jesse Daystar, Ronalds Gonzalez, and Carter Reeb, et al., “Economics, Environmental Impacts, and Supply Chain

Analysis of Cellulosic Biomass for Biofuels in the Southern US: Pine, Eucalyptus, Unmanaged Hardwoods, Forest

Residues, Switchgrass, and Sweet Sorghum,” Bioresources, vol. 9, no. 1 (2014). The study considered pine, eucalyptus,

unmanaged hardwood, and forest residuals to be forest-based feedstock, and switchgrass and sweet sorghum to be

agriculture-based feedstock.

National Research Council, “Water Implications of Biofuels Production in the United States,” 2008; Donna Jones,

“Potential air emission impacts of cellulosic ethanol production at seven demonstration refineries in the United States,”

Journal of the Air and Waste Management Association, vol. 60 (September 2010).

Congressional Research Service

The Renewable Fuel Standard (RFS): Cellulosic Biofuels

Rural Economic Development

Thus far, cellulosic biofuel production facilities have been constructed in close proximity to the

feedstock to be utilized (e.g., crop residue, forestry residue). With the exception of some eligible

feedstocks (e.g., yard waste, food waste), this would place cellulosic biofuel production facilities

in rural areas, which could enhance some rural economies. A transportation conundrum may

result from cellulosic biofuel production facilities being located in rural areas, specifically the

transfer of fuel to where it is needed most, which is areas with high demand for transportation

fuel (e.g., large cities). Currently, availability of rail capacity and tank cars for conventional

ethanol is limited—a situation that could be exacerbated if demand grows with additional

cellulosic biofuel production.

Potential Challenges for Cellulosic Biofuels

U.S. production of cellulosic biofuels has had a slow start. Impediments to increasing capacity

involve a variety of factors, including financing, feedstock eligibility, and feedstock supply,

among others.

Financing

The production of cellulosic biofuels has been reported to be “complex, capital-intensive, and

costly.”78 Commercial cellulosic biofuel facilities are estimated to cost hundreds of millions of

dollars, significantly more than a traditional corn ethanol plant, especially when measured in

terms of the amount of biofuel produced (measured in million gallons per year, or mgy). For

example, the company INEOS Bio reports that its Indian River 8 mgy production capacity plant

cost approximately $130 million.79 American Process, Inc., reports that its Alpena 0.8 mgy pilot

plant cost approximately $36 million.80 POET-DSM reports that its 25 mgy commercial cellulosic

ethanol plant, which opened in September 2014, cost approximately $250 million.81 DuPont

reports that its 30 mgy cellulosic ethanol plant cost approximately $225 million.82 In comparison,

a 40 mgy corn ethanol plant cost approximately $80 million to construct in 2006.83 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

commercial scale.84 These costs, and the perceived financial risk, are likely to decrease if a

significant number of commercial-scale plants come online and prove to be economically viable.

U.S. Congressional Budget Office, The Renewable Fuel Standard: Issues for 2014 and Beyond, June 2014.

Email from Bryan Stockton of ML Strategies, December 13, 2012.

Email from Kim Nelson of American Process, Inc., December 11, 2012.

POET-DSM, Testimony of Kevin Potas, Business Development Manager at POET-DSM Advanced Biofuels, EPA

Public Hearing for the 2014 Standards for the Renewable Fuel Standard Program, December 5, 2013,

http://www.poetdsm.com/testimony. POET-DSM, “First commercial-scale cellulosic ethanol plant in the U.S. opens

for business,” press release, September 3, 2014, http://poetdsm.com/pr/first-commercial-scale-cellulosic-plant.

DuPont Cellulosic Ethanol: Commercializing Advanced Renewable Fuel in Iowa, 2013, http://biofuels.dupont.com/

fileadmin/user_upload/live/biofuels/DuPont_Nevada_CE_final.pdf.

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.

For more information on federal spending for cellulosic biofuels, see CRS Report RL34738, Cellulosic Biofuels:

Analysis of Policy Issues for Congress, by (name redacted) et al.

Congressional Research Service

The Renewable Fuel Standard (RFS): Cellulosic Biofuels

Feedstock Eligibility

When determining feedstock eligibility for the RFS, definitions matter. Due to the many biofuel

programs at various federal agencies and tax incentives, there is a plethora of biomass definitions

and other terminology that describe biomass feedstock for cellulosic biofuel production.

However, only the definitions contained in EISA Section 201 may deem a feedstock or fuel

eligible for the RFS.85

Feedstock Supply

Another cellulosic biofuel production challenge is feedstock contracts, which will likely cover

multiple years. Cellulosic biofuel production companies generally want to “lock in” their

feedstock supply, preferably at a set price for a predetermined time in order to have better

projections of operational costs. Agricultural and forestry producers may not agree to a contract

for a cellulosic feedstock that requires a lengthy time commitment. For example, it generally

takes three years for switchgrass crops to reach maturity.86 As a result, a producer would have to

commit its land to one particular cellulosic feedstock crop for a number of years, thus limiting the

producer’s choice to grow other, potentially more remunerative crops during that period. Some

are concerned about collecting cellulosic feedstocks in a way that could possibly harm the

landscape (e.g., soil carbon, water quality). One potential strategy is the use of conservation

planning for any land involved in cellulosic feedstock collection.87 Conservation planning allows

a producer to maintain, protect, and improve the natural resources of the land, helping to ensuring

that those resources remain in the best possible condition and exist in the future. For instance, a

producer who implements soil and water conservation techniques, and other non-conservation

planning measures, should be able to annually provide feedstock to a biofuel producer with

minimal natural resource disturbance. Additionally, there are concerns about the equipment and

time needed to harvest, transport, and store the cellulosic feedstock. Some could contend that

these concerns are perfectly normal for an emerging business model, and that the feedstock

supply challenges will be overcome as more cellulosic biofuel production plants come into

operation. In early 2013, EPA reported that the industry had made significant progress regarding

There are some important distinctions about the renewable biomass definition for the RFS contained in EISA as

compared to other laws. For example, the renewable biomass definition for the RFS under EISA does not allow for

biomass removed from federal lands, and excludes crops from forested lands. There have been ongoing discussions to

modify both the cellulosic biofuel definition and the renewable biomass definition for the RFS under EISA. Some

suggest that broadening the cellulosic biofuel definition to include more feedstocks and fuel pathways could help

industry to meet the annual RFS mandates. It is not clear that EPA has the capacity to address such additions.

Moreover, some argue that a renewable biomass definition that allows biomass removal from federal lands 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. Further, the definition of biomass under EISA also excludes most municipal solid

waste (MSW), which some view as a potential source for conversion to biofuels. For more information on biomass

definitions, see CRS Report R40529, Biomass: Comparison of Definitions in Legislation, by (name redacted).

University of Tennessee, Growing and Harvesting Switchgrass for Ethanol Production in Tennessee, SP701-A,

http://www.utextension.utk.edu/publications/spfiles/SP701-A.pdf.

For example, the USDA Natural Resources Conservation Service and DuPont signed a memorandum of

understanding with the goal “to safeguard natural resources on private lands used to supply bio-based feedstocks for

cellulosic ethanol production.” U.S. Department of Agriculture, “USDA Announces New Conservation Collaboration

with DuPont to Promote Sustainable Harvesting of Bio-based Feedstocks for Cellulosic Ethanol,” press release, March

29, 2013.

Congressional Research Service

The Renewable Fuel Standard (RFS): Cellulosic Biofuels

feedstock supply, citing companies that have secured feedstock contracts with local agricultural

producers.88

Existing Plant Capacity

In terms of starting commercial-scale cellulosic biofuel production, 2014 could be deemed as

having been a banner year for the cellulosic biofuels industry, with the opening of three

commercial-scale cellulosic ethanol facilities. Quad County Corn Processors in Iowa started

producing cellulosic ethanol from corn kernel fiber in July 2014. The “bolt-on” project, which has

a production capacity of up to 2 million gallons of cellulosic ethanol per year, is an add-on to the

existing 35 mgy cornstarch ethanol facility.89 September 2014 brought the commencement of the

POET-DSM Project Liberty plant in Iowa, a commercial-scale facility producing cellulosic

ethanol from corn stover with a production capacity of up to 25 mgy.90 And in October 2014,

Abengoa opened a commercial-scale cellulosic ethanol plant in Kansas.91 The plant produces

cellulosic ethanol from crop residues and has a production capacity of up to 25 mgy.

In its proposed rule, EPA provides information on eight companies and one additional industry

(compressed and liquefied natural gas) with the potential to produce cellulosic biofuels by 2016.92

EPA’s assessment includes their biofuel production estimates, technology process, and anticipated

start dates. Four of the companies identified in the 2014 proposed rule were also identified in the

2013 final rule.

As observed over the last few years, due to unforeseen financial and technical issues, it can be

difficult to determine when or if cellulosic biofuel companies will actually come online and how

much cellulosic biofuel will be produced. In 2010, it was reported that approximately two dozen

demonstration- or pilot-scale cellulosic ethanol plants existed in the United States.93 The

Advanced Ethanol Council reported in 2012 that there were nine cellulosic biofuel

pilot/demonstration facilities, eight commercial facilities under construction or commissioning,

and seven commercial facilities at the engineering stage.94 Environmental Entrepreneurs projects

EPA, “Regulation of Fuels and Fuel Additives: 2013 Renewable Fuel Standards; Final Rule,” 78 Federal Register,

August 15, 2013. In its 2014 proposed rule, EPA briefly mentions a feedstock contract for one of the facilities projected

to produce cellulosic biofuel in 2015. This may lead some to believe that feedstock supply is of minor concern.

However, feedstock supply and any challenges it may cause will be more fully understood once multiple commercialscale facilities are actively operating.

Iowa Renewable Fuels Association, “Quad County Corn Processors Produces First Gallons of Cellulosic Ethanol in

Iowa,” press release, July 1, 2014.

POET-DSM, “First commercial-scale cellulosic ethanol plant in the U.S. opens for business,” press release,

September 3, 2014, http://poetdsm.com/pr/first-commercial-scale-cellulosic-plant.

Abengoa, “Abengoa celebrates grand opening of its first commercial-scale next generation biofuels plant,” press

release, October 17, 2014.

EPA, “Renewable Fuel Standard Program: Standards for 2014, 2015, and 2016 and Biomass-Based Diesel Volume

for 2017; Proposed Rule,” 80 Federal Register 33099, June 10, 2015.

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;CRS Report R41460,

Cellulosic Ethanol: Feedstocks, Conversion Technologies, Economics, and Policy Options, by (name redacted); 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.

Advanced Ethanol Council (AEC), Cellulosic Biofuels Industry Progress Report 2012-2013, December 2012,

http://ethanolrfa.org/page/-/PDFs/AEC%20Cellulosic%20Biofuels%20Industry%20Progress%20Report%2020122013.pdf?nocdn=1. AEC acknowledges the report does not profile all cellulosic biofuel projects under development in

the United States.

Congressional Research Service

The Renewable Fuel Standard (RFS): Cellulosic Biofuels

that 17 commercial cellulosic biofuel facilities will come online in the United States by 2017,

with at least 12 of the facilities producing cellulosic ethanol.95

Financial Assistance

Several forms of federal financial support are available for cellulosic biofuel production,

including the Department of Energy (DOE) Loan Guarantee Program (LGP), the USDA

Biorefinery Renewable Chemical, and Biobased Manufacturing Assistance Program (BAP), the

Biomass Crop Assistance Program (BCAP), and tax incentives. For example, since at least 2008,

the government has provided tax incentives to support cellulosic biofuel production.96 Other

sources of financial assistance include smaller grants awarded by federal agencies for unique

initiatives.97

To help promote cleaner energy technologies, including cellulosic biofuel production

technologies, Congress established the DOE LGP.98 Loans may not exceed 80% of total project

costs. The DOE Section 1703 loan program supports clean energy technologies that are high

technology risks (e.g., biomass, solar, alternative fuel vehicle technologies). In addition, the DOE

Section 1705 loan program, which expired in 2011, supported renewable energy systems, electric

power transmission systems, and leading-edge biofuels.99 Some in the industry are concerned that

the LGP is not being carried out at a pace responsive to market momentum for cellulosic

biofuels.100

The USDA BAP assists in the development of new and emerging technologies for advanced

biofuels.101 BAP provides competitive grants and loan guarantees for construction and/or

retrofitting of demonstration-scale biorefineries to demonstrate the commercial viability of one or

more processes for converting renewable biomass to advanced biofuels. Because BAP has not

received any discretionary funding needed to implement the grant portion of the program, USDA

has only implemented the loan guarantee portion of the program using mandatory funding. USDA

reports that seven biorefineries were granted a BAP conditional commitment for a loan guarantee

Environmental Entrepreneurs, E2 Advanced Biofuel Market Report 2014, 2014. CRS tallied commercial facilities

listed in Appendix B that are to be located in the United States and projected to produce cellulosic biofuel by 2017.

For more information, see CRS Report R42566, Alternative Fuel and Advanced Vehicle Technology Incentives: A

Summary of Federal Programs, by (name redacted) et al.

; P.L. 113-295.

For example, USDA and DOE have both provided grants to support advanced biofuels.

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

Section 1703 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. For more information on loan guarantees, see CRS Report R42152, Loan Guarantees for Clean Energy

Technologies: Goals, Concerns, and Policy Options, by (name redacted)

In 2011, a Section 1705 loan for $132.4 million was awarded to Abengoa Bioenergy Biomass of Kansas, LLC for a

commercial-scale cellulosic ethanol project. U.S. Department of Energy, “Energy Department Finalizes $132 Million

Loan Guarantee to Support the Abengoa Bioenergy Project,” press release, September 29, 2011, http://energy.gov/

articles/energy-department-finalizes-132-million-loan-guarantee-support-abengoa-bioenergy-project.

100

Renewable Fuels Association, “2010 State of the Industry Address,” 2010 National Ethanol Conference, Orlando,

FL, February 16, 2010, http://ethanolrfa.3cdn.net/b76292e4bf133edd34_e1m6bhh33.pdf.

101

For more information, see P.L. 111-5 and CRS Report R43416, Energy Provisions in the 2014 Farm Bill (P.L. 11379), by (name redacted)

Congressional Research Service

The Renewable Fuel Standard (RFS): Cellulosic Biofuels

at a total of approximately $704 million from FY2009 through FY2012.102 Under the 2014 farm

bill (P.L. 113-79), BAP received mandatory funding of $100 million in FY2014 for loan

guarantees and $50 million for FY2015 and FY2016. Subsequently, for FY2015, Congress

limited BAP mandatory funding to $30 million (P.L. 113-235).

Another federal government program, focused on feedstock development, is the BCAP.103 The

two main program objectives 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 materials for

use in a biomass conversion facility. USDA issued the BCAP final rule on October 27, 2010,

implementing both program components. Since the program’s inception, 11 BCAP project areas

have been established.104 Outlays under BCAP reached $248 million in FY2010 but have since

declined to an estimated $13.6 million in FY2014. The 2014 farm bill authorized mandatory

funding of $25 million annually for FY2014 through FY2018. Subsequently, for FY2015,

Congress limited mandatory funds for BCAP to $23 million (P.L. 113-235).

Conclusion

Cellulosic biofuel has supporters and detractors. Proponents suggest that increased use of

cellulosic biofuels for transportation could potentially help to reduce U.S. dependence on foreign

oil, strengthen rural economies, and improve the environment. In contrast, others argue that

cellulosic biofuels at RFS volumes may never materialize, and would require a substantial

feedstock supply that has yet to be verified and may never be cost-competitive without

government support.

Cellulosic biofuel production is not at the stage many had predicted when EISA was enacted. The

lower production levels make it nearly impossible to meet the RFS annual cellulosic biofuel

volume obligations in the near future. According to many, the crux of the matter could be that a

lack of cellulosic biofuel production may eventually jeopardize the entire advanced biofuel

component of the RFS. Year after year, the same reasons are given as to why production has

stagnated—technological setbacks, lack of financing, etc. Additionally, uncertainty is a recurring

theme both for cellulosic biofuel production and RFS implementation. Some observers maintain

that it is questionable whether the industry will make substantial progress toward the goals that

Congress established, unless consistent steps are taken by all stakeholders, including clear

direction from Congress; prompt program implementation by the EPA; assured financial and

technical support from USDA and DOE; and investment from the private sector.

102

Email from Ashley Martin, USDA, March 1, 2013.

BCAP receives its authorization from Title IX of the Farm Security and Rural Investment Act of 2002 (P.L. 107171) 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.

104

BCAP project areas are specific geographic areas where producers may enroll land to grow specified biomass crops.

Participants may be eligible to receive financial and technical assistance as well as annual payments to establish these

crops.

103

Congressional Research Service

The Renewable Fuel Standard (RFS): Cellulosic Biofuels

Author Contact Information

(name redacted)

Specialist in Agricultural Conservation and Natural

Resources Policy

r[ edacted]@crs.loc.gov , 7-....

Congressional Research Service

EveryCRSReport.com

The Congressional Research Service (CRS) is a federal legislative branch agency, housed inside the

Library of Congress, charged with providing the United States Congress non-partisan advice on

issues that may come before Congress.

EveryCRSReport.com republishes CRS reports that are available to all Congressional staff. The

reports are not classified, and Members of Congress routinely make individual reports available to

the public.

Prior to our republication, we redacted names, phone numbers and email addresses of analysts

who produced the reports. We also added this page to the report. We have not intentionally made

any other changes to any report published on EveryCRSReport.com.

CRS reports, as a work of the United States government, are not subject to copyright protection in

the United States. Any CRS report may be reproduced and distributed in its entirety without

permission from CRS. However, as a CRS report may include copyrighted images or material from a

third party, you may need to obtain permission of the copyright holder if you wish to copy or

otherwise use copyrighted material.

Information in a CRS report should not be relied upon for purposes other than public

understanding of information that has been provided by CRS to members of Congress in

connection with CRS' institutional role.

EveryCRSReport.com is not a government website and is not affiliated with CRS. We do not claim

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.