Advanced Biofuel Market Report 2013

This report catalogs the growth and challenges of the advanced biofuel industry and provides updates on developments since the publication of last year's report in 2012. The scope of this work includes active advanced biofuel projects in the United States and Canada. Each project included in this report achieves at least a 50% reduction in carbon intensity relative to a petroleum baseline, using the direct and indirect effects as measured by the California Air Resources Board. E2 developed a low-end and high-end methodology to estimate future capacities. For low-end estimates, our figures include facilities that have demonstrated progress towards production. For high-end estimates, we examined all active companies we could identify, but discounted some capacity projections. We also used Cleantech Group's industry investment data, as well as input from companies, to understand the probability of completion and develop estimates of investment in the industry.

For these fuel capacities to be achieved, each project would need to be completed on the schedule we have projected. Comparisons of our reports over the last three years show that some projects are complete on schedule, some projects are deferred, others are canceled due to market conditions, and some that we did not identify are successful.

Key Figures

• Capacity for 2013 is 1.0 billion gallons gasoline equivalent
• Capacity for 2015 is between 1.4 and 1.6 billion gallons gasoline equivalent. This equates to 0.7% of total U.S. transportation fuel use.
• 160 commercial scale facilities planned, under construction, or complete from 159 companies
• 13 demonstration facilities in existence
• Private investment in the advanced biofuel industry totals over $4.85 billion since 2007
• Public grants exceed $600 million since 2008. Currently 20 biorefinery projects are public grantees.
• Federal loan guarantees exceed $940 million since 2008. Nine of the current biorefinery projects have received these loan guarantees.

After completing our analysis, a number of trends emerged. The capacity projections are sufficient to meet the federal Renewable Fuel Standard (RFS) and California's Low Carbon Fuel Standard (LCFS) targets through 2016, given the other fuels and technologies that can be used in each program. Capacity in the industry continues to grow, and biodiesel remains the dominant advanced biofuel today and through 2016. Drop-in renewable hydrocarbons, which may be blended directly into standard gasoline, diesel, or jet fuel, show significant progress and we expect them to contribute more substantially to overall advanced biofuel capacity over time. Industry growth is driven primarily by federal and state policies, specifically the RFS and the LCFS. The substantial public investment in the advanced biofuel industry comes primarily from the Department of Agriculture, the Department of Energy, and the Department of Defense. Regulatory certainty, including the continued existence of renewable fuel policies, the permitting of pathways, non-compliance fees paid by oil and gas companies, and agency reaction to market conditions, remains unstable and is a barrier to commercialization for many projects. Capital and operating expenses also continue to be a significant challenge for many advanced biofuel developers. While some companies are retrofitting existing refineries for biofuel production, others will need to construct new facilities, which requires substantial investment. Looking towards 2016, there is real potential for advanced biofuels to scale up. Today, numerous facilities are on track towards commercialization, and the industry is moving steadily forward. New investments and regulatory certainty will help ensure the successful commercialization of these projects.