Next-Generation Biofuels: Near-Term Challenges and Implications for Agriculture

This report assesses the short-term outlook for production of next-generation biofuels and the near-term challenges facing the sector. Next-generation U.S. biofuel capacity should reach about 88 million gallons in 2010, thanks in large measure to one plant becoming commercially operational in 2010, using noncellulosic animal fat to product green diesel. U.S. production capacity for cellulosic biofuels is estimated to be 10 million gallons for 2010, much less than the 100 million gallons originally mandated by the 2007 Energy Independence and Security Act. Near-term sector challenges include reducing high capital and production costs, acquiring financial resources for precommercial development, developing new biomass supply arrangements, many of which will be with U.S. farmers, and overcoming the constraints of ethanol’s current 10-percent blending limit with gasoline.