Developing an Advanced Biofuels Industry: State Policy Options for Lean and Uncertain Times

This report by the Environmental and Energy Study Institute (EESI) examines the state of the advanced biofuels industry in the United States following the 2008 economic recession. It analyzes national policy trends, identifies critical barriers to commercialization—including technological hurdles, market volatility, and regulatory uncertainty—and provides ten specific policy recommendations for state governments to support sustainable, local biofuel development during periods of limited fiscal capacity.

• The advanced biofuels industry faces a significant 'valley of death' between pilot projects and full-scale commercialization, exacerbated by frozen credit markets and risk-averse lenders.
• The Renewable Fuel Standard 2 (RFS2), established by the Energy Independence and Security Act of 2007, mandated increasing renewable biofuels production from 9 billion gallons in 2008 to 36 billion gallons by 2022, with a minimum of 16 billion gallons coming from cellulosic materials.
• The corn ethanol industry is approaching a 'blend wall' where market saturation is expected by 2012 at approximately 15-17 billion gallons of annual production, given current E10 blend rates and vehicle efficiency.
• State governments are encouraged to inventory bioenergy resources and develop long-range plans to identify local competitive advantages and engage stakeholders.
• The report recommends that states develop sustainable feedstock production guidelines to ensure biomass production sustains ecosystems and protects biodiversity and water quality.
• States can use land easement programs to provide financial incentives for landowners to grow cellulosic feedstocks on marginal lands, integrating production with conservation goals.
• The report suggests establishing state-level minimum renewable fuel standards or Low Carbon Fuel Standards (LCFS) to create stable local markets, noting that LCFS are more technology-neutral.
• Interagency cooperation and interstate collaboration are recommended to reduce regulatory uncertainty, pool resources, and influence larger markets.
• Tax incentives for producers and retail distributors are identified as a way to overcome high upfront costs, particularly when they are long-term and transferable.
• States can leverage limited resources to attract larger federal and private investments through grants, loans, and loan guarantees to move technologies to commercial scale.

APA

Environmental and Energy Study Institute (2010). Developing an Advanced Biofuels Industry: State Policy Options for Lean and Uncertain Times. https://www.eesi.org/files/state_biofuel_021610.pdf

Chicago

Environmental and Energy Study Institute. Developing an Advanced Biofuels Industry: State Policy Options for Lean and Uncertain Times. 2010. https://www.eesi.org/files/state_biofuel_021610.pdf.

Wikipedia

{{cite report |author=Environmental and Energy Study Institute |title=Developing an Advanced Biofuels Industry: State Policy Options for Lean and Uncertain Times |date=16 February 2010 |url=https://www.eesi.org/files/state_biofuel_021610.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{environmentalandenergystudyinstitute2010developing, author = {{Environmental and Energy Study Institute}}, title = {{Developing an Advanced Biofuels Industry: State Policy Options for Lean and Uncertain Times}}, institution = {Environmental and Energy Study Institute}, year = {2010}, month = feb, url = {https://www.eesi.org/files/state_biofuel_021610.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }