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

The document analyzes the challenges facing the U.S. advanced biofuels industry, including the 'valley of death' between pilot projects and commercialization, volatile petroleum prices, and regulatory uncertainties. It argues that while the federal government provides essential broad-scale support, state governments are uniquely positioned to guide the industry by leveraging local geography and resources. The report proposes ten specific policy options for states, ranging from resource inventorying and sustainable feedstock guidelines to the implementation of low carbon fuel standards and interagency cooperation, highlighting examples from states like California, Oregon, and Tennessee.

• The advanced biofuels industry faces a significant financing gap known as the 'valley of death' between pilot projects and full-scale commercialization, which is exacerbated by risk-averse lenders in frozen credit markets.
• The Renewable Fuel Standard 2 (RFS2) mandated an increase in renewable biofuels production from 9 billion gallons in 2008 to 36 billion gallons by 2022, including a minimum of 16 billion gallons from cellulosic materials.
• Corn ethanol production is approaching a 'blend wall'—market saturation—estimated to occur around 2012 at 15-17 billion gallons of annual production, given current E10 blend rates and vehicle efficiency.
• State-level policy options to support the industry include creating sustainable feedstock guidelines, establishing minimum renewable fuel standards, and enacting low carbon fuel standards (LCFS).
• California's Low Carbon Fuel Standard, entering into force in 2011, aims to reduce the carbon intensity of transportation fuels by 10 percent by 2020, potentially reducing GHG emissions by 13 million metric tons per year.
• Interstate cooperation, such as the I-65 Biofuel Corridor involving Alabama, Tennessee, Kentucky, and Indiana, helps create infrastructure that allows users to travel from the Great Lakes to the Gulf of Mexico with consistent refueling access.
• The use of land easements can provide financial incentives for landowners to produce cellulosic feedstocks on marginal lands, as seen in Minnesota's Reinvest in Minnesota – Clean Energy Program (RIM-CE).
• State-funded R&D initiatives, such as Tennessee's $70 million commitment to the University of Tennessee Biofuels Initiative, aim to make cellulosic biofuels commercially viable and generate significant local tax revenue and jobs.
• Tax incentives can be used to target specific barriers, such as Oregon's tax credit for the production and collection of biomass feedstock, which makes it economically viable to remove logging residues from forests.

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} }