Selected Issues Related to an Expansion of the Renewable Fuel Standard (RFS) [December 3, 2007]

High petroleum and gasoline prices, concerns over global climate change, and the desire to promote domestic rural economies have greatly increased interest in biofuels as an alternative to petroleum in the U.S. transportation sector. Biofuels, most notably corn ethanol, have grown significantly in the past few years as a component of U.S. motor fuel supply. Ethanol, the most commonly used biofuel, is blended in nearly half of all U.S. gasoline (at the 10% level or lower in most cases). However, current biofuel supply only represents about 4% of total gasoline demand. While recent proposals have set the goal of significantly expanding biofuel supply in the coming decades, questions remain about the ability of the U.S. biofuel industry to meet rapidly increasing demand. Current U.S. biofuel supply relies almost exclusively on ethanol produced from Midwest corn. In 2006, 20% of the U.S. corn crop was used for ethanol production. To meet some of the higher ethanol production goals would require more corn than the United States currently produces, if all of the envisioned ethanol was made from corn. Due to the concerns with significant expansion in corn-based ethanol supply, interest has grown in expanding the market for biodiesel produced from soybeans and other oil crops. However, a significant increase in U.S. biofuels would likely require a movement away from food and grain crops as feedstocks. Other biofuel feedstock sources, including cellulosic biomass, are promising, but technological barriers make their future uncertain. Therefore, some proposals would require ever-larger amounts of biofuels produced from feedstocks other than corn starch, including sugarcane, oil crops, and cellulose, to promote the development of these fuels. The Senate-passed energy bill (H.R. 6) would require the use of 36 billion gallons of renewable fuels annually in 2022, of which only 15 billion gallons could be ethanol from corn starch. The remaining 21 billion gallons would be so-called " advanced biofuels. " The current RFS would only require the use of 7.5 billion gallons in 2012, increasing to an expected 8.6 billion gallons in 2022, of which only 250 million gallons of cellulosic biofuels would be required. Issues facing the U.S. biofuels industry include potential agricultural " feedstock " supplies, and the associated market and environmental effects of a major shift in U.S. agricultural production; the energy supply needed to grow feedstocks and process them into fuel; and barriers to expanded infrastructure needed to deliver more and more biofuels …