Biofuel production capacity has increased from 437 million gallons in 2011 to more than 685 million gallons in 2012, according to a new report from Environmental Entrepreneurs (E2). By 2015, the industry has the potential to produce 1.6 billion to 2.6 billion gallons of renewable fuel, the report forecasts.
According to E2, standards like California’s Low Carbon Fuel Standard (LCFS) and the federal Renewable Fuel Standard (RFS2) create an incentive for investors and biofuel companies to continue to innovate and increase biofuel production, which in turn will drive down costs and carbon emissions.
The EPA’s RFS2 requires US fuel companies to ensure that about 9 percent of their gasoline is made up of ethanol this year. The California LCFS, part of the state’s AB 32 climate change legislation, requires a reduction of 10 percent in the carbon intensity of California’s transportation fuels by 2020. It provides an incentive to produce advanced biofuels, which come from non-food based sources.
E2 reports that California uses about 18 billion gallons of transportation fuel each year, and transportation fuels produce about 40 percent of the state’s annual greenhouse gas emissions.
At least 27 new or retrofitted biofuel refineries are expected to come online by 2015 to meet potential demand from the LCFS and the RFS2, according to the E2 report. Three of these will be located in California, with an additional two demonstration facilities in the state.
California is already home to eight advanced biodiesel facilities. Nationally, between 18,407 and 47,700 new jobs could be created by the growth in the biofuels industry if the federal Renewable Fuel Standard, along with standards in California and other states, are implemented as planned, the report says.
Advanced biofuel production costs will continue to decrease as well, the organization says. According to the report, at capacity companies will produce at $0.60 to $3.50 per gallon, depending on the feedstock and technology. E2 says it’s difficult to compare advanced biofuel production costs directly to petroleum production costs, but says it expects this price range to be competitive.
In August, eight biofuels groups formed the Biofuels Producers Coordinating Council, in reaction to calls to limit the RFS2 because of this year’s drought. The coalition aims to defend the renewable fuel standard.