Biofuels Well Below US Targets, Government Says

Cellulosic biofuels will likely remain well below targets set by the Energy Independence and Security Act of 2007, according to the US Energy Information Administration (EIA).

That law set a target level of 500 million gallons of cellulosic biofuels for 2012 and 1 billion gallons for 2013, growing to 16 billion gallons by 2022. The US only produced .004 percent of the 2012 target amount last year.

In 2012, companies produced about 20,000 gallons of cellulosic biofuel using wood waste, sugarcane bagasse and other biomass. EIA estimates this output could grow to more than 5 million gallons in 2013; it says several commercial-scale facilities are ramping up operations. Even more plants, with proposed capacity of about 250 million gallons, could begin production by 2015.

But the path to commercial biofuels has been rocky with several projects — including one from BP Biofuels in Highlands County, Fla. — getting cancelled before starting construction, EIA says.

Roadblocks include difficulties obtaining financing and scaling up technology. Additionally, some companies have moved away from biofuels because of the increased availability of low-cost natural gas. Biofuel project production costs remain higher than those of petroleum-based fuels on both a volumetric and energy-content basis.

In January, a US federal court struck down the 2012 Renewable Fuel Standard target for refiner use of cellulosic biofuels. Refiners and importers would have been required to pay $8 million for credits to fulfill the 2012 mandate. But a week later the EPA said it still planned to raise, year-on-year, the amount of cellulosic biofuels that refiners must blend into their gasoline and diesel.

EIA forecasts that liquid fuels and electricity will be the primary products of this industry in the near term, but says many companies are developing technologies that use cellulosic biomass to produce intermediate chemicals, including butanediol, polymers, succinic acid, paraxylene, and others. The agency says that over the medium- to long-term, these technologies have the potential to improve business cases for producers by increasing margins and diversifying revenue sources.

A report published earlier this month by Lux Research says biofuel mandates and growth in the biochemicals industry are expected to triple demand for biomass by 2030, placing pressure on available feedstocks.