Image Source: Pixabay

Twenty years ago, with the Energy Policy Act of 2005, the US decided to encourage “biofuels” in a big way with the Renewable Fuel Standard (RFS) program, which started with RFS1 and later was amended to RFS2. Gabriel E. Lade and Aaron Smith provide an overview of what has happened since then in "Biofuels: Past, Present, and Future” (Annual Review of Resource Economics, 2025, 17: 105-125).

Probably the main goal of encouraging biofuels was to reduce the extent of US energy dependence on imported oil. However, another important goal was the idea that if fuel could come from crops, and the the carbon dioxide emitted from burning the fuel could be absorbed into next year’s crops, biofuels could be part of reducing overall carbon emissions. The general plan back in 2005 was that biofuels might begin with using corn to make ethanol, which could be added to gasoline. However, the hope was to move toward producing biofuels not from corn–which has a number of other uses–and toward producing ethanol from nonedible parts of plants that were currently being thrown away, or from nonedible plants that could grow with relatively little cultivation, like switchgrass. However, the technology for converting plants other than corn to biofuels, at a competitive price, has been slow to develop. Lade and Smith write:

Before 2005, biofuels comprised little of the country’s energy consumption; ethanol made up less than 3% of gasoline, and biomass-based diesel use was negligible. In 2024, each biofuel comprises more than 10% of the corresponding fuel pool. … Nearly every gallon of gasoline sold in the United States contains 10% ethanol. However, all ethanol is made from corn; it is not made from the nonedible portion of plants grown on marginal lands …

Thus, there are several types of biofuels currently in play: the conventional corn-based ethanol that is added to gasoline; cellulosic ethanol that is now made from natural gas derived from offbeat sources (as discussed in a moment);biomass-based biodiesel fuel that is based on vegetable oils like soybean and canola oil, along with animal fats and recycled cooking oil.

The shift to “cellulosic” biofuel from non-corn plant sources hasn’t gone well, but the push for biofuels led to some other sources of these fuels. Lade and Smith write:

Cellulosic ethanol production never materialized because no company could produce it profitably at a large scale. A handful of commercial-scale liquid cellulosic ethanol plants opened in the United States between 2014 and 2020 (US EIA 2014). … Production peaked from 0.5 mgal/year in 2014 to between 8 and 10 mgal/year from 2017 to 2019. Production declined after 2019 as the few major operational commercial-scale cellulosic ethanol plants closed … By 2022, the RFS2 envisioned 16 bgal of cellulosic biofuel. That year, liquid cellulosic ethanol production was 1.4 mgal, less than 0.1% of the envisioned volumes.

Instead of liquid cellulosic biofuels, the cellulosic component of the RFS2 mandate has been either waived or partially met by liquid natural gas (LNG) or compressed natural gas (CNG) production. … These gases are produced from captured gas from landfills, municipal wastewater treatment facilities, and agricultural livestock manure (CRS 2023), sources not envisioned as compliance fuels when the RFS2 was originally passed.

Lade and Smith review the evidence biofuel controversies that have continued over time. For example, increased demand for corn and soybeans as a result of the biofuel mandate has driven up the prices over time, which is good for farmers of those products but not for consumers. The biofuel mandate causes farmers to plant more land in corn and soybeans than they would otherwise do, and plowing additional land releases carbon dioxide that had been stored in plant and root systems–thus offsetting part of the environmental gain from biofuels.

The current status of biofuel subsidies and requirements is unclear. Those who favor them would like additional mandates to mix more ethanol into gasoline and to require more use of biodiesel–even to figure out a way to have a biofuel that would work for aircraft. Opponents point to the costs related to higher prices and land use. The ultimate goal would be to find a low-carbon source for biofuels: for example, there is research ongoing into types of algae.

Lave and Smith are writing an academic review, not a diatribe, but at least in my reading, the bottom line for biofuels is not at present very encouraging. They write:

The Energy Policy Act and subsequent RFS2 mandates … transformed the US agricultural sector and gasoline markets; around one-third of all corn produced in the United States is used for fuel production, and nearly every gallon of gasoline sold in the United States contains at least 10% corn ethanol. … Although biomass-based diesel markets are much smaller than ethanol markets by comparison, their growth, paired with the recent surge in renewable diesel, means these fuels now demand more than 40% of the soybean oil produced in the United States.

The past and future benefits of these policies beyond increasing crop demand are less clear. Expanding cropland generates substantial carbon emissions that can offset the gains from burning less fossil fuel. Low-carbon biofuels are limited by high cost and the low supply of non-crop feedstocks such as animal fats and used cooking oil. Scaling production technologies for liquid cellulosic ethanol proved much more challenging and costly than thought in 2007. … In summary, while the fuels and focus are different than in 2007, the industry in 2025 has largely returned to past controversies about land use change, food prices, and the high cost of low-carbon feedstocks.

My own take is that the Renewable Fuels Mandate was an effort to accelerate technological change–specifically, to find a way to find a way for low-carbon plants (and some other sources) to replace fossil fuels. Two decades later, that hope of a great leap forward in this technology is largely unfulfilled. I’m the sort of optimist who would still support ongoing research in this area. But the main support for biofuels now comes from producers of corn and soybeans, who have become dependent on biofuels as the destination for a sizeable share of their output.

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