Analysis & Projections

Biofuels Issues and Trends

Release date: October 15, 2012 (updated October 18, 2012 for cellulosic production and October 23, 2012 for RSF2 volume clarification)


Biofuels is a collective term for liquid fuels derived from renewable sources, including ethanol, biodiesel, and other renewable liquid fuels. This report focuses on ethanol and biodiesel, the most widely available biofuels. From 2009 to the middle of 2012, the U.S. biofuels industry increased its output and prepared to meet an expanded Renewable Fuel Standard (RFS2),1 which requires increasing volumes of biofuels use. In 2011, the biofuels industry transitioned away from tax incentives for non-cellulosic biofuels, which expired at the end of 2011. Annual ethanol and biodiesel consumption, production, imports, and exports during 2009-11 are summarized in Table 1.

Highlights from the report include:

  • Ethanol grew from 8 percent of U.S. gasoline consumption by volume in 2009 to nearly 10 percent in 2011 and in the first eight months of 2012. With almost all gasoline in the United States already blended with 10 percent ethanol (E10), the maximum level approved for use in all cars and light trucks, significant increases in domestic consumption of ethanol face a blend wall unless higher percentage ethanol blends can achieve significant market penetration.
  • While the U.S. Environmental Protection Agency (EPA) has approved use of a 15 percent ethanol blend (E15) for model year 2001 and newer cars and light trucks, concerns related to automobile warranties, potential liability for misfueling, and infrastructure costs are likely to limit E15 use to low volumes in the near term.
  • Exports of ethanol increased substantially as producers looked abroad for new markets and Brazil experienced a poor sugar harvest during 2011-12.
  • In the 2010/11 agricultural marketing year,2 40 percent of the corn crop and 14 percent of soybean oil production was used to produce biofuels and other products, including distillers grains for use as animal feed.3
  • The federal excise tax credits for non-cellulosic ethanol and biodiesel and the ethanol import tariff expired at the end of 2011.
  • A serious drought in the midwestern United States during summer 2012 lowered production estimates for corn and other crops, resulting in higher prices and a reduced forecast for biofuels production for the 2012/13 marketing year.
  • Plans for a pipeline to deliver ethanol from the Midwest to the Northeast were withdrawn during 2011.
  • Cellulosic biofuels production to date is far below the targets set by the Energy Independence and Security Act of 2007 (EISA 2007). EPA issued waivers that substantially reduced the cellulosic biofuels obligation under RFS2 for the 2010, 2011, and 2012 program years. Even that anticipated level of commercial production failed to materialize. There was no production of cellulosic biofuels or Renewable Identification Numbers (RINs) in 2010 or 2011. While a small number of cellulosic RINs may be available to be applied towards the reduced RFS2 requirements for 2012 set under EPA's waiver,4 production of cellulosic biofuel RINs in 2012 is likely to be well short of the reduced 2012 requirement.
Table 1. Ethanol and biodiesel summary, 2009-11
(milllion gallons unless otherwise noted)
  2009 2010 2011
Consumption 11,037 12,858 12,871
Consumption (Percentage of Gasoline by Volume) 8.0 9.3 9.6
Production 10,938 13,298 13,948
Gross Imports 198 16 172
Gross Exports NA 399 1,195
Consumption 326 263 878
Consumption Consumption (Percentage of Distillate Fuel by Volume) 0.6 0.5 1.5
Production 516 343 967
Gross Imports 77 23 36
Gross Exports 266 105 73
Sources: EIA, Monthly Energy Review, August 2012. Ethanol Production and Consumption: Table 10.3. Biodiesel Production, Imports, Exports, and Consumption: Table 10.4. Motor Gasoline Supply and Distillate Fuel Supply: Table 3.5. EIA, Petroleum Supply Annual, Table 1. See Appendix C for descriptions of calculations of percentage of gasoline or distillate fuel by volume.

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1 See Appendix A.
2 Marketing years span calendar years and are often written to include both calendar years. For example, 2010/11 refers to the marketing year beginning September 1, 2010 and ending August 31, 2011 for corn. Marketing years differ by commodity; the marketing year for soybeans and other oilseeds begins on October 1.
3 U.S. Energy Information Administration (EIA) calculation. See Appendix C.
4 U.S. Environmental Protection Agency (EPA) Moderated Transaction System,



Technical information concerning the content of the report may be obtained from Mindi Farber-DeAnda at 202-586-6419 (, Tony Radich at 202-287-0504 (