Was 2011 a banner year for biofuels? It already seems like it was the year of big biofuel IPO announcements, and there's now proof that production is steadily growing. The EPA has finalized the 2012 Renewable Fuels Standards (PDF), which all match projected targets thanks to reliable increases in production volume this year.
The RFS program is tasked with setting the minimum volume and percentage requirements for biofuels within the transportation sector every year. The current program, RFS2, was established in 2007 after an overhaul to the original program specifications. RFS2 has more closely matches the production ramping of the industry, and aims to set a minimum volume of 36 billion gallons of biofuel production by 2022.
The RFS program regulates four sectors of the biofuel markets, whose 2012 target volumes and standards are now as follows:
Biomass-based diesel: 1.0 billion gallons of production, 0.91 percent of total U.S. transportation fuel
Advanced biofuels: 2.0 billion gallons, 1.21 percent
Cellulosic biofuels: 8.65 million gallons, 0.006 percent
Total renewable fuels: 15.2 billion gallons, 9.23 percent
The big number here is the total standard. The EPA's official 2012 biofuel target is just over nine percent of all fuel used in the United States. That's not a huge proportion, but it's significant. It's also realistic, judging by the industry's success in hitting 2011 targets.
The biofuel workhorse continues to be the biodiesel sector, which has handily surpassed its 2011 target of 800 million gallons. According the EPA, the sector produced 908 million gallons of biodiesel through November. That suggests that shooting for an even billion in 2012 won't be a problem. In fact, the National Biodiesel Board has taken issue with the EPA not setting targets fast enough: the agency has discussed but not finalized a 1.28-billion-gallon target for 2013. The NBB wants the target on the books as soon as possible to help build support for growth in the sector.
In stark contrast, large-scale cellulosic biofuel production continues to feel like the search for El Dorado. Admittedly, the cellulose-cracking production process is the newest and most difficult to develop, and there are a host of new cellulosic producers looking to go commercial in 2012 and 2013. But no matter how conservative the EPA's targets are, it's going to be some time until cellulosic biofuels make up a significant portion of total biofuel production.
The number that may be unrealistic is the total for advanced biofuels. That number includes biodiesel, which in EPA terms is given an 'equivalence value' of 1.5; in other words, the 1.0-billion-gallon biodiesel standard also counts as 1.5 billion 'ethanol equivalent' gallons toward the total advanced biofuel standard of 2.0 billion gallons.
It's the other 500 million gallons that will prove a problem. Cellulosic ethanol also counts toward the advanced number, but in its report, the EPA projected only 10.45 million gallons of production for 2012. That leaves a huge gap, which has led the EPA to leave a loophole for itself to reduce the 2012 advanced biofuel production standard (and thus the total standard) if necessary.
The total standard should be met easily either way, and the EPA isn't too worried about the advanced biofuels, writing in the full 2012 RFS2 report (PDF): “Based on our analysis, we believe that there will be sufficient volumes of other advanced biofuels, such as imported sugarcane ethanol, additional biodiesel, or renewable diesel, such that the applicable volume for advanced biofuel can remain at the statutory level of 2.0 billion gallons.”
Overall, the numbers are pretty positive, and suggest that the biofuel industry as a whole is growing steadily. It's not particularly surprising news, but the biodiesel market is projected to continue to increase production and is still a stable sector. Also unsurprising is the fact that the cellulosic sector has yet to ramp up to the commercial scale. Of course, with the number of new cellulosic aspirants this year, that may soon change.