The Status and Future of Advanced The Status and Future of Advanced Biofuels in the United StatesBiofuels in the United States

Daniel NibargerI i l E iInternational EconomistOffice of Global AnalysisForeign Agricultural Service/USDA

Daniel.Nibarger@fas.usda.gov

What Will We CoverWhat Will We Cover

• Where does the U.S. Advanced Biofuel Market Stand?

• Where is the U.S. Going?

• What are the Challenges?g

Where does the U.S. Advanced Bi f l M k t St d?Biofuel Market Stand?

Tropics have Advantage in Biomass Production PotentialTropics have Advantage in Biomass Production Potential

G t t NA NPPG t t NA NPP

1,2001,200 gC/mgC/m22/year/year

Greatest NA NPPGreatest NA NPP

Regions with Greatest NPPRegions with Greatest NPP

2 6002 600 gC/mgC/m22/year/year

Regions with Greatest NPPRegions with Greatest NPP

Net Primary Productivity (gC/mNet Primary Productivity (gC/m22/year)/year)

2,6002,600 gC/mgC/m22/year/year

00 26252625 MissingMissing SeaSea

Net Primary Productivity (gC/mNet Primary Productivity (gC/m /year)/year)

Source: FAO

U.S. RFS2 Volume MandatesU.S. RFS2 Volume Mandates40

30

35

lons

20

25

ns of G

al

10

15

Billion

0

5

02006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

BioDiesel 0.5 0.65 0.8 1 1.28 1 1 1 1 1 1 1 1 1

"Other" Advanced 0.1 0.29 0.54 0.99 1.456 1 1.5 2 2.5 3 3.5 3.5 3.5 4

Cellulosic Biofuel 0 0.007 0.007 0.009 0.014 1.75 3 4.25 5.5 7 8.5 10.5 13.5 16

*

Source: EISA 

Renewable Fuel 4 4.7 9 10.5 12 12.6 13.2 13.8 14.4 15 15 15 15 15 15 15 15

What is Advanced Biofuel?

Cellulosic Biofuel Biomass­Based 

Advanced Biofuel Renewable FuelCellulosic Biofuel Diesel

Advanced Biofuel Renewable Fuel

Greenhouse Gas Reduction %

60% 50% 50% 20%

Biofuel TypesCellulosic and Drop­

in type fuels

Biodiesel, renewable diesel, & cellulosic 

diesel

Sugarcane ethanol & All Cellulosic and Biomass­

Based Diesel Fuels

Corn­based ethanol           

(Plus all other categories)Based Diesel Fuels categories)

Feedstocks

Cellulose and hemicellulose based 

Vegetable oils & fats; waste 

Sugarcane ethanol & All Cellulosic 

Corn starch & other grain 

Feedstocksmaterials, non­food 

crops

waste greases/tallow

and Biomass­Based Diesel Fuels

starches, sorghum

Transesterification, ifi i

Processes

Transesterification, thermochemical, 

catalytic depolymerization, FT   i  

Transesterification, thermochemical, 

gasification catalytic depolymerization, 

Fermentation, hydrotreating(dedicated or 

i )

Dry and wet mill, fermentation

FT, enzymatic hydrolysis

depolymerization, FT processes

coprocessing)

Source: FAS and Hart Energy

U.S. Advanced Biofuel Production 

4 431

Capacity

4000

45004,431

3000

35003,378

Year

2000

2500

1 550n Liters/Y

1000

1500985

1,2411,550

Million

0

500

1000

0Cancelled Under 

ConstructionNot Operating Operating Proposed

Source:  Hart Energy, Global Biofuels Center, Capacity Database ‐ Data Accurate as of Jan. 31, 2013

U.S. Advanced Biofuel RINS

Source: 2012 EPA Moderated Transaction System http://www.epa.gov/otaq/fuels/rfsdata/2012emts.htm

Advanced Biofuel Support Programs

The Biomass Crop Assistance Program (BCAP)• Matching Payments• Annual Payments to Certain Producers.

USDA Loan Guarantees 

Advanced Biofuel Production PaymentsAdvanced Biofuel Production Payments

Tax IncentivesTax Incentives• Cellulosic Biofuel Producer Tax CreditD i ti All f C ll l i Bi f l Pl t• Depreciation Allowances for Cellulosic Biofuel Plants

Where is the U.S. Going?

United States (expectations and key issues)United States (expectations and key issues)

Gl b l P d ti & T d i 2013 d B dGlobal Production & Trade in 2013 and Beyond• Remain largest producer & consumer• E15 enlarges market potential by additional 6 BG (22 BL)• Prices should go lower• Export potential

Key Market Determinates in 2013 and Beyond• Blendwall concerns and adoption of higher blendsBlendwall concerns and adoption of higher blends• Cellulosic production and “advanced” biofuel imports• Competing fuels for ethanol market• Competing fuels for ethanol market

2011 Fuel Ethanol ProductionThe US has rapidly outgrown Brazil to become the world’s largest ethanol producerThe US has rapidly outgrown Brazil to become the world s largest ethanol producer

and consumer.

4.61.4

52 2.2

0.51.3

23

0.5

Legend

Unit = Billion Liters (BLtrs)

20 BLtrs

Legend

Source: FAS Annual Biofuels Reports and FAS/Washington staff analysis.

( )Only larger trade flows are shown

2011 Fuel Ethanol Production & Key Trade FlowsThe US has rapidly outgrown Brazil to become the world’s largest ethanol producerThe US has rapidly outgrown Brazil to become the world s largest ethanol producer

and consumer. Trade….

4.61.4

52 2.2

0.51.3

23

0.5

Legend

Unit = Billion Liters (BLtrs)

20 BLtrs

Legend

Source: FAS Annual Biofuels Reports and FAS/Washington staff analysis.

( )Only larger trade flows are shown

2022 Fuel Ethanol OutlookUS i l t d d b t B il l thUS remains largest producer and consumer, but Brazil closes the gap.

Brazil reasserts its position as largest exporter, and US becomes net importer.

2.01.44.6

578.6

0.5

522.7

2.2

1.3

47

0.5

23

1.5 1.7

Legend2011 Actual vs 2022 Projected

47

1.12011 Actual  vs 2022 Projected

Actual

Projected

Unit = Billion Liters (MLtrs)

20 BLtrs

( )Only larger trade flows are shown

Source: Outlook based on FAS/Washington staff analysis and generally consistent with USDA’s 2012 long-term projections.

World Ethanol ProductionWorld Ethanol ProductionMajor Markets and Rest of World (ROW)

160Billion Liters

120

140ROW non‐fuelROW fuelEU non‐fuel

80

100 EU fuelBrazil non‐fuelBrazil fuelUSA non‐fuel

40

60USA fuel

0

20

Sources:  FAS staff analysis, FOLicht, OECD‐FAO; US fuel ethanol (WASDE, 2012 USDA Baseline)

World Ethanol ProductionWorld Ethanol ProductionSecondary and Minor Markets

Billion Liters

Sources:  FAS staff analysis, FOLicht, OECD‐FAO; US fuel ethanol (WASDE, 2012 USDA Baseline)

What are the Challenges?

Challenges for Advanced Biofuel in the United StatesUnited States

Competition• Cheap Shale Gas• Electrified Vehicles• Cellulosic production and “advanced” biofuel importsp f p

The U.S. Blendwall‐13.4 Billion GallonsThe U.S. Blendwall 13.4 Billion Gallons• Will E15 and E85 Increase the market?

Challenges for Advanced Biofuel in the United StatesUnited States

Feedstock Supply• Competition for ligno‐cellulose 

Credit Availability• Uncertainty in Credit MarketsUncertainty in Credit Markets

F i A i lt l S i /USDAForeign Agricultural Service/USDAGlobal Policy Analysis Division

Office of Global Analysis