Helping U.S. businesses by
Browse by organization

Biofuels Sector, 2008

U.S. Market Overview

A biofuel is any fuel that derives from biomass – recently living organisms or their metabolic byproducts. Agricultural products specifically grown for use as biofuels include corn and soybeans, primarily in the United States; flaxseed and rapeseed, primarily in Europe; sugar cane in Brazil; and palm oil in Asia. Biodegradable outputs from industry, agriculture, forestry, and households – such as straw, timber, manure, rice husks, and sewage - can also be used to produce bioenergy or biogas through anaerobic processes. In the United States, the word “biofuels” is typically applied to mean ethanol and biodiesel for vehicular use.


Currently, there are 134 U.S. ethanol refineries with a production capacity of more than 7.2 billion gallons, and more than 6.2 billion gallons of capacity is currently being added. Federal, state, and private funding is supporting research efforts to develop and produce commercially viable cellulosic ethanol from biomass. Federal regulations driving this expansion to increase the use of ethanol as a part of the U.S. fuel mix include: the Renewable Fuels Standard; the Volumetric Ethanol Excise Tax Credit; the Small Ethanol Producer Tax Credit; the Federal Reformulated Gasoline Program; the Federal Winter Oxygenated Fuels Program; and the Commodity Credit Corporation Bioenergy Program. More than 22 states have producer and retailer incentives to increase ethanol production and use. Even with the surge in production, U.S. ethanol imports have increased to meet demand and are led by Brazilian ethanol trans-shipped through Caribbean nations under Caribbean Basin Initiative quotas.


U.S. biodiesel is usually made from soybean oil, and annual U.S. production capacity is about 2.24 billion gallons per year. New construction and expansion of existing production capacity may add approximately 1.23 billion gallons of new production by mid-2009. Many of the same federal and state regulations driving the increase in ethanol production are also encouraging the increase in U.S. biodiesel production capacity.