GAO 

United States Government Accountability Office

Report to Congressional Requesters

BIOFUELS

Potential Effects and 

Challenges of 

Required Increases in 

Production and Use 

August 2009 

GAO-09-446 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

August 2009

BIOFUELS

Potential Effects and Challenges of Required 

Increases in Production and Use 

Highlights of GAO-09-446, a report to 

congressional requesters 

In December 2007, the Congress 

expanded the renewable fuel 

standard (RFS), which requires 

rising use of ethanol and other 

biofuels, from 9 billion gallons in 

2008 to 36 billion gallons in 2022. 

To meet the RFS, the Departments 

of Agriculture (USDA) and Energy 

(DOE) are developing advanced 

biofuels that use cellulosic 

feedstocks, such as corn stover and 

switchgrass. The Environmental 

Protection Agency (EPA) 

administers the RFS. 

This report examines, among other 

things, (1) the effects of increased 

biofuels production on U.S. 

agriculture, environment, and 

greenhouse gas emissions; (2) 

federal support for domestic 

biofuels production; and (3) key 

challenges in meeting the RFS. 

GAO extensively reviewed 

scientific studies, interviewed 

experts and agency officials, and 

visited five DOE and USDA 

laboratories. 

What GAO Recommends

GAO suggests that the Congress 

consider requiring EPA to develop 

a strategy to assess lifecycle 

environmental effects of increased 

biofuels production and whether 

revisions are needed to the VEETC. 

GAO also recommends that EPA, 

DOE, and USDA develop a 

coordinated approach for 

addressing uncertainties in 

lifecycle greenhouse gas analysis 

and give priority to R&D that 

addresses future blend wall issues. 

DOE, USDA, and EPA generally 

agreed with the recommendations. 

To meet the RFS, domestic biofuels production must increase significantly, 

with uncertain effects for agriculture and the environment. For agriculture, 

many experts said that biofuels production has contributed to crop price 

increases as well as increases in prices of livestock and poultry feed and, to a 

lesser extent, food. They believe that this trend may continue as the RFS 

expands. For the environment, many experts believe that increased biofuels 

production could impair water quality—by increasing fertilizer runoff and soil 

erosion—and also reduce water availability, degrade air and soil quality, and 

adversely affect wildlife habitat; however, the extent of these effects is 

uncertain and could be mitigated by such factors as improved crop yields, 

feedstock selection, use of conservation techniques, and improvements in 

biorefinery processing. Except for lifecycle greenhouse gas emissions, EPA is 

currently not required by statute to assess environmental effects to determine 

what biofuels are eligible for inclusion in the RFS. Many researchers told GAO 

there is general agreement on the approach for measuring the direct effects of 

biofuels production on lifecycle greenhouse gas emissions but disagreement 

about how to estimate the indirect effects on global land use change, which 

EPA is required to assess in determining RFS compliance. In particular, 

researchers disagree about what nonagricultural lands will be converted to 

sustain world food production to replace land used to grow biofuels crops. 

The Volumetric Ethanol Excise Tax Credit (VEETC), a 45-cent per gallon 

federal tax credit, was established to support the domestic ethanol industry. 

Unless crude oil prices rise significantly, the VEETC is not expected to 

stimulate ethanol consumption beyond the level the RFS specifies this year. 

The VEETC also may no longer be needed to stimulate conventional corn 

ethanol production because the domestic industry has matured, its processing 

is well understood, and its capacity is already near the effective RFS limit of 

15 billion gallons per year for conventional ethanol. A separate $1.01 tax credit 

is available for producing advanced cellulosic biofuels. 

The nation faces several key challenges in expanding biofuels production to 

achieve the RFS’s 36-billion-gallon requirement in 2022. For example, farmers 

face risks in transitioning to cellulosic biofuels production and are uncertain 

whether growing switchgrass will eventually be profitable. USDA’s new 

Biomass Crop Assistance Program may help mitigate these risks by providing 

payments to farmers through multi-year contracts. In addition, U.S. ethanol 

use is approaching the so-called blend wall—the amount of ethanol that most 

U.S. vehicles can use, given EPA’s 10 percent limit on the ethanol content in 

gasoline. Research has been initiated on the long-term effects of using 15 

percent or 20 percent ethanol blends, but expanding the use of 85 percent 

ethanol blends will require substantial new investment because ethanol is too 

corrosive for the petroleum distribution infrastructure and most vehicles. 

Alternatively, further R&D on biorefinery processing technologies might lead 

to price-competitive biofuels that are compatible with the existing petroleum 

distribution and storage infrastructure and the current fleet of U.S. vehicles. 

View GAO-09-446 or key components.

For more information, contact Patricia Dalton 

at (202) 512-3841 or daltonp@gao.gov. 
Page i GAO-09-446 

Contents 

Letter 1

Executive Summary 2 

Purpose 2 

Background 4 

Principal Findings 5 

Conclusions 11 

Matters for Congressional Consideration 12 

Recommendations for Executive Action 12 

Agency Comments and GAO’s Evaluation 13 

Chapter 1 Introduction 17 

Corn Starch Ethanol Is the Primary U.S. Biofuel 20 

Soybean Oil Is the Major U.S. Biodiesel Feedstock 21 

The Federal Government Has Used Tax Expenditures, the RFS, 

and an Ethanol Import Tariff to Stimulate Domestic Biofuels 

Production 24 

DOE and USDA Support Biofuels R&D and Commercialization 27 

Objectives, Scope, and Methodology 30 

Chapter 2 Biofuels Production Has Had Mixed Effects on U.S. 

Agriculture, but the Effects of Expanded Production 

Are Less Certain 35 

Increasing Corn Ethanol Production Has Had Mixed Effects on 

Land Use, Crop Selection, and Livestock Production 35 

Growth in Ethanol Production Has Generally Provided a Boost to 

Rural Economies 40 

Higher Corn Prices—Driven in Part by Increased Ethanol 

Production—Have Likely Been a Factor in Recent Food Price 

Increases 43 

The Effects of Expanded Biofuels Production on Agriculture Are 

Uncertain but Could Be Significant 45 

Some USDA Programs Could Support the Transition to Cellulosic 

Energy Crop Production for Biofuels 48 

 Biofuels 
Chapter 3 Increased Biofuels Production Could Have a Variety of 

Environmental Effects, but the Magnitude of These 

Effects Is Largely Unknown 51 

Cultivation of Corn for Biofuel Has a Variety of Environmental 

Effects, but a Shift to Cellulosic Feedstocks Could Reduce These 

Effects 52 

The Process of Converting Feedstocks into Biofuels Has 

Environmental Consequences, but the Effects Vary 65 

Storage and Use of Certain Ethanol Blends May Result in Further 

Environmental Effects that Have Not Yet Been Measured 73 

Focus on Sustainability Will Be Important in Evaluating 

Environmental Implications of Increased Biofuel Production 77 

Conclusions 78 

Matter for Congressional Consideration 79 

Agency Comments and Our Evaluation 79 

Chapter 4 Researchers Disagree on How to Account for Indirect 

Land-Use Changes in Estimating the Lifecycle 

Greenhouse Gas Effects of Biofuels Production 80 

Estimates of the Lifecycle Greenhouse Gas Emissions of Biofuels 

Have Significantly Differed 81 

Assumptions about Agricultural and Energy Inputs, Co-Products, 

and Land-Use Changes Determine Research Results 83 

Shortcomings in Forecasting Models and Data Make It Difficult to 

Determine Lifecycle Greenhouse Gas Emissions 88 

Conclusions 91 

Recommendation for Executive Action 92 

Agency Comments and Our Evaluation 92 

Chapter 5 Federal Tax Expenditures, the RFS, and an Ethanol 

Tariff Have Primarily Supported Conventional Corn 

Starch Ethanol 93 

The VEETC Provides a Tax Credit to Companies that Blend 

Ethanol with Gasoline 94 

RFS Biofuels Volume Requirements Rise Annually 96 

The United States Imposes a Tariff on Ethanol Imports 98 

The RFS and the VEETC Can Be Duplicative for Total Ethanol 

Consumption 99 

Page ii GAO-09-446 Biofuels
The Relationship between Crude Oil and Corn Prices Will Primarily 

Determine Whether the RFS Is Binding 101 

Some Recent Studies Have Proposed that the VEETC Be Revised 102 

Other Federal Biofuels Tax Expenditures Support Biodiesel and 

Cellulosic Biofuels Producers 103 

Conclusions 105 

Matter for Congressional Consideration 105 

Chapter 6 Federal Biofuels R&D Primarily Supports Developing 

Cellulosic Biofuels 106 

Federal Biofuels R&D Programs Are Growing and Focus on 

Cellulosic Ethanol 106 

The Congress Has Authorized and Appropriated Additional 

Funding for Biofuels R&D 110 

Experts Identified R&D Areas for Improving Cellulosic Biofuels 

Production 111 

Chapter 7 Significant Challenges Must Be Overcome to Meet 

the RFS’s Increasing Volumes of Biofuels 112 

Farmers and Other Suppliers Face the Challenge of Identifying and 

Developing Productive and Profitable Cellulosic Feedstocks 113 

Cellulosic Feedstocks Pose Unique Logistical Challenges for 

Biorefineries 116 

High Costs and the Limitations of Current Conversion Technology 

Are Key Challenges to Making Cellulosic Biofuels Competitive 

with Other Fuels 118 

Blending Limits and Transportation Pose Challenges to Expanded 

Ethanol Consumption 120 

The Biodiesel Industry Faces Feedstock and Market Challenges 124 

Conclusions 125 

Recommendations for Executive Action 125 

Agency Comments 126 

Appendix I Key Studies on the Agricultural and Related Effects 

of Biofuels and on the Transition to Advanced 

Biofuel Feedstock Production 127 

Page iii GAO-09-446 Biofuels
Appendix II Economic Studies Examining the Impacts of Increased 

Biofuel Production on U.S. Food and Agricultural 

Markets 133 

Appendix III Scientific Studies on the Environmental Impacts of 

Biofuels 146 

Appendix IV Key Studies on the Lifecycle Greenhouse Gas Effects 

of Biofuels 153 

Appendix V Recent Studies on Federal Supports for Biofuels 158 

Appendix VI Economic Linkages of the Corn Ethanol Industry to 

Food and Agricultural Markets 159 

Appendix VII Summary of Researchers’ Assumptions and 

Conclusions about Lifecycle Greenhouse Gas 

Emissions of Biofuels Production 163 

Appendix VIII Comments from the Department of Agriculture 166 

Appendix IX Comments from the Department of Energy 170 

Appendix X Comments from the Environmental Protection 

Agency 172 

Page iv GAO-09-446 Biofuels
Appendix XI GAO Contacts and Staff Acknowledgments 175 

Tables 

Table 1: Average Water Consumed in Corn Ethanol Production in 

Primary Producing Regions in the United States, in Gallons 

of Water/Gallon of Denatured Ethanol Produced 53 

Table 2: Projected Growth in Corn Acreages Related to Increased 

Corn Ethanol Production of 15 Billion Gallons per Year 54 

Table 3: Sample of Agricultural Conservation Practices Available to 

Reduce the Environmental Effects of Feedstock 

Cultivation for Biofuels 60 

Table 4: Potential Air Pollutants Associated with Ethanol 

Refineries and Their Related Health and Environmental 

Effects 70 

Table 5: Criteria Pollutants and Related Emissions from Stationary 

and Mobile Sources, 1990 and 2007 (thousands of short 

tons) 77 

Table 6: Federal Agencies’ Obligations for Biofuels R&D, Fiscal 

Years 2005-2008 106 

Table 7: Integrated Biorefinery Projects Receiving DOE Funding 107 

Table 8: Major Economic Studies of Agricultural Market Impacts of 

Biofuels Production 135 

Figures 

Figure 1: Greenhouse Gas Emissions Associated with the Biofuels 

Production Process 19 

Figure 2: Corn Used for Ethanol by Market Year, 1980-2008 36 

Figure 3: U.S. Acres Planted to Corn, Soybeans, Wheat, and Cotton, 

Crop Years 1999-2009 37 

Figure 4: Existing and Planned Ethanol Facilities (as of 2007) and 

Their Estimated Total Water Use Mapped with the 

Principal Bedrock Aquifers of the United States and Total 

Water Use in 2000 67 

Figure 5: Estimated Lifecycle Greenhouse Gas Emissions of 

Ethanol as Compared with Gasoline 82 

Figure 6: Domestic Ethanol Production and Federal Tax 

Expenditures, 1980-2008 95 

Figure 7: Annual Biofuels Use under the RFS, 2009-2022 97 

Page v GAO-09-446 Biofuels
Figure 8: Economic Linkages of Ethanol Production to Food and 

Agricultural Markets 160 

Abbreviations 

AST above-ground storage tanks 

BCAP Biomass Crop Assistance Program 

CRP Conservation Reserve Program 

DDG dried distiller’s grains 

DOE Department of Energy 

EISA Energy Independence and Security Act of 2007 

EPA Environmental Protection Agency 

MTBE methyl tertiary butyl ether 

NPDES National Pollutant Discharge Elimination System 

NREL National Renewable Energy Laboratory 

R&D research and development 

RFS Renewable Fuel Standard 

RIN renewable identification number 

UST underground storage tanks 

USDA U.S. Department of Agriculture 

USGS U.S. Geological Survey 

VEETC Volumetric Ethanol Excise Tax Credit 

2008 Farm Bill Food, Conservation, and Energy Act of 2008 

This is a work of the U.S. government and is not subject to copyright protection in the 

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necessary if you wish to reproduce this material separately. 

Page vi GAO-09-446 Biofuels
Page 1 GAO-09-446 

Patricia A. Dalton 

Managing Director 

Natural Resources and Environment 

United States Government Accountability Office

Washington, DC 20548 

 

August 25, 2009 

The Honorable Barbara Boxer 

Chairman 

Committee on Environment 

 and Public Works 

United States Senate 

The Honorable Susan M. Collins 

United States Senate 

As requested, this report discusses the challenges and potential effects 

associated with the increased production and use of biofuels in the United 

States. We are suggesting that the Congress consider actions to address 

the potential environmental effects of increased biofuels production and 

whether revisions are needed to federal financial support for the 

production of conventional ethanol. We are also recommending that the 

Secretaries of Agriculture and Energy and the Administrator of the 

Environmental Protection Agency take actions to minimize the potential 

effects of the nation’s biofuels production efforts. 

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies of this report to other 

appropriate congressional committees; the Secretaries of Agriculture, 

Energy, the Interior, and the Treasury; and the Administrator of the 

Environmental Protection Agency. The report also will be available at no 

charge on the GAO Web site at http://www.gao.gov. 

If you or your staffs have any questions about this report, please contact 

me at (202) 512-3841 or daltonp@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs can be found on the last page 

of this report. GAO staff who made major contributions to this report are 

listed in appendix XI. 

 Biofuels 
Executive Summary 

For the past several decades, the United States has enjoyed relatively 

inexpensive supplies of crude oil, which has accounted for almost all of 

portation. However, this reliance on 

portation makes the U.S. economy vulnerable to even 

harms U.S. balance of 

 greenhouse gas emissions—

primarily carbon dioxide, methane, and nitrous oxide—which has resulted 

in global climate change with potentially damaging long-term effects. The 

federal government has promoted biofuels as an alternative to petroleumbased fuels since the 1970s, and production of the most common U.S. 

biofuel—ethanol from corn starch—reached 9 billion gallons in 2008. The 

Energy Policy Act of 2005 created a Renewable Fuel Standard (RFS) that 

generally required gasoline and diesel in the United States1

 to contain 4 

billion gallons of renewable fuels, such as ethanol and biodiesel, in 2006 

and 7.5 billion gallons in 2012.2

 The Energy Independence and Security Act 

(EISA) of 2007 expanded the RFS by requiring that U.S. transportation fuel 

contain 9 billion gallons of renewable fuels in 2008 and increasing annually 

to 36 billion gallons in 2022.3

 The 36-billion-gallon total must include at 

least 21 billion gallons of advanced biofuels—defined as renewable fuels 

other than ethanol derived from corn starch that meet certain criteria—

and can include up to 15 billion gallons of conventional biofuels—defined 

as ethanol derived from corn starch. EISA requires that most advanced 

biofuels (at least 16 billion of the 21-billion-gallon total) be produced from 

cellulosic materials, or feedstocks, including perennial grasses, crop 

residue, and the branches and leaves of trees. However, advanced biofuels 

are at the earliest stages of being commercially produced in the United 

States, and a number of logistical and technical challenges must still be 

overcome before they are economically viable. In addition, some research 

 

Executive Summary 

Purpose 

the energy consumed for trans

petroleum for trans

minor disruptions in the global crude oil supply, 

payments in trade, and contributes to

1

Under the act, the RFS applies to transportation fuel sold or introduced into commerce in 

the 48 contiguous states. However, the Administrator of the Environmental Protection 

Agency (EPA) is authorized, upon a petition from Alaska or Hawaii, to allow the RFS to 

apply in that state. On June 22, 2007, Hawaii petitioned EPA to opt into the RFS, and the 

Administrator approved that request. For the purposes of this report, statements that the 

RFS applies to U.S. transportation fuel refer to the 48 contiguous states and Hawaii. 

2

Pub. L. No. 109-58, §1501 (2005). The act authorizes the EPA Administrator, in consultation 

with the Secretaries of Agriculture and Energy, to waive the RFS levels established in the 

act, by petition or on the Administrator’s own motion, if meeting the required level would 

severely harm the economy or environment of a state, a region, or the United States or 

there is an inadequate domestic supply. Throughout this report, the RFS levels established 

in the act are referred to as requirements, even though these levels could be waived by the 

EPA Administrator. 

3

Pub. L. No. 110-140, § 201 (2007). 

Page 2 GAO-09-446 Biofuels
Executive Summary 

Page 3 GAO-09-446 Biofuels

in recent years has questioned the extent to which corn starch ethanol

compared with gasoline, reduces lifecycle greenhouse gas emissions that

occur during the process of growing, harvesting, and transporting th

feedstock; producing the biofuel; and using the biofuel in a vehicle. Some 

research has also identified other adverse environmental effects from 

producing corn for ethanol. 

The Chairman of the Senate Committee on Environment and Public Works

and Senator Susan M. Collins asked GAO to assess several issues related 

to increased U.S. production of ethanol and other biofuels. Specifically

this report examines (1) the known agricultural and related effects of 

increased biofuels feedstock production in the United States; (2) the 

known environmental effects of increased feedstock cultivation and 

conversion and biofuels use in the United States; (3) the results, 

assumptions, and limitations of key scientific analyses of the lifecycle 

greenhouse gas effects of biofuels produced from different feedstocks; (4) 

federal support for developing a domestic biofuels industry; (5) federal 

funding for advanced biofuels research and development (R&D); and (6

key challenges in meeting the RFS’s specified levels. 

To assess the effects of increased biofuels production, GAO used a 

snowball sampling technique that identified 62 studies on the agricultura

effects, 62 articles on the environmental effects, and 46 articles on the 

lifecycle greenhouse gas effects published in scientific journals and 

government publications. Next, GAO identified recognized experts in each 

field, in collaboration with the National Academy of Sciences, and 

interviewed them using a semistructured interview format. In addition, 

GAO interviewed program managers, scientists, economists, researchers, 

, as 

e 

, 

) 

l 

and other staff from the Departments of Agriculture (USDA), Energy 

(DOE), the Interior, and the Treasury; the Environmental Protection 

ss 

d 

economists. GAO applied conventional economic reasoning in 

gh 

ederal and industry reports; interviewed federal agency officials 

tives of nongovernmental organizations and 

Agency (EPA); the National Science Foundation; and the Department of 

Commerce’s National Oceanic and Atmospheric Administration. To asse

federal support for developing a domestic biofuels industry, GAO obtaine

Treasury data on federal tax expenditures, reviewed relevant economic 

literature, and interviewed cognizant federal officials and academic and 

government 

analyzing the incidence of tax credits. To assess federal funding support 

for advanced biofuels R&D, GAO obtained DOE, USDA, and EPA data on 

their obligations for R&D and loan guarantees for fiscal years 2005 throu

2008 and interviewed cognizant agency officials. To assess key challenges 

in meeting the RFS’s requirements, GAO reviewed relevant documents, 

including f

and scientists, and representa
Executive Summary 

industry associations. In doing this work, GAO conducted site visits at 

DOE’s National Renewable Energy Laboratory, Argonne National 

Laboratory, and Oak Ridge National Laboratory and USDA’s National 

Center for Agricultural Utilization Research and Eastern Regional 

Research Center. See chapter 1 for a more detailed discussion of GAO’

methodology. 

s 

h 

d 

thanol 

s. A 

nt of domestic 

ethanol is made from corn grown in the Midwest. The corn starch can be 

d into 

lion 

fter 

 a 

Biofuels, such as ethanol and biodiesel, are an alternative to petroleumbased transportation fuels and are produced from renewable sources suc

as corn, sugar cane, and soybeans. In 2008, the United States consume

about 138 billion gallons of gasoline and about 10 billion gallons of 

biofuels, primarily ethanol. Ethanol, the most common U.S. biofuel, is

mainly used as a gasoline additive in blends of about 10 percent e

and 90 percent gasoline, known as E10, which is available in most state

relatively small volume is also blended at a higher level called E85—a 

blend of 85 percent ethanol and 15 percent gasoline—which can only be

used in specially designed vehicles, known as flexible-fuel vehicles, that 

can use either gasoline or E85 for fuel. About 98 perce

Background 

converted relatively easily into sugar and then fermented and distille

ethanol. 

The RFS requires that U.S. transportation fuels in 2022 contain 36 bil

gallons of biofuels. To be eligible for consideration under the RFS, 

renewable fuels produced by biorefineries that begin construction a

EISA’s enactment on December 19, 2007, must generally achieve at least

20 percent reduction in lifecycle greenhouse gas emissions as compared 

with petroleum fuels. However, advanced biofuels and biomass-based

diesel must generally achieve at least a 50 percent reduction in lifecycle 

greenhouse gas emissions relative to baseline petroleum fuels, while 

cellulosic biofuels must generally achieve at least a 60 percent reduction, 

regardless of when the biorefinery producing the fuel was constructed.4

Currently, EPA determines a biofuel’s eligibility under the RFS based, in 

part, on its lifecycle greenhouse gas emissions. However, after 2022, EISA

requires that EPA, in coordination with DOE and USDA, establish the RFS 

 

4

While EISA specifies the reductions in lifecycle greenhouse gas emissions that each type 

of renewable fuel must achieve, it also authorizes EPA to adjust the required reductions if 

the specified reduction is not commercially feasible for fuels made using a variety of 

feedstocks, technologies, and processes. EPA’s proposed rule, if finalized, would adjust the 

reduction for advanced biofuels to 44 or 40 percent. 74 Fed. Reg. 24904 (May 26, 2009). 

Page 4 GAO-09-446 Biofuels
Executive Summary 

based, in part, on the impact of the production and use of renewable fue

on the environment, including on air quality, wildlife habitat, water

and water supply. EPA is undertaking some of these analyses and inclu

a partial assessment of water and air impacts in the preamble to th

proposed RFS rulemaking, published on May 26, 2009, even though this 

information is 

ls 

 quality, 

ded 

e 

currently not used to determine which biofuels are eligible 

for consideration under the RFS. 

22 

uld 

rm 

his 

 and enzymes break down complex plant molecules to produce 

ethanol, while others are piloting the use of thermochemical processes, 

soybeans and cotton. While higher corn prices have created additional 

income for corn producers, they have also increased feed costs for 

ocal 

Principal Findings 

Also, at least 16 billion of the 36 billion gallons of biofuels required in 20

are to be made from such cellulosic feedstocks as perennial grasses, crop 

residue, and wood waste. Cellulosic feedstocks are diverse. Some 

feedstocks are abundant and relatively inexpensive, and their use co

greatly expand biofuel production. These feedstocks might also raise fa

income, reduce greenhouse gas emissions, and improve water quality as 

compared with conventional corn starch ethanol. However, at present, the 

technology to economically grow, harvest, and transport cellulosic 

feedstocks is untested on a large scale. In addition, most of the energy in 

plant and tree biomass is locked away in complex cellulose and 

hemicellulose molecules, and technologies to produce biofuels from t

type of feedstock economically are still being developed. Some cellulosic 

biorefineries are piloting the use of biochemical processes in which 

microbes

which use heat and chemical catalysts to turn plant material into a liquid 

that more closely resembles petroleum. 

Biofuels production has had mixed effects on U.S. agriculture with reg

to land use, crop selection, livestock production, rural economies, and 

food prices. For example, the increasing demand for corn for ethanol 

production has contributed to higher corn prices, provided economic 

incentives for some producers to devote additional acres to corn 

production, and resulted in reduced production of other crops, such as 

Biofuels Production Has ard 

Had Mixed Effects on U.S. 

Agriculture, but the Effects 

of Expanded Production 

Are Less Certain 

livestock producers. At the same time, the number of biorefineries 

producing ethanol or other biofuels has grown considerably, offering new 

employment opportunities in rural communities as well as a boost to l

commerce and tax revenues, although experts’ views on the magnitude 

and permanence of these benefits varies. In addition, according to USDA

Page 5 GAO-09-446 Biofuels
Executive Summary 

and other sources, the increasing use of corn for ethanol production, 

among other factors such as high energy costs and tight global grain 

supplies, likely contributed to higher retail food prices by increasing the 

price of corn used for food processing and animal feed. The potential

future effects of expanded biofuels production, including production of 

new energy crops for advanced biofuels, are uncertain but could be 

significant, particularly to the extent these new crops affect the 

production of other crops and livestock. Some USDA farm, forest, 

ter 

 Corn is a 

erts 

e additional corn production will 

lead to an increase in fertilizer and sediment runoff, impairing streams and 

ther water bodies. Furthermore, experts believe that as cultivation of 

ome crops such as corn for biofuels production increases, 

environmentally sensitive lands currently enrolled in conservation 

rograms may be moved back into production, thereby increasing 

duce 

ly, 

tion. 

 will 

ge 

, 

Increased Biofuels 

Production Could Have a 

Variety of Environmental 

Effects, but the Magnitude 

Is Largely Unknown 

conservation, and extension programs could potentially support the 

transition to cellulosic feedstock production, although changes may be 

needed for these programs to “level the playing field” in light of the

support they already provide for the production of food and feed crops. 

The increased cultivation of corn for ethanol, its conversion into biofuels, 

and the storage and use of these fuels could affect water supply, wa

quality, air quality, soil quality, and biodiversity, but future movement 

toward cellulosic feedstocks could reduce some of these effects.

relatively resource-intensive crop, requiring significant amounts of 

fertilizer and pesticide applications and additional water to supplement 

rainfall, depending on where the crop is grown. As a result, some exp

believe that increased corn starch ethanol production may result in the 

cultivation of corn on arid lands that require irrigation, contributing to 

additional ground and surface water depletion in water-constrained 

regions. In addition, some experts believ

o

s

p

cultivation of land that is susceptible to erosion and decreasing available 

habitat for threatened species. However, some of these effects on water

quality and habitat may be mitigated by the use of certain agricultural 

conservation practices. In the future, farmers may also adopt cellulosic

feedstocks, such as switchgrass and crop residues, which could re

water and land-use effects relative to corn. In addition, the process of 

converting feedstock into biofuels may also adversely affect water supp

water quality, and air quality as more biorefineries move into produc

For example, biorefineries require water for processing biofuels and

need to draw from existing water resources, which are limited in some 

potential production areas. However, the effects will depend on the 

location and size of the facility and the feedstock used. Finally, the stora

and use of certain ethanol blends may pose other environmental problems

Page 6 GAO-09-446 Biofuels
Executive Summary 

such as leaks in underground storage tanks that are not certified to sto

such blends and increased emissions of certain air pollutants when 

ethanol is used in most cars; however, less is known about the extent of 

these effects. Although EPA included a partial assessment of water and

effects in the preamble of its May 2009 RFS proposed rulemaking, EISA 

does not require EPA to determine what fuels are eligible for 

consideration under the RFS based on their lifecycle environmen

effects, apart from greenhouse gas emissions. 

Twelve key scientific studies that GAO reviewed provided a wide ran

estimates on the lifecycle greenhouse gas emissions of biofuels relative t

re 

 air 

tal 

ge of 

o 

fossil fuels—from a 59 percent reduction to a 93 percent increase in 

missions for conventional corn starch ethanol, a 113 percent reduction to 

ol 

o 

d 

n 

re in 

 biofuels 

nges in 

in 

osic 

e is 

ycle 

Researchers Disagree on 

How to Account for 

Indirect Land-Use Changes 

f 

e in Estimating the Li

Greenhouse Gas Effects o

Biofuels Production 

fecycle a 50 percent increase for cellulosic ethanol, and a 41 percent to 95 percent 

reduction for biodiesel. Most of the studies found that corn starch ethan

achieves some greenhouse gas reduction benefits and that cellulosic 

ethanol is likely to be more beneficial. Different assumptions about the 

agricultural and energy inputs used in biofuel production and how t

allocate the energy used in this production to co-products, such as 

distiller’s grains, primarily explain why the greenhouse gas emission 

estimates among these studies varied. However, most of these studies di

not attempt to account for the effect of increased biofuels production o

indirect land-use changes—converting nonagricultural lands elsewhe

the world to replace agricultural land used to grow biofuels crops to 

maintain world production of food, feed and fiber crops—even though it is 

widely recognized that land-use changes could be the most significant 

source of lifecycle greenhouse gas emissions associated with

production. Three studies that have addressed indirect land-use cha

their methodologies each reported that biofuels had a net increase 

greenhouse gas emissions relative to fossil fuels and concluded that 

indirect land-use changes, in fact, eliminate the greenhouse gas reduction

benefits associated with corn starch ethanol, biodiesel, and even cellul

biofuels when produced from certain feedstocks. 

Many of the lifecycle analysis researchers GAO interviewed stated ther

general consensus on the approach for measuring the direct effects of 

increased biofuels production, but disagreement about assumptions and 

assessment methods for estimating the indirect effects of global land-use 

change. EPA is required to assess significant greenhouse gas emissions 

from land-use change because only biofuels that achieve certain lifec

emission reductions relative to petroleum fuels are eligible for 

consideration under the RFS. In particular, researchers disagree about 

Page 7 GAO-09-446 Biofuels
Executive Summary 

what nonagricultural lands will be converted to maintain world productio

of food, feed, and fiber crops. Although research for measuring indir

land-use changes as part of the greenhouse gas analysis is only in the earl

stages of development, EISA directed EPA to promulgate a rule to 

determine the lifecycle greenhouse gas emissions of biofuels included in

the RFS, including significant emissions from land-use change

researchers told GAO that the lack of agreement on standardized life

assumptions and assessment methods, combin

n 

ect 

y 

s. Several 

cycle 

ed with key information 

gaps in such areas as feedstock yields and domestic and international 

nd-use data, greatly complicate EPA’s ability to promulgate this rule. 

c 

r 

ofuel 

al 

l 

e 

echnology for the 

conventional corn starch ethanol industry is mature and its production 

t 

 

la

The federal government has supported the development of a domesti

biofuels industry primarily though tax credits, the RFS, and a tariff on 

ethanol imports. The Energy Tax Act of 1978, among other things, 

provided tax incentives designed to stimulate the production of ethanol 

for blending with gasoline, which were restructured as the Volumetric

Ethanol Excise Tax Credit (VEETC) in 2005.5

 Subsequently, in Decembe

2007, EISA expanded the RFS by substantially increasing its annual bi

volume requirements, including up to 9 billion gallons of convention

corn starch ethanol in 2008 and up to 15 billion gallons of conventiona

corn starch ethanol in 2015. As a result, the VEETC’s annual cost to the 

Treasury in forgone revenues could grow from $4 billion in 2008 to $6.75 

billion in 2015 for conventional corn starch ethanol, even though the 2008 

Farm Bill reduced the VEETC from 51 cents to 45 cents per gallon for

ethanol starting in 2009. The United States also controls ethanol imports, 

which qualify for the VEETC, by imposing a tariff of 54 cents per gallon

plus 2.5 percent of the ethanol’s value. However, two of these tools—th

VEETC and the RFS—can be duplicative with respect to their effects on 

ethanol consumption. Because U.S. ethanol consumption is unlikely to

exceed the 10.5 billion gallons allowed under the RFS in 2009, unless 

crude oil prices rise significantly, GAO and others have found that under 

current market conditions the VEETC does not stimulate additional 

ethanol consumption. In addition, the processing t

Biofuels

capacity is nearing the effective RFS limit of 15 billion gallons per year for 

conventional ethanol beginning in 2015. In light of this situation, some 

recent studies have suggested that the VEETC be terminated or phased ou

 nd the 

arch 

Ethanol 

Federal Tax Credits, the 

RFS, and the Ethanol Tariff 

Have Primarily Supported 

Conventional Corn St

5

The tax credit is paid to the crude oil refiners or gasoline wholesalers that ble

ethanol with gasoline. 

Page 8 GAO-09-446 
Executive Summary 

or be revised by, for example, modifying it to provide a stimulus when 

crude oil prices are low but reducing its size when crude oil prices rise. 

The economists GAO interviewed noted that removing the VEETC would 

affect motor fuel blenders, consumers, and biofuels producers diffe

depending upon market conditions. For example, one economist stated 

that when the RFS causes biofuels consumption to be higher than it 

otherwise would be, most of the VEETC’s benefits go to consumers with 

lower crude oil prices and go to producers with higher crude oil prices. 

Another economist said that motor fuel blenders would likely lose if th

VEETC were removed, but the exact impacts would depend on supply a

rently, 

e 

nd 

demand elasticities. 

lon 

or 

 at 

d 

in 

ction 

ch 

ty 

stover (the cobs, stalks, leaves, and husks of corn plants) while 

maintaining soil organic matter. 

Federal R&D Mainly 

Supports the Development 

of Advanced Cellulosic 

Biofuels 

In addition to the VEETC, which predominantly benefits conventional 

corn starch ethanol, the Congress has provided tax credits of $1 per gal

for producing or blending advanced biodiesel and $1.01 per gallon f

producing cellulosic biofuels. Both biodiesel and cellulosic biofuels have

high production costs that have limited their ability to compete in fuel 

markets. To date, these tax credits have predominantly supported 

biodiesel production because only small amounts of cellulosic biofuels are 

currently being produced. The RFS requirement for biodiesel rises from

least 500 million gallons in 2009 to at least 1 billion gallons in and beyon

2012 and for cellulosic biofuels rises from at least 100 million gallons in 

2010 to at least 16 billion gallons in 2022. 

DOE and USDA, the principal federal sponsors of biofuels R&D, obligated

about $500 million to develop advanced cellulosic biofuels in fiscal year 

2008. In February 2009, the American Recovery and Reinvestment Act of 

2009 appropriated $800 million to DOE for biomass-related projects, and 

March 2009 the Omnibus Appropriation Act, 2009, appropriated $217 

million for DOE’s biomass and biorefinery systems R&D program. A 

substantial portion of DOE’s funding supports its Integrated Biorefineries

Program, which seeks to demonstrate technologies for using a wide 

variety of cellulosic feedstocks and operating profitably once constru

costs are covered, and R&D on next-generation cellulosic feedstocks, su

as algae. USDA’s biofuels R&D seeks, among other things, to develop 

practices and systems that maximize the sustainable yield of high-quali

bioenergy feedstocks by, for example, maximizing the harvest of corn 

Page 9 GAO-09-446 Biofuels
Executive Summary 

The domestic biofuels industry faces multiple challenges to meet the RF

increasing volume requirement of biofuels, particularly cellulosic and 

other advanced biofuels. For example, cost-effective methods and 

technologies need to be developed to address the logistical difficulties in 

collecting, transporting, and storing the leaves, stalks, tree trunks, and 

other feedstocks that cellulosic biorefineries will process. Also, some

DOE, EPA, and USDA officials expressed concern about inconsistencies i

how EISA and the 2008 Farm Bill define renewable biomass because 

municipal waste and wood residues on federally managed forest land are

excluded under EISA but not under the 2008 Farm Bill. If not resolved, 

these inconsistencies

S’s 

n 

 could complicate the promulgation of regulations 

and implementation of programs for achieving the RFS. Another challenge 

uding 

thanol because, for example, 

pipelines do not exist to cost effectively transport biofuels from 

iorefineries in the Midwest to East and West Coast markets. The U.S. 

the 

s, 

the existing petroleum distribution and 

storage system and increased consumer purchases of flexible-fuel 

ehicles. Advances in thermochemical processing technology could yield 

Significant Challenges 

Must Be Overcome to Meet 

the RFS’s Increasing 

Volumes of Biofuels 

lies in the cellulosic conversion technology itself, which needs more 

commercial development and is expensive relative to the cost of 

producing ethanol from corn starch. Researchers are still developing 

pretreatment processes and biochemical and thermochemical refining 

technologies. While the RFS requires only modest amounts of biodiesel

beginning in 2009, this industry faces its own set of challenges, incl

the cost of feedstocks and a limited U.S. market. 

An immediate challenge facing the expansion of the domestic biofuels 

industry under the RFS is infrastructure limitations for distributing, 

storing, and using increasing volumes of e

b

biofuels distribution infrastructure can deliver current volumes of ethanol 

to consumers. However, the nation may reach the blend wall—the point 

where all of the nation’s gasoline supply is blended as E10 and extra 

volumes of ethanol cannot be readily consumed—as early as 2011 because 

EPA, under the Clean Air Act, currently limits the ethanol content in 

gasoline to 10 percent for most U.S. vehicles, the current economic 

slowdown has reduced U.S. gasoline consumption, and the RFS requires 

increasing amounts of biofuels. DOE has initiated R&D to determine 

long-term effects of using blends above 10 percent ethanol on a car’s 

emission control system and engine. If EPA and vehicle manufacturers 

find that the current U.S. vehicle fleet cannot use higher ethanol blend

additional ethanol consumption will be limited to flexible-fuel vehicles 

that can use E85. However, expanding E85 consumption would require

substantial investment in an ethanol distribution and storage 

infrastructure that is distinct from

v

Page 10 GAO-09-446 Biofuels
Executive Summary 

nonethanol products that the existing petroleum refining and distribution 

infrastructure can use—and therefore reduce blend wall issues. 

The RFS requires that the nation’s transportation fuel contain 36 billion

gallons of biofuels in 2022, primarily advanced biofuels. To date, the 

domestic biofuels industry has achieved about 30 percent of this level, 

largely through the production of conventional corn starch ethanol. G

forward, federal agencies face significant challenges to ensure the 

domestic biofuels industry can meet the RFS’s more demanding advanc

biofuel requirements, while minimizing any unintended adverse effects. 

For example, one key challenge is identifying and mitigating any adverse 

environmental effects. Given the potential for increased biofuels 

production to further exacerbate existing environmental problem

believes that assessing the viability of a biofuel feedstock will be 

incomplete without a consideration of the related lifecycle environmen

effects. Although EPA’s May 2009 proposed rulemaking included a partia

analysis of water and air effects of biofuel production, EISA does not 

require EPA to determine what renewable fuels ar

oing 

ed 

s, GAO 

tal 

l 

e eligible for 

consideration under the RFS based on their lifecycle environmental 

nation 

ncies 

d 

e 

f 

els. With 

 and 

production and more effectively achieve the RFS. How federal agencies 

Conclusions 

effects, apart from greenhouse gas emissions. A second key challenge is

addressing the likelihood that ethanol production will exceed the 

capability of the petroleum infrastructure and today’s fleet of vehicles to

distribute and use the ethanol, referred to as the blend wall. The 

will need to make a substantial investment in a new ethanol distribution

infrastructure to reach the RFS requirements, unless cost-effective biofuel 

products are developed that the existing petroleum refining, distribution,

and storage infrastructure can use. A third key challenge is inconsiste

in how EISA and the 2008 Farm Bill define renewable biomass that, if not 

resolved, could complicate federal agencies’ efforts to promulgate 

regulations and implement programs for achieving the RFS. 

EISA, the 2008 Farm Bill, and the American Recovery and Reinvestment 

Act of 2009 have extended and expanded existing programs, authorize

new ones, and appropriated substantial funding for R&D to stimulate th

domestic biofuels industry. In particular, EISA significantly expanded the 

RFS to require that U.S. transportation fuels contain 36 billion gallons o

biofuels in 2022, while the 2008 Farm Bill somewhat reduced the VEETC

and established a new tax credit for advanced cellulosic biofu

these many efforts, federal agencies are challenged to not only be efficient 

in minimizing duplicative incentives, but also to ensure that existing

new federal programs are harmonized to promote advanced biofuel 

Page 11 GAO-09-446 Biofuels
Executive Summary 

choose to address these challenges will shape the effect that biofuels 

production will have on the nation’s continuing efforts to balance the need 

for new sources of energy, the increasing demand for food, and the need 

 protect the environment. 

. 

at 

the 

mining 

ther 

n 

p a 

coordinated approach for identifying and researching unknown variables 

e 

Matters for 

to

GAO provides two matters for congressional consideration and three

recommendations for executive action to help address these challenges

In addition to the currently required lifecycle greenhouse gas emissions 

analysis, the Congress may wish to consider amending EISA to require th

the Administrator of the Environmental Protection Agency develop a 

strategy to assess the effects of increased biofuels production on 

environment at all stages of the lifecycle—cultivation, harvest, transport, 

conversion, storage, and use—and to use this assessment in deter

which biofuels are eligible for consideration under the RFS. This would 

ensure that all relevant environmental effects are considered concurrently 

with lifecycle greenhouse gas emissions. 

Because the RFS allows rapidly increasing annual amounts of 

conventional biofuels through 2015 and the conventional corn starch 

ethanol industry is mature, the Congress may wish to consider whe

revisions to the VEETC are needed. Options could include maintaining the 

VEETC, reducing the amount of the tax credit or phasing it out, or 

modifying the tax credit to counteract fluctuations in crude oil prices. 

To improve EPA’s ability to determine biofuels’ greenhouse gas emissions 

and define fuels eligible for consideration under the RFS, GAO 

recommends that the Administrator of the Environmental Protectio

Agency and the Secretaries of Agriculture and Energy develo

Congressional 

Consideration 

Recommendations for 

Executive Action 

and major uncertainties in the lifecycle greenhouse gas analysis of 

increased biofuels production. This approach should include a 

coordinated effort to develop parameters for using models and a standard

set of assumptions and methods in assessing greenhouse gas emissions for

the full biofuel lifecycle, such as secondary effects that would include 

indirect land-use changes associated with increased biofuels production. 

To minimize future blend wall issues and associated ethanol distribution 

infrastructure costs, GAO recommends that the Secretaries of Agriculture

and Energy give priority to R&D on process technologies that produc

Page 12 GAO-09-446 Biofuels
Executive Summary 

biofuels that can be used by the existing petroleum-based distribution 

storage infrastructure and the current fleet of U.S. vehicles. 

To address inconsistencies in

and 

 existing statutory language, GAO 

recommends that the Administrator of the Environmental Protection 

, 

legislative changes the Administrator determines may be needed to clarify 

hat biomass material—based on type of feedstock or type of land—can 

ir 

sure that coordinated scientific 

discussions do not lead to standard methods that become codified in 

rmation 

sions. 

of indirect land-use changes, GAO believes that a coordinated approach 

r identifying and researching unknown variables and major uncertainties 

y the 

goals that 

d that 

ropose 

that the report generally tends to emphasize negative aspects of increased 

currently being researched. While GAO believes its reporting of the 

nts 

Agency, in consultation with the Secretaries of Agriculture and Energy

review and propose to the appropriate congressional committees any 

w

be counted toward RFS. 

GAO provided USDA, DOE, and EPA with a draft of this report for the

review and comment. In its written comments, USDA stated that the 

report is comprehensive, well written, and accurate. Regarding the 

recommendation for determining biofuels’ lifecycle greenhouse gas 

emissions, USDA agreed with the general premise implicit in the 

recommendation, but cited the need to en

Biofuels

regulations that would inhibit the adoption and use of new info

and improved or more appropriate methods as they become available.

GAO agrees with USDA’s concern that the RFS regulation should not 

codify standard methods that might inhibit the development of better 

information or methods for assessing lifecycle greenhouse gas emis

However, because only three scientific studies have examined the effects 

fo

will benefit EPA’s lifecycle analysis. Regarding the recommendation for 

giving priority to R&D for producing biofuels that can be used b

existing petroleum-based infrastructure, USDA agreed that this is an 

important goal, but cited other similarly important biofuels R&D 

its scientists are pursuing. Regarding the recommendation for clarifying 

what biomass material can be counted toward the RFS, USDA agree

the executive agencies should consult on a definition and then p

any legislative changes to the appropriate congressional committees, 

stating that the department supports the 2008 Farm Bill’s definition. USDA 

also provided four substantive comments on the report. First, while the

department does not dispute most findings and conclusions, USDA noted 

biofuels production. GAO notes that USDA, in its comments, 

acknowledged the environmental challenges posed by increased biofuel 

production, and GAO agrees that strategies to mitigate these effects are

Agency Comme

and GAO’s Evaluation 

Page 13 GAO-09-446 
Executive Summary 

research on these effects has been balanced, GAO reviewed this 

discussion and provided additional clarification where appropriate. 

Second, USDA stated that the report is written as if EPA’s study on the 

s findings 

rs’ 

is 

ization of EPA’s rulemaking is accurate. Third, 

USDA suggested that the report discuss legislative restrictions on 

ligibility for some competitive research programs, which it believes are 

 of 

nd 

ond 

ent in 

rees 

eRFS is still in progress and suggests that the report discuss EPA’

and conclusions. GAO notes that EPA recently published peer reviewe

assessments of four key components of the lifecycle greenhouse gas 

emissions analysis in its May 2009 proposed rule. GAO believes that th

peer review is an important first step for scientists to understand and 

validate the assumptions and models that EPA’s lifecycle analysis used 

and that GAO’s character

e

important obstacles to achieving the best possible biofuels research. GAO

notes that examining the funding restrictions in the Energy Policy Act

2005 and other legislation that exclude federal government owned a

operated research facilities from receiving DOE grant funds was bey

the scope of work for this review. Finally, USDA said the assessm

appendix VI of the impact of linkages between the corn ethanol industry 

and the livestock industry needed clarification and correction. GAO ag

and has revised the appendix, as appropriate. See appendix VIII for 

USDA’s comments. 

In its written comments, DOE also addressed each of the three 

recommendations. Regarding the recommendation for determining 

biofuels’ lifecycle greenhouse gas emissions, DOE noted that EPA already 

consults with DOE on these matters and added that DOE would welcome

the opportunity to become more engaged in this process if requested to do 

so by the EPA Administrator. Regarding the recommendation for giving 

priority to R&D for producing biofuels that can be used by the existing

petroleum-based infrastructure, DOE commented that it has already 

expanded in this direction, noting recent and planned initiatives. For 

example, DOE cited a new solicitation to fund consortia to accelerate the 

development of advanced biofuels under the American Recovery and 

Reinvestment Act also supports infrastructure-compatible fuels and alga

based fuels, and DOE anticipates that hydrocarbon fuels will become a

higher priority in the future and contribute to RFS requirements for 

advanced biofuels. Regarding the recommendation for clarifying what 

biomass material can be counted toward the RFS, DOE stated that the 

department would welcome the opportunity to participate in deliberations 

about how to clarify the biomass definition if requested to do so by the 

EPA Administrator, adding that DOE supports an expansion of biomass 

eligibility to include materials that do not come from federal lands 

classified as environmentally sensitive and that can be grown and 

Page 14 GAO-09-446 Biofuels
Executive Summary 

harvested in a sustainable manner. DOE also provided four substa

comments on the report. First, DOE stated that the blend wall is not 

necessarily insurmountable to achieving the RFS’s goals, citing Energy 

Information Administration projections that E85 could account for 30 

percent of the total ethanol volume in 2020. While GAO does not disagree 

with this projection, GAO notes that expanded use of E85 would requ

substantial investment in the ethanol transportation and storage 

infrastructure—for example, EPA estimates that installing E85 refuelin

equipment will average $122,000 per facility. Second, DOE suggested that 

GAO revise its footnote in chapter 1 on Cello Energy’s production plans, 

noting that the company had recently lost a fraud lawsuit. GAO has

the reference to the Cello biorefinery. Third, in response to GAO’s 

statement citing DOE and ethanol industry expert concern about the 

limited capacity of the freight rail system, DOE said that ethanol cargo 

represents a mere fraction of total rail cargo and that the railway indust

has plans for major capital expansions over the coming decades. GAO 

revised its discussion of the freight rail challenges to increased biofuels 

use in chapter 7 to note, for example, that few blending terminals have th

off-loading capacity to handle large train shipments of ethanol. Finally, 

DOE noted that Kinder-Morgan has performed extensive testing on 

transporting ethanol

ntive 

ire 

g 

 revised 

ry 

e 

 in existing petroleum product pipelines in Florida. 

See appendix IX for DOE’s comments. 

the 

y 

ear 

e the 

uels’ 

In its written comments, EPA stated that the report comprehensively

identifies the main issues that should be considered when assessing 

expanded biofuels production. Regarding GAO’s suggestion that the 

Congress consider amending EISA to require that EPA assess the effects 

of increased biofuels production on the environment at all stages of the 

lifecycle and use this assessment in determining eligible biofuels under 

RFS, EPA said that (1) this issue might best be addressed by the newl

created Executive Biofuel Interagency Working Group, (2) EPA has cl

authorities and responsibilities under other statutes that may regulate 

aspects of a biofuel’s lifecycle, and (3) EISA requires that EPA evaluat

environmental effects of biofuels and submit a report to the Congress. 

GAO acknowledges that EPA has the authority under other statutes to 

mitigate the environmental effects of biofuels and believes that the 

evaluation currently required by section 204 of EISA will provide a good

foundation for the analysis GAO suggests. However, GAO believes the 

matter for congressional consideration would require EPA to not only 

assess the lifecycle effects of biofuels, but to actually use these 

assessments to determine which biofuels are eligible for consideration 

under the RFS. Regarding the recommendation for determining biof

lifecycle greenhouse gas emissions, EPA stated that the agency has

Page 15 GAO-09-446 Biofuels
Executive Summary 

worked closely with USDA and DOE in developing the lifecycle 

assessment methodology for its proposed rule and with the European

Union, other international governmental organizations, and scientists on

modeling, including the impact of indirect land-use change. GAO notes

that while EPA has obtained information from USDA and DOE, its 

lifecycle analysis methodology was not transparent because EPA did not 

shared its methodology with outside scientists before its Notice o

Proposed Rulemaking for the RFS regulation was published. GAO believe

the recently completed peer review of EPA’s methodology, including key 

assumptions and its analytical model, will improve the transparency of 

EPA’s lifecycle analysis. Furthermore, the indirect effects of land-use 

change on lifecycle greenhouse gas emissions are not well understo

and additional research is needed to address data limitations, unknow

variables, and major uncertainties. Regarding the recommendation for 

clarifying what biomass material can be counted toward the RFS, EPA 

stated that the agency is working with USDA to identify inconsistencies

and interpret how biomass is treated under EISA and the 2008 Farm Bill.

EPA also provided two substantive comments on the report. First, EPA 

stated that the analyses for its May 2009 proposed rule on lifecycle 

greenhouse gas emissions represent the most up-to-date and 

comprehensive assessment of many of these issues but commented it wa

not clear how GAO considered these an

f 

s 

od, 

n 

s 

alyses for this report. As 

previously stated, GAO believes that EPA’s recently completed peer 

s 

idate 

er 

w 

d 

ts. 

review of the key components of its lifecycle greenhouse gas emission

analysis is an important first step for scientists to understand and val

the data, assumptions, and models that EPA’s lifecycle analysis uses.

Second, EPA believes that many of the inconsistencies in biofuels 

assessments in the reported literature can in large part be explained eith

by differences in what is being modeled or, in some cases, by the use of 

more precise or up-to-date data and assumptions. GAO agrees with EPA

that important progress has been made in quantifying the direct effects of 

biofuels production on lifecycle greenhouse gas emissions. However, fe

studies have been performed that assess the indirect effects of land-use 

change, and further research is needed to improve scientific 

understanding about the data, assumptions, and assessment models use

to estimate these indirect effects. See appendix X for EPA’s commen

In addition, USDA, DOE, and EPA provided comments to improve the 

report’s technical accuracy, which GAO incorporated as appropriate. 

Page 16 GAO-09-446 Biofuels
Chapter 1: Introduction 

Page 17 GAO-09-446 

Chapter 1: Introduction 

The United States consumes more liquid fuels than any other nat

roughly 19.4 million barrels per day, or about 23 percent of world 

consumption in 2008—even though U.S. consumption fell in 2008 due to 

high crude oil prices and a weakened economy. The U.S. transportation

sector is almost entirely dependent on crude oil and accounts for al

two-thirds of total U.S. consumption. To meet the demand for oil in the 

face of limited and declining domestic production, the nation impor

about two-thirds of its oil in 2008 and will likely continue to do so absent 

dramatic reductions in consumption or significantly increased use of 

alternative fuels. Oil is a global commodity with relatively little spare 

production capacity even as world oil demand has grown substantially

recent years. As demonstrated by the high gasoline prices of 2008, even a 

minor disruption in global oil supply can cause economic difficulties for 

tens of millions of Americans. Oil use also adversely affects the 

environment through the emission of greenhouse gases—primarily carb

dioxide, methane, and nitrous oxide—which has resulted in a warmer 

global climate system with potentially damaging long-term effects.1

Biofuels are an alternative to petroleum-based transportation fuels a

produced from renewable sources, primarily corn, sugar cane

soybeans.2

 The United States is the world’s largest producer of biofuels. 

The Energy Policy Act of 2005 created a Renewable Fuel Standard

that generally required U.S. transportation fuel3

 to contain 4 billion ga

of renewable fuels, such as ethanol and biodiesel, in 2006 and 7.5 billion 

gallons of renewable fuels in 2012, absent a waiver from the Administrator 

 

ion—

most 

ted 

 in 

on 

nd are 

, and 

 (RFS) 

llons 

 

ses have 

 as 

ce in 

Agency (EPA) is authorized, upon a petition from Alaska or Hawaii, to allow the RFS to 

pply in that state. On June 22, 2007, Hawaii petitioned EPA to opt into the RFS, and the 

Administrator approved that request. For the purposes of this report, statements that the 

RFS applies to U.S. transportation fuel refer to the 48 contiguous states and Hawaii. 

1

Greenhouse gases trap a portion of the sun’s heat in the atmosphere and prevent the heat

from returning to space. The insulating effect, known as the greenhouse effect, moderates 

atmospheric temperatures, keeping the earth warm enough to support life. According to 

the Intergovernmental Panel on Climate Change—an organization within the United 

Nations that assesses scientific, technical, and economic information on the effects of 

climate change—global atmospheric concentrations of these greenhouse ga

increased markedly as a result of human activities over the past 200 years, contributing to a 

warming of the earth’s climate. 

2

Biofuels can be in solid, gaseous, or liquid form. In this report we refer to liquid biofuels

biofuels. 

3

Under the act, the RFS applies to transportation fuel sold or introduced into commer

the 48 contiguous states. However, the Administrator of the Environmental Protection 

a

 Biofuels 
Chapter 1: Introduction 

Page 18 GAO-09-446 Biofuels

of the Environmental Protection Agency (EPA).4 The Energy 

Independence and Security Act (EISA) of 2007 expanded the RFS, 

requiring that U.S. transportation fuels contain 9 billion gallons of 

renewable fuels in 2008 and increasing annually to 36 billion gallons in 

2022. 

In addition to improving the nation’s energy security by decreasing oil 

imports and developing rural economies by raising domestic demand for 

U.S. farm products, increased biofuels consumption may reduce 

greenhouse gas emissions as compared with fossil fuels. As shown in 

figure 1, emissions of carbon dioxide and other greenhouse gases occur in

each of the stages of growing, harvesting, processing, and using biofuels. 

For the past 20 years, researchers have used mathematical models—

particularly Argonne National Laboratory’s GREET model—to es

fuel-cycle energy use and lifecycle greenhouse gas emissions directly 

associated with biofuels production and to compare them with the ene

use and emissions of fossil fuels. However, researchers have only re

timate 

rgy 

cently 

begun to conduct research on the indirect effects of increased biofuels 

te the 

, 

air quality. 

 

production by examining the secondary effects of using agricultural lands 

to grow energy crops. Specifically, researchers are seeking to estima

added greenhouse gas effects if other lands, locally or elsewhere globally

are cleared and converted into agricultural land to replace the displaced 

agricultural production—referred to as land-use change.5

 In addition, 

expanding feedstock supplies and biofuels production may increase the 

use of scarce water supplies; raise food prices; and reduce soil, water, and 

 

 the 

is report, the RFS levels established in the act are referred 

to as requirements, even though these levels could be waived by the EPA Administrator. 

11(o)(1) of the Clean Air Act defines lifecycle greenhouse gas emissions as the 

aggregate quantity of greenhouse gas emissions—including direct emissions and significant 

ges 

n 

r, 

4

The act authorizes the EPA Administrator, in consultation with the Secretaries of 

Agriculture and Energy, to waive the RFS levels established in the act, by petition or on

Administrator’s own motion, if meeting the required level would severely harm the 

economy or environment of a state, a region, or the United States or there is an inadequate 

domestic supply. Throughout th

5

Section 2

indirect emissions such as significant emissions from land-use changes—as determined by 

EPA’s Administrator, related to the full fuel lifecycle. Lifecycle emissions include all sta

of fuel and feedstock production and distribution, from feedstock generation or extractio

through the distribution and delivery and use of the finished fuel to the ultimate consume

where the mass values for all greenhouse gases are adjusted to account for their relative 

global warming potential. 
Chapter 1: Introduction 

Figure 1: Greenhouse Gas Emissions Associated with the Biofuels Production Process 

Biofuels

Microbes ferment

sugars into 

ethanol

Carbon

Dioxide

Carbon

Dioxide

Carbon

Dioxide

Carbon

Dioxide

Carbon

Dioxide

Pre-processing

Cellulose

Harvesting

Biomass

Solar Energy

and Carbon 

Dioxide

Sugars

Enzymes break cellulose

down into sugars

Sources: DOE; Art Explosion (images).

Page 19 GAO-09-446 Biofuels
Chapter 1: Introduction 

Biofuels

Ethanol is the most commonly produced 

about 98 percent of it is made from corn that is grown primarily in the 

biofuel in the United States, and 

Midwest.6

 Corn contains starch, which can be converted relatively easily 

into sugar and then fermented and distilled into fuel ethanol (ethyl 

alcohol), the same compound found in alcoholic beverages. Each 56-

pound bushel of corn that is processed in a biorefinery yields roughly 2.7 

gallons of ethanol fuel. Currently, only the starch from the corn kernel is 

used to make the fuel, and the remaining substance of the kernel is 

available to create additional economically valuable products. These are 

known as co-products and include dried distiller’s grains, an animal feed 

primarily used for beef and dairy cows. About 3 billion bushels of corn, or 

about 23 percent of the nation’s 13-billion bushel corn crop, were used to 

produce ethanol during the 2007-2008 corn marketing year, according to 

the U.S. Department of Agriculture’s (USDA) February 2009 estimates.7

USDA estimated that this will increase to 3.7 billion bushels, or about 30 

percent of the corn crop, for the 2008-2009 marketing year.8

Corn is converted to ethanol through fermentation using one of two 

standard processes, wet milling or dry milling. The main difference is the 

initial treatment of the corn kernel. In the wet-mill process, the corn 

kernel is steeped in a mixture of water and sulfurous acid that helps 

separate the kernel into starch, germ, and fiber components. The starch 

that remains after this separation can then be fermented and distilled into 

fuel ethanol. In the dry-mill process, the kernel is first ground into flour 

meal and processed without separating the components of the corn kernel. 

The meal is then slurried with water to form a mash and enzymes are 

added to convert the starch in the mash to a fermentable sugar. The sugar 

is then fermented and distilled to produce ethanol. Traditional dry-mill 

ethanol plants are cheaper to construct and operate than wet-mill plants 

but yield fewer marketable co-products. Dry-mill plants produce distiller’s 

grains (used as cattle feed) and carbon dioxide (used to carbonate soft 

drinks) as co-products, while wet-mill plants produce many more co-

 

6

Ethanol is also imported from some member nations of the Caribbean Basin Initiative and 

Brazil, which use sugarcane as their feedstock, and produced from domestically grown 

orghum. 

7

The 2007-2008 corn marketing year began September 1, 2007, and ended August 31, 2008. 

These estimates were based on 93.5 million planted acres in 2007, of which 86.5 million 

were harvested, at an average yield of 150.7 bushels per acre. For 2008, USDA estimated 

that corn growers will plant 86 million acres, of which 78.6 million would be harvested, at 

an average yield of 153.9 bushels per acre. 

s

8

Corn Starch Ethanol 

Is the Primary U.S. 

Biofuel 

Page 20 GAO-09-446 
Chapter 1: Introduction 

products, including corn oil, carbon dioxide, corn gluten meal, and corn 

gluten feed. 

The biggest use of fuel ethanol in the United States is as an additive

gasoline. Ethanol is primarily blended with gasoline in mixtures of ab

10 percent, called E10, or less, which can be used in any gasoline powered

vehicle. A relatively small volume is also blended at a higher level called 

E85—a blend of about 85 percent ethanol—which can be used only i

specially designed vehicles known as flexible-fuel vehicles because they 

can use either gasoline or E85. Ethanol contains only about two-thirds of 

the energy of a gallon of gasoline, so consumers must purchase more fuel 

to travel the same distance. A gasoline blend containing 10 percent ethano

results in a 2 percent to 3 percent decrease in fuel economy, while in a 

higher blend such as E85 drivers experience about a 25 percent reductio

in fuel economy. Because vehicle manufacturers have generally designed 

vehicles to operate primarily on gasoline, most warranties fo

 in 

out 

n 

l 

n 

r non-flexiblefuel vehicles allow the company to void the warranty if the owner uses 

s 

es is 

t 

g 

g 

 

fuels containing more than 10 percent ethanol. 

U.S. biodiesel fuel is made from soybeans and other plant oils (such a

cottonseed and canola), animal fats (such as beef tallow, pork lard, and 

poultry fat), and recycled cooking oils.9

 Soybean oil has been the most 

commonly used biodiesel feedstock in the United States.10 According to 

the National Biodiesel Board, soybean oil made up about 65 percent of the 

feedstock used to produce domestic biodiesel in 2008. The United Stat

the world’s largest soybean producer and exporter—farmers produced 

about 2.7 billion bushels of soybeans in 2007-2008 and will produce abou

3 billion bushels of soybeans in 2008-2009, according to USDA.11 Accordin

to the Energy Information Administration, most U.S. biodiesel production 

in recent years has been exported to European Union countries.12

However, the European Commission imposed provisional antidumpin

Biofuels

 

ant feedstocks for biodiesel production are rapeseed in Europe and palm, 

astor oils in tropical and subtropical countries. 

11The 2007-2008 soybean marketing year began September 1, 2007, and ended August 31, 

 Energy Outlook, April 2009. 

Soybean Oil Is the 

Major U.S. Biodiesel 

Feedstock 

9

It is generally estimated that 7.5 pounds of soybean oil will yield 1 gallon of biodiesel. 

10Predomin

coconut, and c

2008. 

12Energy Information Administration, Short-Term Energy Outlook Supplement: Biodiesel 

Supply and Consumption in the Short-Term

Page 21 GAO-09-446 
Chapter 1: Introduction 

and antisubsidy duties on U.S. biodiesel imports in March 2009. Biodiesel

is most commonly used as a blend with petroleum diesel, and B20 (20 

percent biodiesel) is the most commonly used biodiesel blend in the 

f 6 

s 

e biofuels. These 

feedstocks are called cellulosic because much of their biomass is in the 

rm of cellulose, a complex molecule found in plants. Plant biomass is 

•

•

husks of corn plants), corn fiber, wheat straw, rice straw, and sugarcane 

bagasse. 

•

ills. 

•

Ethanol and Other Biofuels

Can Be Produced from a 

Variety of Biomass 

United States. The energy content of a gallon of biodiesel is about 8 

percent lower than that of petroleum diesel, causing vehicles running on 

B20, for example, to experience about a 2 percent decrease in fuel 

economy. At concentrations of up to 5 percent, biodiesel can be used in 

any application as if it were pure petroleum diesel. At concentrations o

percent to 20 percent, biodiesel blends can be used in several application

that use diesel fuel with minor or no modifications to the equipment, 

although certain manufacturers do not extend warranty coverage if 

equipment is damaged by these blends. 

While ethanol is currently produced primarily from sugar- and starch-rich 

food crops, the biomass in the stalks, stems, branches, and leaves of 

various plants and trees can also be used to mak

fo

made up primarily of cellulose, hemicellulose, and lignin. Cellulose and 

hemicellulose are made up of potentially fermentable sugars. Lignin 

provides the structural integrity of plants by enclosing the tightly linked

cellulose and hemicellulose molecules, which makes these molecules 

harder to reach. Because cellulosic feedstocks are diverse, abundant, and 

potentially inexpensive, their use could greatly expand biofuel production. 

Cellulosic feedstocks include: 

Dedicated annual or perennial energy crops: includes switchgrass, forage 

sorghum, miscanthus, hybrid poplar, and willow. 

Agricultural residues: includes corn stover (the cobs, stalks, leaves, and

Forest residues and by-products: includes forest thinnings from stand 

improvement or removal of excess understory trees, forest residues (dead 

trees and branches), and hardwood sawdust and chips from lumber m

Municipal and other wastes: includes household garbage and paper 

products. 

Page 22 GAO-09-446 Biofuels
Chapter 1: Introduction 

Cellulosic conversion technology currently focuses on two processes: 

A biochemical process uses acids and enzymes to break down cellulo

and hemicellulose into fermentable sugars. This also makes lignin 

available to be burned to produce steam and electricity. In a biochemical 

process, the percentage of the cellulosic feedstock that is made of 

potentially fermentable sugars will determine its potential ethanol yield.

• se 

•

oduces a mixture of carbon 

monoxide and hydrogen, known as syngas. Pyrolysis—heating biomass in 

e absence of oxygen—produces liquid pyrolysis oil. Syngas and pyrolysis 

il can then potentially be refined into a number of biofuels products, 

, into 

up to $272 million, subject to annual 

appropriations, to support the cost of constructing four small biorefineries 

13

A thermochemical process uses gasification and pyrolysis technologies to 

convert biomass and its residues to fuels, chemicals, and power. 

Gasification—heating biomass with about one-third of the oxygen 

necessary for complete combustion—pr

th

o

including ethanol, gasoline, jet fuel, and diesel fuel. Because the 

thermochemical process can convert the whole plant, including lignin

fuel, it can potentially produce more biofuel from a feedstock than

biochemical conversion. Researchers at the Department of Energy’s 

(DOE) National Renewable Energy Laboratory have reported liquid 

product yields of 75 percent (by feedstock weight) when using fast 

pyrolysis, one method of thermochemical conversion. 

Some small biorefineries have begun to process cellulosic feedstocks 

using either biochemical or thermochemical conversion technologies.14

However, no commercial-scale facilities are currently operating in the 

United States. DOE is providing

that will process cellulosic feedstocks using either a biochemical or 

thermochemical conversion technology. 

 

13See Biomass Research and Development Board, Increasing Feedstock Production for 

Biofuels Economic Drivers, Environmental Implications, and the Role for Research 

lds 

For example, Cello Energy recently opened a biorefinery in Bay Minette, Alabama, that 

uses pyrolysis technology to process tires, hay, straw, wood chips, and switchgrass. 

(Washington, D.C., December 2008) for information about biomass yields and fuel yie

for different biofuel feedstocks. 

14

Page 23 GAO-09-446 Biofuels
Chapter 1: Introduction 

Biofuels

The Energy Tax Act of 1978, among other things, provided tax incentives 

designed to stimulate the production of ethanol for blending with 

placed 

Farm Bill) effectively reduced the VEETC to 45 cents per gallon beginning 

 biofuels 

ts for 

ount of 

ugh 

hich 

 the 

gh 

ich offsets the 

advantage foreign ethanol producers may gain from the VEETC. 

 in 

ns 

ing a 

uce the amount of renewable 

fuels required to be blended in gasoline in whole or in part if the 

dministrator determines that (1) its implementation would severely harm 

 

gasoline.15 Specifically, the act authorized a motor fuel excise tax 

exemption for ethanol blends, which effective January 2005 was re

by the Volumetric Ethanol Excise Tax Credit (VEETC) to provide ethanol 

blenders with an excise tax credit of 51-cents per gallon of ethanol 

through 2008.16 The Food, Conservation, and Energy Act of 2008 (the 2008 

in 2009 and established a $1.01 per gallon tax credit through 2012 for 

cellulosic biofuels producers.17 Additional tax credits that support

include a $1 per gallon tax credit for biodiesel production, tax credi

small producers of ethanol or agri-biodiesel, an income tax credit for

alternative fueling infrastructure, and a depreciation deduction for 

cellulosic ethanol facilities.18 These tax credits are examples of tax 

expenditures, so named because they result in revenue losses for the 

federal government because the government forgoes a certain am

tax revenue to encourage specific behaviors by a particular group of 

taxpayers, making them in effect spending programs channeled thro

the tax system. The largest of these tax expenditures is the VEETC, w

cost $4 billion in forgone tax revenue in fiscal year 2008, according to

Department of the Treasury. The 2008 Farm Bill also extended throu

2010 a 54-cent-per-gallon tariff on imported ethanol, wh

The federal government also supports biofuels through the RFS. EISA 

amended the RFS in 2007 to require that the amount of renewable fuels

transportation fuel in the United States increase from 11.1 billion gallo

in 2009 to 36 billion gallons in 2022. However, EISA allows the 

Administrator of EPA, after consulting with USDA and DOE and hold

public notice and comment period, to red

A

15Pub. L. No. 95-618, §221 (1978). 

16Pub. L. No. 108-357, §301 (2004). 

1) Small Ethanol Producer Credit; Pub. L. No. 109-58, 

§1345, §1342 (2005) Small Agri-Biodiesel Tax Credit and Alternative Fuel Infrastructure Tax 

The Federal 

Government Has 

Used Tax 

Expenditures, the 

RFS, and an Ethanol 

Import Tariff to 

Stimulate Domestic 

Biofuels Production 

17The 2008 Farm Bill limits the combined value of all tax credits for cellulosic ethanol to 

$1.01 per gallon. 

18Pub. L. No. 101-508, §11502 (199

Credit; Pub. L. No. 109-432, §209 (2006) Special Depreciation Allowance for Cellulosic 

Biomass Ethanol Plant Property 

Page 24 GAO-09-446 
Chapter 1: Introduction 

the economy or environment of a state, a region, or the United States or 

(2) there is an inadequate domestic supply. 

For 2009, the 11.1 billion gallons of biofuels must include at least 600 

million gallons of advanced biofuels—defined as renewable fuel other than

ethanol derived from corn starch that meet certain criteria—and up

billion gallons of conventional biofuels—defined as ethanol derived from 

corn starch and includes other biofuels that are not considered to be 

advanced biofuels.

 to 10.5 

tains 

se 

ons. 

r 

rch 

ed 

e 

 fuels, 

 

19 The RFS further specifies that of the 600 million 

gallon of advanced biofuels for 2009, at least 500 million gallons must 

come from biomass-based diesel.20

Beginning in 2010, the general requirement for advanced biofuel con

separate volume requirements for both biomass-based diesel and 

cellulosic biofuels. Beginning in 2015 and continuing through 2022, the

advanced biofuel requirements essentially limit the annual amount of 

conventional biofuels that can count toward the RFS to 15 billion gall

The 36-billion-gallon biofuel requirement for 2022 includes a minimum of

21 billion gallons of advanced biofuels, of which (1) at least 16 billion 

gallons must be cellulosic biofuels, (2) at least 1 billion gallons must be 

biomass-based diesel, and (3) the remaining 4 billion gallons can be othe

advanced biofuels, such as butanol or ethanol derived from sugar or sta

other than corn starch. 

To be eligible for consideration under the RFS, renewable fuels produc

by biorefineries for which construction began after EISA’s enactment on 

December 19, 2007, must generally achieve at least a 20 percent reduction

in lifecycle greenhouse gas emissions as compared with baselin

petroleum fuels.21 However, advanced biofuels and biomass-based diesel 

under the RFS must generally achieve at least a 50 percent reduction in 

lifecycle greenhouse gas emissions relative to baseline petroleum

19Because of its lower production cost, corn starch ethanol is the predominant U.S. biofuel 

ry scheme for the RFS created pursuant to the Energy 

Policy Act of 2005 did not provide a mechanism for implementing this requirement in 2009. 

ss-based diesel requirement by 500 million gallons and allowing obligated 

demonstrate compliance only at the end of the 2010 compliance period. 73 Fed. 

o 

used to meet the RFS. 

20EPA determined that the regulato

Accordingly, EPA decided to create a combined 2009/2010 requirement by increasing the

RFS’s 2010 bioma

parties to 

Reg. 70643 (Nov. 21, 2008). 

21Biorefineries for which construction began before EISA’s enactment are not subject t

this requirement. 

Page 25 GAO-09-446 Biofuels
Chapter 1: Introduction 

while cellulosic biofuels must generally achieve at least a 60 percent 

reduction, regardless of when the biorefinery producing the fuel was 

constructed.22

 the 

e 

iofuels. Subsequently, in late July 

2009, four peer review analyses of key components of EPA’s lifecycle 

time, (2) 

d, 

ent, apart from greenhouse gas emissions, in order 

for a fuel to be eligible for consideration under the RFS. After 2022, EISA 

rmation 

promote the environmental sustainability of biofuels feedstock 

production, taking into consideration land use, habitat conservation, crop 

 

EISA requires that EPA promulgate a regulation that determines the 

lifecycle greenhouse gas emissions of biofuels and delineates which are 

eligible for consideration under the RFS based on the specified reductions

and other statutory requirements. On May 26, 2009, EPA published a 

Notice of Proposed Rulemaking in the Federal Register that proposes

regulatory structure to implement the RFS and methods for calculating th

lifecycle greenhouse gas effects of b

analysis were completed: (1) methods and approaches to account for 

lifecycle greenhouse gas emissions from biofuels production over 

model linkages, (3) international agricultural greenhouse gas emissions 

and factors, and (4) satellite imagery. The proposed rule, if promulgate

would adjust the required lifecycle greenhouse gas emissions reductions 

for advanced biofuels from at least a 50 percent reduction to 44 percent or

40 percent in comparison with petroleum fuels. 

Although the proposed rule includes an analysis of environmental and 

health impacts, EISA does not require EPA to determine a fuel’s lifecycle 

impact on the environm

requires EPA, in coordination with DOE and USDA, to establish the RFS 

based, in part, on the impact of the production and use of renewable fuels

on the environment, including on air quality, wildlife habitat, water quality,

and water supply. On May 5, 2009, the President announced the fo

of a Biofuels Interagency Working Group, co-chaired by the Secretary of 

Agriculture, the Secretary of Energy, and the Administrator of EPA. The 

working group is tasked, in part, with identifying new policy options to 

management practices, water efficiency and water quality, as well as 

lifecycle assessments of greenhouse gas emissions. 

 ductions in lifecycle greenhouse gas emissions that each type 

of renewable fuel must achieve, it also authorizes EPA to adjust the required reductions if 

logies, and processes. 

22While EISA specifies the re

the specified reduction is not commercially feasible for fuels made using a variety of 

feedstocks, techno

Page 26 GAO-09-446 Biofuels
Chapter 1: Introduction 

To ensure that the RFS is met, EPA sets a blending standard each yea

represents the amount of biofuel that each refiner, importer, and certa

blenders of gas

r that 

in 

oline must use.23 In November 2008, EPA set the blending 

standard at 10.21 percent for 2009, which is designed to satisfy EISA’s 

ons 

reas 

nt 

h 

c 

g 

sic 

uels. DOE is also 

 

general requirement that transportation fuels contain 11.1 billion gall

of biofuels for the year. This means that most refiners, importers, and 

blenders of gasoline will have to displace 10.21 percent of their gasoline 

with biofuels. 

Other statutory requirements EPA implements help maintain a market for 

ethanol. For example, the Clean Air Act Amendments of 1990 require a

with the worst air quality to use reformulated gasoline, which includes

oxygenate additives that increase the oxygen content of the fuel and 

reduce emissions of carbon monoxide in some engines. Methyl tertiary 

butyl ether (MTBE) was the most common oxygenate additive until rece

years, when it was found to contaminate groundwater. As of 2007, MTBE 

had been banned in 25 states. In its place, ethanol has been increasingly 

used as the primary oxygenate in gasoline—increasing its demand. 

DOE supports biofuels research and development (R&D) efforts throug

its Biomass Program, within the Office of Energy Efficiency and 

Renewable Energy, and through its Office of Science. DOE’s Biomass 

Program focuses on (1) developing more sustainable and competitive 

feedstocks than corn, primarily by exploring technologies to use cellulosi

biomass; (2) reducing the cost of producing cellulosic ethanol; (3) 

converting biomass to biofuels through both biochemical and 

thermochemical processes; (4) helping to develop a national biofuels 

infrastructure by, for example, funding the construction of projects 

demonstrating integrated biorefinery technologies that use multiple 

feedstocks; and (5) promoting market-oriented activities for acceleratin

the deployment of biomass technologies.24 DOE’s Office of Science jointly 

funds projects focused on biomass genomics with USDA and funds and 

operates three Bioenergy Research Centers, designed to accelerate ba

research to develop cellulosic ethanol and other biof

Biofuels

23The yearly blending standard is calculated as a percentage, by dividing the amount of 

 that the RFS requires to be used in a given year by the amount of gasoline 

, D.C.: March 5, 2008). 

DOE and USDA 

Support Biofuels R&D 

and Demonstration 

renewable fuel

expected to be used during that year, including certain adjustments specified by EISA. 

24See GAO, Advanced Energy Technologies: Budget Trends and Challenges for DOE’s

R&D Program, GAO-08-556T (Washington

Page 27 GAO-09-446 
Chapter 1: Introduction 

responsible for monitoring compliance with the requirement that 75 

percent of federal fleet vehicle acquisitions be capable of using alternative 

fuels and the goal of increasing use of these fuels.25

USDA’s Agricultural Research Service and Forest Service primarily 

conduct in-house R&D on feedstock development, sustainable harvest 

production, and commercially viable conversion of agricultural feedstock

into fuel ethano

and 

s 

l, butanol, biodiesel, pyrolysis-derived fuels, and value 

added co-products. In addition to these biofuels R&D activities, the 

• n 

t 

• onservation Stewardship Program: provides payments to encourage 

intaining, 

ourages 

, 

he 

al 

nonfederal lands; and the Forest Service’s Forest Inventory and Analysis 

program is responsible for data collection and publication of information 

 

Natural Resources Conservation Service administers the following two 

programs: 

Environmental Quality Incentives Program: a voluntary conservatio

program for farmers and ranchers, to promote agricultural production, 

forest management, and environmental quality as compatible national 

goals. The program offers participants financial and technical assistance 

through contracts ranging from 1- to 10-year terms to install or implemen

structural and land management practices. 

C

producers to address resource concerns in a comprehensive manner by 

undertaking additional conservation activities and improving, ma

and managing existing conservation activities. 

The Farm Service Agency administers the Conservation Reserve Program, 

a cost-share and rental payment program that assists producers in 

improving soil, water, and wildlife resources. The program enc

farmers to convert highly erodible cropland or other environmentally 

sensitive acreage to vegetative cover, such as tame or native grasses

wildlife plantings, trees, filter strips, or riparian buffers. In addition, t

Economic Research Service and Office of the Chief Economist analyze 

and report on trends and effects associated with biofuels production; the 

National Agricultural Statistics Service gathers data and reports on sever

aspects of U.S. agriculture; the Natural Resources Conservation Service 

gathers data on land use and natural resource conditions and trends on

 

See GAO, Federal Energy Management: Agencies Are Acquiring Alternative Fuel 

ton, 

25

Vehicles but Face Challenges in Meeting Other Fleet Objectives, GAO-09-75R (Washing

D.C.: Oct. 22, 2008). 

Page 28 GAO-09-446 Biofuels
Chapter 1: Introduction 

on status and trends of trees (growth, mortality, and removals), fores

products and utilization, and forest land ownership in the United States 

and the territories. 

t 

fice of Science and Technology Policy; the Office of the 

Federal Environmental Executive; the Departments of Commerce, 

h 

0 

iomass Research and 

Development Initiative to award grants, contracts, and financial assistance 

ations to address the 

constraints surrounding availability of biomass feedstocks.27 The Board 

d 

 7 

s 

 

The Biomass Research and Development Act of 2000 directed the 

Secretaries of Agriculture and Energy to coordinate policies and 

procedures that promote R&D leading to the production of biofuels and

biobased products.26 The act created the Biomass Research and 

Development Board, co-chaired by DOE and USDA with representation 

from the Of

The Biomass Research and 

Defense, the Interior, Transportation, and the Treasury; EPA; and the 

National Science Foundation. The act also created the Biomass Researc

and Development Technical Advisory Committee, composed of about 3

representatives from industry, academia, and state government. In 

addition, the act directed the Secretaries of Agriculture and Energy to 

establish, in consultation with the Board, a B

to carry out research on and development of biofuels and biobased 

products. The Biomass Research and Development Board issued a 

multiagency National Biofuels Action Plan in October 2008 and a report in 

December 2008 to inform research recommend

has also completed or drafted reports on such subjects as biomass 

conversion, sustainability, feedstock production, and logistics. 

In addition to federal efforts to support biofuel development, several 

states have established laws and policies to increase the availability an

use of biofuels. In 2007, the American Coalition for Ethanol reported that

states have mandates that require the use of ethanol-blended fuels, 23 

states provide ethanol production incentives, and 13 states offer incentive

to encourage retailers to provide biofuels at their stations. 

26Pub. L. 106-224, Title III, 114 Stat. 428 (as amended by section Pub. L. No. 109-58, Pub. L. 

No. 110-14, and Pub. L. No. 110-246). 

ecember 2008). 

Development Board 

Coordinates Federal R&D 

27Biomass Research and Development Board, Increasing Feedstock Production for 

Biofuels: Economic Drivers, Environmental Implications, and the Role of Research 

(Washington, D.C., D

Page 29 GAO-09-446 Biofuels
Chapter 1: Introduction 

Biofuels

The Chairman of the Senate Committee on Environment and Public Wo

and Senator Susan M. Collins asked us to assess several issues related to

the increased produ

rks 

ction of ethanol and other biofuels in the United 

States. Specifically, we examined (1) the known agricultural and related 

ffects of increased biofuels feedstock production in the United States; (2) 

n and 

tocks; (4) 

g the 

iewed 

ally, 

ify 

erlly 

uction 

n food, 

feed, and livestock markets as well as on overall biofuels feedstock yield 

d 

ethods, 

scenarios, and relevant findings of economic models of biofuels’ potential 

ffects on agriculture. For the most part, these studies were national in 

scope and generated quantitative or empirical results. Some of the studies 

also modeled the effects of increased biofuels production on relevant 

agricultural and energy programs or policies. 

mental effects of increased feedstock 

te government reports. In conducting this 

Objectives, Scope, 

e

and Methodology 

the known environmental effects of increased feedstock cultivatio

conversion and biofuels use in the United States; (3) the results, 

assumptions, and limitations of key scientific analyses of the lifecycle 

greenhouse gas effects of biofuels produced from different feeds

federal support for developing a domestic biofuels industry; (5) federal 

funding for advanced biofuels R&D; and (6) key challenges in meetin

RFS’s specified levels. 

To examine known agricultural and related effects of increased biofuels 

production in the United States, we reviewed recent economic and 

scientific articles and recent reports of federal agencies. We also rev

studies, reports, and presentation materials from the Biomass Research

and Development Board and obtained relevant USDA data. Specific

we searched databases including SciSearch, Biosis Previews, ProQuest, 

EconLit, and AgEcon Search and used a snowball technique to ident

relevant peer-reviewed articles. We reviewed scientific articles in pe

reviewed journals that fit the following criteria: (1) the research was of 

sufficient breadth and depth to provide observations or conclusions 

directly related to our objectives; (2) the research was targeted specifica

toward projecting or demonstrating effects of current biofuels prod

and advanced biofuels production on U.S. agriculture, namely o

and productivity, land-use intensification or expansion, and rural 

development; and (3) the studies were typically published between 2002 

and 2008 by U.S.-based researchers. Based on these criteria, we selected 

62 studies (see app. I). Of these, we selected 12 studies for more detaile

analysis (see app. II). These studies contain empirical economic analysis 

and were chosen because they present key assumptions, m

e

To examine the known environ

cultivation and conversion and biofuels use in the United States, we 

conducted a review of relevant scientific articles, U.S. multidisciplinary

studies, and key federal and sta

Page 30 GAO-09-446 
Chapter 1: Introduction 

review, we searched databases such as SciSearch, Biosis Previews, and 

ProQuest and used a snowball technique to identify additional studies, 

asking experts to identify relevant studies and reviewing studies from

article bibliographies. We reviewed studies that fit the following criteria 

for selection: (1) the research was of sufficient breadth and depth to 

provide observations or conclusions directly related to our objectives; (2

the research was targeted specifically toward projecting or demo

effects of increased biofuel feedstock cultivation, conversion, and use o

U.S. water supply, water quality, soil quality, air quality and biodiversity; 

and (3) typically published from 2004 to 2008. In reviewing 62 articles an

studies (see app. III), we examined key assumptions, methods, and 

relevant findings of major scientific a

) 

nstrating 

n 

d 

rticles, primarily on the water quality, 

water supply, soil quality, and air quality effects. 

fic 

n 

s 

e 

ot 

cks. We also reviewed the 

proposed California Air Resources Board regulation to implement 

s 

To examine the findings, assumptions, and limitations of key scienti

analyses of the lifecycle greenhouse gas effects of biofuels produced from 

different feedstocks, we reviewed recent scientific articles in peerreviewed journals that examined the energy effects of biofuels, including

net energy effects and greenhouse gas emissions of biofuels compared 

with fossil fuels. Specifically, we used a snowball sampling technique, 

asking experts and relevant stakeholders to identify key studies and the

checking in the citations of these articles for other relevant work to 

identify studies that (1) provided specific estimates of greenhouse ga

emissions from ethanol and biodiesel produced from biofuel feedstocks 

and (2) were published from 2004 to 2009 by U.S.-based researchers. We 

then examined 12 studies that quantified a change in lifecycle greenhous

gas emissions of biofuels compared with that of fossil fuels as well as 18 

studies that found a change in greenhouse gas emissions but did n

compare the effects with fossil fuels. We also reviewed 16 additional 

studies that examined the effects of different inputs, assumptions, and 

data gaps on lifecycle analysis conclusions. (See app. IV for the 46 

scientific studies on the lifecycle greenhouse gas effects of biofuels we 

reviewed.) In doing this work, we made site visits to DOE’s Argonne

National Laboratory to interview the scientists who developed the GREET 

model that is widely used to calculate greenhouse gas emissions and 

DOE’s Oak Ridge National Laboratory to interview scientists about their 

efforts to develop switchgrass as an energy crop and calculate the 

greenhouse gas emissions of cellulosic feedsto

California’s low carbon fuel standard. 

Based on our review of the methodologies of each of the scientific studie

included to assess agricultural and related effects, environmental effects, 

Page 31 GAO-09-446 Biofuels
Chapter 1: Introduction 

and greenhouse gas emissions, we determined each to be sufficiently 

sound to include in this report. We also collaborated with the National 

Academy of Sciences to identify recognized experts affiliated with U.S.

based institutions, including academic institutions, the federal 

government, and research-oriented entities for each of the following a

The effects of increased biofuels production on agriculture. Experts who 

published peer-reviewed research articles or texts or significantly 

contributed to government studies that either (1) analyzed the effects of 

one or more biofuel feedstocks on U.S. agriculture; (2) estimated how 

expansion of U.S. biofuels production on agricultural or nonagricult

lands has impacted, is impacting, or will potentially impact food, feed, or 

fertilizer markets, major agricultural conservation

-

reas: 

•

ural 

 programs, or any 

associated price and income effects; or (3) examined practices to maintain 

g 

e 

•

iofuel 

ds 

• rs 

t 

, 

as 

nd, 

lified 

er, it is important to note that, 

given our methodology, we may not have identified all of the studies with 

or increase crop or biofuels feedstock productivity levels while mitigatin

any adverse effects on environmental quality. We also asked the National 

Academy of Sciences to identify recognized experts from the privat

sector. 

The effects of increased biofuels production on water quality, soil 

quality, water supply, and air quality. Experts who have (1) published 

research analyzing the water resource requirements of one or more b

feedstocks and the implications of increased biofuels production on lan

with limited water resources, agricultural lands, marginal lands, or highly

erodible lands; (2) analyzed the possible effects of increased biofuel 

production on water, soil, habitat, and biodiversity; or (3) analyzed 

pollution resulting from biofuels production and use. 

The lifecycle greenhouse gas effects of biofuels production. Researche

who have recently published peer-reviewed research that examined the

lifecycle greenhouse gas effects of biofuels produced from differen

feedstocks. Because we were asked to examine the results, assumptions

and limitations of key scientific analyses of the lifecycle greenhouse g

effects of biofuels produced from different feedstocks, we limited our 

interviews to the researchers who published these scientific studies a

as a result, are most knowledgeable about the models and data used for 

analysis. 

We believe we have included the key scientific studies and have qua

our findings where appropriate. Howev

findings relevant to these three objectives. Where applicable, we assessed 

Page 32 GAO-09-446 Biofuels
Chapter 1: Introduction 

the reliability of the data we obtained and found them to be sufficientl

reliable for our purposes. 

Together with the National Academy of Sciences’ lists of expert

identified authors of key agricultural, environmental, and greenhouse gas 

y 

s, we 

studies as a basis for conducting semistructured interviews to assess what 

rviewed 

, 

by 

ists and nonprofit organizations.) We conducted semistructured 

interviews of cognizant federal officials and academic and government 

; the 

DOE 

005 

 guarantees for 

biofuels projects. We also obtained R&D data from EPA but excluded 

tural 

e 

rch, 

ency; Rural Development mission area; National Agricultural 

Statistical Service; Office of Budget and Program Analysis; and Risk 

and interviewed federal agency officials and executives from industry 

is known about the effects of the increasing production of biofuels and 

important areas that need additional research. The experts we inte

included research scientists in such fields as agricultural economics, 

environmental and natural resource economics, agronomy, soil science

ecology, air quality, and engineering. We also conducted interviews with 

cognizant federal agency officials and industry association executives. 

To assess federal support for developing a domestic biofuels industry, we 

reviewed the economic literature on the impacts of various policy tools 

used to provide federal support and their interactions, including both 

conceptual and empirical analyses. (See app. V for 10 recent analyses 

econom

economists and reviewed Treasury data on federal tax expenditures

R&D tax credit and other tax expenditures generally available to 

businesses were excluded. We applied conventional economic reasoning 

in analyzing the incidence of tax credits. 

To examine federal support for advanced biofuels R&D, we obtained 

and USDA data on (1) obligations for biofuels R&D for fiscal years 2

through 2008 and (2) commitments for grants and loan

other federal agencies because they obligated only limited funds for 

biofuel R&D. We did not attempt to determine the market value of 

proposed federal loan guarantees. To determine what federal agricul

research is underway to support a transition to advanced biofuels 

feedstock production, we conducted interviews with USDA officials in th

Agricultural Research Service; Forest Service; Cooperative State Resea

Education, and Extension Service; Natural Resources Conservation 

Service; Economic Research Service; Office of the Chief Economist; Farm

Service Ag

Management Agency. 

To examine the key challenges in meeting the RFS’s specified levels, we 

reviewed relevant literature and federal and industry association reports, 

Page 33 GAO-09-446 Biofuels
Chapter 1: Introduction 

associations. We also conducted site visits to DOE’s National Renewable

Energy Laboratory, Argonne National Laboratory, and Oak Ridge National 

Laboratory and USDA’s National Center for Agricultural Utilization 

ers 

Council, The Nature Conservancy, and World Resources Institute. 

ds 

e 

r 

Research and Eastern Regional Research Center. 

In addition, we interviewed executives from cognizant industry 

associations and nonprofit organizations for each of the objectives. The 

industry associations include the American Meat Institute, Biotechnology 

Industry Organization, National Biodiesel Board, National Corn Grow

Association, and Renewable Fuels Association, which represent various 

agricultural, energy, and biofuels industries. The nonprofit organizations 

include the Environmental Working Group, Natural Resources Defense 

We conducted our work from July 2008 through July 2009 in accordance

with generally accepted government auditing standards. These standar

require that we plan and perform the audit to obtain sufficient, appropriat

evidence to provide a reasonable basis for our findings and conclusions 

based on our audit objectives. We believe that the evidence obtained 

provides a reasonable basis for our findings and conclusions based on ou

audit objectives. 

Page 34 GAO-09-446 Biofuels
Chapter 2: Biofuels Production Has Had 

Mixed Effects on U.S. Agriculture, but the 

Effects of Expanded Production Are Less 

Certain 

Page 35 GAO-09-446 

Chapter 2: Biofuels Production Has Had Mixed 

Effects on U.S. Agriculture, but the Effects of 

Biofuels production has had mixed effects on U.S. agriculture, including 

effects on land use, crop selection, livestock production, rural economies, 

and food prices. For example, the increasing demand for corn for eth

production has led to higher corn prices, provided

anol 

 economic incentives for 

some producers to devote additional acres to corn production, and 

 prices 

production, among other factors such as high energy costs and tight global 

t 

fect 

, forest, conservation, and extension programs 

potentially could reduce risk and provide incentives to encourage farmers 

 produce cellulosic energy crops (feedstocks) and help reduce the gap 

with existing supports for producing food and feed crops. 

Increased ethanol production has raised demand for corn and contributed 

to higher corn prices. This has had several effects on U.S. agriculture, 

including an increase in acres planted to corn, a reduction in acres planted 

to other crops, an increase in crop production on lands that were formerly 

used for grazing or idled, and an increase in feed costs for livestock 

producers. 

In 2007, increased prices for corn led farmers to devote more acreage to 

corn and less to soybeans and other crops. That year, U.S. farmers planted 

an estimated 93.5 million acres to corn—a 19 percent increase from 2006—

while reducing the area planted to soybeans by 14 percent, and to cotton 

by 29 percent. According to USDA, a sharp rise in the price of corn, 

partially attributable to the increased use of corn for ethanol, prompted 

farmers to make this shift from soybeans and cotton. At the beginning of 

the 2007 planting season, the price of corn had reached $3.39 a bushel—a 

61 percent increase from just 12 months earlier. Moreover, the quantity of 

U.S. corn used to produce ethanol rose by more than 50 million metric 

resulted in reduced production of other crops. While higher corn

have created additional income for corn producers, they have also been 

driving up feed costs for livestock producers. At the same time, the 

number of biorefineries producing ethanol or other biofuels has grown 

considerably, offering new employment opportunities in rural 

communities as well as a boost to local commerce and tax revenues, 

although experts’ views on the magnitude and permanence of these 

benefits varies. In addition, the increasing use of corn for ethanol 

grain supplies, has likely contributed to higher retail food prices by 

increasing the price of corn used for food processing and animal feed. The

potential future effects of expanded biofuels production, including 

production of new energy crops for advanced biofuels, are less certain bu

could be significant, particularly to the extent that these new crops af

the production of other crops and livestock on agricultural land. Finally, 

some USDA farm

to

Expanded Production Are Less Certain 

Increasing Corn 

Ethanol Production 

Has Had Mixed 

Effects on Land Use, 

Crop Selection, and 

Livestock Production 

 Biofuels 
Chapter 2: Biofuels Production Has Had 

Mixed Effects on U.S. Agriculture, but the 

Effects of Expanded Production Are Less 

Certain 

tons from 2002 to 2007. Figure 2 shows the increase in corn used for 

ethanol by market year, 1980 through 2008. 

Figure 2: Corn Used for Ethanol by Market Year, 1980-2008 

In 2008, soybean plantings rebounded, as corn acreage dec

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

80 8119 8219 8319 8419 8519 8619 198719 88 8919 1994199319921991199019 199719961995 8 200720062005200420032002200120001999199 2008

Bushels (in millions)

Source: USDA’s Economic Research Service.

Year

lined. Soybean 

prices rose significantly in 2007 because of the smaller crop—the second 

mallest soybean crop in a decade—and this prompted some producers to 

ning 

SDA 

milar acreage to be planted to corn in 2009 and projects corn 

acreage to remain above 90 million acres through 2017, with increasing 

s

return acres planted in corn in 2007 back to soybeans in 2008. The 

estimated land area planted to soybeans increased by 17 percent, retur

to 2006 levels. Land planted to corn dropped to an estimated 86 million 

acres in 2008; nevertheless, this level was still 10 percent above 2006 levels 

and represented one of the largest areas planted to corn since 1949. U

expects a si

yields per acre. Figure 3 shows the changes in U.S. production—based on

planted acres—of corn, soybeans, wheat, and cotton for crop years 1999 

through 2009. 

Page 36 GAO-09-446 Biofuels
Chapter 2: Biofuels Production Has Had 

Mixed Effects on U.S. Agriculture, but the 

Effects of Expanded Production Are Less 

Certain 

Figure 3: U.S. Acres Planted to Corn, Soybeans, Wheat, and Cotton, Crop Years 

1999-2009 

0

10

20

30

40

50

60

70

80

90

100

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Acres (in millions)

Source: GAO analysis of USDA’s National Agricultural Statistics Service data.

Year

Corn

Soy

Wheat

Cotton

Increased demand and higher prices for corn in recent years also re

in the cultivation of some land that was formerly used for grazing or idled. 

Cropland used only for pasture or grazing declined by 41 percent from 

2002 to 2007 compared with a 6 percent decline in total cropland, 

according to USDA’s 2007 Census of Agriculture. In addition, the cash 

rental rates for these pasture and grazing lands increased substantially, in

part due to land-use changes to crop production. For example, the avera

cash rent paid per acre for pasture rose by 41 percent nationwide from 

2002 to 2008. In addition, some experts said that some land formerly 

enrolled in USD

sulted 

ge 

A’s Conservation Reserve Program (CRP) has recently 

gone back into crop production, especially corn. CRP is a land retirement 

program that encourages landowners to take cropland, particularly highly 

erodible land, out of production and, in most circumstances, establish a 

natural vegetative cover—usually grasses—on this land. The landowner 

receives a rental payment from USDA for enrolling land in the program. 

Some experts expect even more CRP land to go back into production in 

the near term as contracts expire and if commodity prices remain high. 

Page 37 GAO-09-446 Biofuels
Chapter 2: Biofuels Production Has Had 

Mixed Effects on U.S. Agriculture, but the 

Effects of Expanded Production Are Less 

Certain 

Moreover, CRP, which as of November 2008 had 34.7 million enrolled 

acres, is scheduled to reduce its enrollment to no more than 32 million 

acres by October 1, 2009, as required by the 2008 Farm Bill. USDA officials 

said they do not track how former CRP land is used once it leaves the 

program, but USDA is working on a survey to identify reasons why some 

landowners opt to leave the program. 

The conversion of land used for grazing or idled to crop production has 

mixed effects. Cropland—which produces food, feed, fiber, and energy—

can yield relatively high financial returns to crop producers and 

landowners. In addition, crop exports contribute to the U.S. balance of 

trade; the United States is the world’s leading exporter of several major 

crops including corn, soybeans, and wheat. Furthermore, crop production 

generally increases economic activity in rural communities, affecting 

demand for farm inputs—seed, fertilizer, pesticides, herbicides, farm 

machinery, and labor—and the services of grain marketing and 

transportation companies. However, the grazing and idled land, usually 

planted in grasses, that cropland displaces also has many economic as well 

as environmental benefits. Grassland provides forage for grazing livestock; 

provides recreational opportunities, such as for hunting and fishing; 

reduces soil erosion; improves water quality; provides wildlife habitat; and 

aids carbon sequestration, which reduces carbon dioxide, a greenhouse 

gas, in the atmosphere. 

e of corn for ethanol has affected livestock producers by 

n, 

 

Increased us

increasing prices for feed. In addition, livestock producers face reductions 

in land available for grazing. Historically, between 50 percent and 60 

percent of U.S. corn is used as animal feed, and feed is often the largest 

cost for livestock producers. According to USDA, from 2006 to 2008, 

livestock producers saw feed prices nearly double, in part because of 

increasing use of corn for ethanol.1

 For example, according to USDA, 

almost one-third of the U.S. corn crop in the 2008 marketing year was used 

for ethanol production, and the agency estimates that a similar or larger 

percentage of the 2009 crop will also be used for this purpose. In additio

the amount of land available for grazing cattle has been declining, 

 

1

Other factors such as drought conditions in some grain-producing countries also 

contributed to higher feed prices. 

Page 38 GAO-09-446 Biofuels
Chapter 2: Biofuels Production Has Had 

Mixed Effects on U.S. Agriculture, but the 

Effects of Expanded Production Are Less 

Certain 

according to researchers knowledgeable about the livestock sector.2 W

development and other uses account for part of these losses, conversion

grasslands to cropland, including for the production of crops for biofuels, 

is also a key factor. In addition, the 2008-09 global recession has hurt U

livestock producers by lowering demand for meat and poultry in the 

United States and abroad. Faced with m

hile 

 of 

.S. 

ultiple factors including rising feed 

costs, declining availability of land for grazing, and decreased domestic 

ventory 

ll 

s 

eat 

eral 

ses 

tiller’s grains, a co-product of the ethanol-fromcorn process that is rich in protein and is gaining increasing importance as 

asing 

d 

 

and foreign demand for meat, many U.S. livestock producers reduced the

size of their herds and flocks in 2008. For example, the national beef cow 

herd was about 31.7 million head at the end of 2008, the lowest in

since 1963. USDA projects that the value of U.S. livestock production wi

decline $11 billion, or 8 percent, in 2009 from the 2008 level. USDA also i

forecasting a decline in 2009 and 2010 across all major categories of meat 

production. Furthermore, a meat industry official said that per-capita m

supplies in the United States in 2009 will be at their lowest level in sev

decades. 

Higher animal feed costs due to increasing corn prices also led some 

livestock producers to seek alternative feed rations that use less corn. 

According to officials of livestock producer organizations, in some ca

the nutrient or caloric content of these alternative rations is lower, 

resulting in slower maturation and weight gain in the animal. Another 

alternative to corn is dis

a feed supplement for beef cattle and dairy cows. However, it is less 

suitable as feed for poultry and hogs because of its high fiber content 

except in smaller amounts. Also, according to some experts, the incre

use of distiller’s grains in the feed ration could raise consumer issues 

because it could affect the quality and appearance of the meat. 

Nevertheless, according to some agricultural economists, the increase

availability of distiller’s grains has reduced to some extent the adverse

impact of corn price increases on the livestock sector by increasing the 

 

According to USDA’s National Resources Inventory, privately owned grassland decreased 

by almost 25 million acres from 1982 through 2003, and more recent data indicated that this 

decline continues, particularly in the Northern Plains states, including North Dakota and 

South Dakota. GAO, Agricultural Conservation: Farm Program Payments Are an 

Important Factor in Landowners’ Decisions to Convert Grassland to Cropland, 

GAO-07-1054 (Washington, D.C.: Sept. 10, 2007) and Prairie Pothole Region: At the Current 

Pace of Acquisitions, the U.S. Fish and Wildlife Service Is Unlikely to Achieve Its Habitat 

, GAO-07-1093 (Washington, D.C.: Sept. 27, 2007). 

2

Protection Goals for Migratory Birds

Page 39 GAO-09-446 Biofuels
Chapter 2: Biofuels Production Has Had 

Mixed Effects on U.S. Agriculture, but the 

Effects of Expanded Production Are Less 

Certain 

supply of a corn substitute. However, a few experts also acknowledged 

that the price of distiller’s grains, like other feed substitutes such as hay, 

has risen and generally tracks with the price of corn. Poultry producers, 

who cannot use hay as a substitute or large quantities of distiller’s grains, 

have seen a rapid escalation in feed costs. Increased costs combined 

lower demand have forced them to make sustained cutbacks in 

production, according to livestock industry officials. These officials also

said that pork producers can feed soybean meal to their hogs but their 

total feed costs have remained high, prompting them to breed fewer 

animals. (See app. VI for further information on economic effects and 

linkages in food and agricultural markets resulting from increased corn 

ethanol production.) 

The growth in ethanol production generally has provided a boost to rural 

economie

with 

s, particularly in the Corn Belt states.3

 The main benefits have 

come from increased crop prices and the construction and operation of 

he 

es. 

ve 

hel. 

ing to 

corn, oilseeds, and many other crops well above their historical levels 

through 2018. USDA expects domestic corn use to grow throughout this 

period, largely reflecting increases in corn use for ethanol production. The 

Biofuels

biorefineries to process corn into ethanol. However, expert views on t

magnitude of these benefits and their permanence varies as the ethanol

industry is prone to boom and bust cycles because of commodity and 

energy price volatility. In addition, as discussed above, the growth in

ethanol production has generally hurt livestock producers, primarily by

driving up feed costs and thereby hurting some sectors of rural economi

The increases in crop prices, caused partly by ethanol production, ha

brought benefits to farmers and landowners. For example, corn prices

rose from under $2 per bushel in 2005 to $5.47 per bushel in June 2008. 

The corn futures price also reached a peak that month of $7.08 per bus

These increases represented historic highs. Furthermore, accord

USDA, long-term growth in global demand for agricultural products, in 

combination with continued U.S. demand for corn for ethanol and 

European Union demand for oilseeds for biodiesel, will hold prices for 

agency also expects corn exports to increase due to global economic 

 

3

The Corn Belt is the area of the United States where corn is a principal cash crop, 

including Iowa, Indiana, most of Illinois, and parts of Kansas, Minnesota, Missouri, 

ebraska, Ohio, South Dakota, and Wisconsin. 

Growth in Ethanol 

Production Has 

Generally Provided a 

Boost to Rural 

Economies 

N

Page 40 GAO-09-446 
Chapter 2: Biofuels Production Has Had 

Mixed Effects on U.S. Agriculture, but the 

Effects of Expanded Production Are Less 

Certain 

growth, including increasing demand for feed grains to support growth in

meat production. 

Because of the increases in crop prices, U.S. farmers set records in 2007 

and 2008 for the dollar value of their crop production, according to USDA. 

Net farm income was $86.8 billion in 2007, more than $29 billion 

average of $57.5 billion (nominal dollars) for the previous 10 years. In 

addition, USDA estimates that the value of farm assets, including land, 

machinery, stored crops, and purchased inputs, rose 28 percent from

to 2008. According to USDA, increased crop prices also reduced 

government outlays by $3.9 billion in 2007 for federal farm programs tha

provide producers pay

above the 

 2005 

t 

ments when commodity prices fall below specified 

thresholds. Furthermore, because USDA anticipates that crop prices will 

emain high for the long term, it projects that government payments to 

skilled and unskilled workers, as well as the local purchase of materials, 

ly 

al 

of 

ys 

ing 

s. 

This spending, along with employee salaries, also results in a multiplier 

effect of additional spending that supports jobs at local businesses, such 

r

farmers will fall from $12.4 billion in 2008 to an average of less than $10 

billion annually from 2009 to 2018. 

In addition, the construction and operation of biorefineries to process 

corn into ethanol has provided additional employment opportunities in 

local communities and benefited businesses which provide goods and 

services to these plants. From 1991 through December 2008, the number of 

U.S. ethanol biorefineries increased from 35 to 172. Construction of a 

biorefinery generally requires the services of multiple businesses and 

including concrete and plumbing and electricity supplies. While a 

relatively few firms specialize in ethanol plant construction and general

have their own equipment and skilled workers that travel with them, loc

construction firms sometimes provide less specialized services such as 

basic site preparation and plumbing and electrical work. 

Once operational, an ethanol biorefinery generally employs dozens 

people. For example, an average 100-million-gallon-per-year plant emplo

about 52 full-time workers, who earn on average $52,000 a year. Accord

to the most recent U.S. Census Bureau data available, the industry had 

about 4,300 employees in 2006. In addition, an operational biorefinery 

purchases goods and services from local firms to support its operation

Page 41 GAO-09-446 Biofuels
Chapter 2: Biofuels Production Has Had 

Mixed Effects on U.S. Agriculture, but the 

Effects of Expanded Production Are Less 

Certain 

as restaurants, stores, and gas stations.4 A 2008 study for the Renewable 

Fuels Association, a trade association, estimated that a 100-million-gallonper-year plant provides nearly 1,100 jobs indirectly. However, other 

f 

r 

 by 

 Iowa’s 

ch as wages and salaries from off-farm 

jobs and nonfarm businesses. In addition, according to a March 2009 

y is 

, 

o 

ties and 

n prone to 

periods of boom and bust driven by food and energy price volatility. When 

ally 

un 

ed 

 

sources have estimated that the direct and indirect employment effects o

ethanol plants are positive, but substantially lower. For example, a 2009 

study by the University of Illinois at Urbana-Champaign estimated a 100-

million-gallon-per-year plant creates 97 to 152 jobs indirectly. In anothe

case, a 2007 study done by Iowa State University projected, in part, that

2016 the U.S. ethanol industry will have created about 9,000 jobs directly 

and 11,600 indirectly. In addition, according to estimates made by

Department of Revenue, the operation of an ethanol plant in a town 

increases the average real household income of its residents by $822. The 

creation of additional employment opportunities is important for farm 

households and rural communities. For example, according to USDA, 

about 90 percent of U.S. farm household income is derived from sources

other than the farming operation, su

report by the Rural Policy Research Institute, the nation’s rural econom

losing jobs at a rate faster than the rest of the United States. New plants 

also increase the local tax base, which may provide funding for schools

hospitals, fire protection, and other public services. However, local 

governments may offer tax abatements for a specified period of years t

attract plants to their area. 

Expert views on the magnitude of these benefits to rural communi

their permanence vary, and some biorefineries recently have suspended 

operations or delayed planned construction or expansion projects due to 

high corn prices, lower fuel demand, and tight credit markets. Some 

experts noted that the biofuels industry generally has bee

crop prices are low and energy prices are high, biofuel producers gener

have profited and have sought to expand production. However, when 

these market conditions are reversed, biofuel producers generally have 

struggled. For example, one of the largest U.S. ethanol producers, VeraS

Energy Corporation, declared bankruptcy in October 2008 and announc

the sale of all of its production facilities in February 2009. Other ethanol 

4

We previously reported on the direct and indirect economic impacts of a new renewable 

energy employer in rural communities. See GAO, Renewable Energy: Wind Power’s 

Contribution to Electric Power Generation and Impact on Farms and Rural 

Communities, GAO-04-756 (Washington, D.C.: Sept. 3, 2004). 

Page 42 GAO-09-446 Biofuels
Chapter 2: Biofuels Production Has Had 

Mixed Effects on U.S. Agriculture, but the 

Effects of Expanded Production Are Less 

Certain 

producers, such as Pacific Ethanol, Inc., have shut down plants or filed fo

bankruptcy because of unfavorable market conditions. 

Finally, according to livestock industry officials, herd and flock 

reductions—although initially creating a surge in business for 

slaughterhouses and meatpackers—have resulted, in the longer term, in 

many slaughter and meatpacking processors reducing shifts or days of 

operation, while others were forced to lay off employees, file for 

bankruptcy, suspend operations, or close. According to these officials, 

these actions potentially have led to the loss of jobs, economic activity, 

and tax revenues in some local communities. For example, according

report by the National Chicken Council, National Turkey Federation, and 

American Meat Institute, the chicken and turkey industries closed facili

and laid off thousands of employees in 2008 due to historically high cor

prices resulting, at least in part, from the use of corn for ethanol. Howeve

the general economic recession affecting the United States is also likely a 

factor in these plant closures. Furthermore, prices paid to livestock 

producers for meat may increase in the future due to supply reductions 

associated with herd and flock downsizing if consumer demand for meat

remains unchanged. However, if the current global recession continues o

worsens, consumer demand for meat may drop further. 

r 

 to a 

ties 

n 

r, 

r 

Higher corn prices, resulting in part from increased ethanol production, 

, 

ction 

price 

Biofuels production has recently been growing by about 15 percent per 

year worldwide, and more than doubled from 2000 to 2005, to nearly 

650,000 barrels per day, or about 1 percent of global transportation fuel 

nd, 

 contrast, 

cent in 2007 and 5.5 

Higher Corn Prices— have likely contributed to domestic and international food price increases. 

Similar observations have been made in other countries that also are 

diverting part of their food and feed crop production to biofuels. However

estimates vary widely as to the relative contribution of biofuels produ

to food price increases. Other factors have also contributed to these 

increases, including increased energy costs, higher costs for agricultural 

inputs, tight global grain supplies, export restrictions, poor grain crops in 

other countries, and growing world demand for food. 

Many experts agreed that the rapid growth in demand for grains to 

produce biofuels has contributed to rising global and domestic food 

prices, although opinions varied on the extent of this contribution. 

Driven in Part by 

Increased Ethanol 

Production—Have 

Likely Been a Factor 

in Recent Food Price 

Increases 

use. Moreover, from the end of 2006 to early 2008, world food commodity 

prices rose by 45 percent, according to the International Monetary Fu

and many world food prices were at record highs in July 2008. In

in the United States, retail food prices rose by 4 per

Page 43 GAO-09-446 Biofuels
Chapter 2: Biofuels Production Has Had 

Mixed Effects on U.S. Agriculture, but the 

Effects of Expanded Production Are Less 

Certain 

percent in 2008, but these rates were still greater than in prior years. 

According to USDA, one reason for this smaller rate of increase is that 

Americans tend to consume highly processed foods in which grain, such 

rtion of 

s where 

in 

07 

 June 

f 

hat the impact 

was from 25 percent to 47 percent. 

•

• production in 7 of 

the past 8 years, according to USDA. At the same time, by 2007 the global 

,

5

 role. 

as corn or its derivative products, represent a relatively small po

the processed food cost. This is less true in developing countrie

direct consumption of grain is more important. 

Estimates vary widely as to the relative contribution of biofuels 

production to retail and commodity food price increases. For example, 

April 2009, the Congressional Budget Office estimated that from April 20

to April 2008, the rise in the price of corn resulting from expanded 

production of ethanol contributed from 0.5 to 0.8 percentage points of the 

5.1 percent increase in U.S. retail food prices measured by the Consumer 

Price Index. In another analysis, the U.S. Council of Economic Advisers 

estimated in May 2008 that U.S. production of corn-based ethanol 

increased global retail food prices by about 3 percent for a 12-month 

period from 2007 to 2008. In addition, regarding commodity prices, a

2008 study prepared for Kraft Foods Global, Inc. by a former USDA Chie

Economist estimated that about 60 percent of the increase in the price of 

corn in marketing years 2006 through 2008 was due to the increased use of 

this grain for ethanol, although other experts estimated t

According to studies we reviewed, the following other factors also 

contributed to food price increases experienced in 2007 and 2008: 

Input prices. Higher oil prices increased the production costs of all goods 

and services, including prices for agricultural inputs such as fertilizer, 

diesel, and propane. In general, higher input prices affect food prices 

through reduced production of food, as suppliers cut back their output. 

Grain supplies. Global consumption of grain exceeded

stocks-to-use ratio declined to the lowest level on record since 1970

although government reductions to their reserve stocks also played a

 

5

The stocks-to-use ratio indicates the level of carryover stock for any given agricultural 

commodity as a percentage of the total use of the commodity. 

Page 44 GAO-09-446 Biofuels
Chapter 2: Biofuels Production Has Had 

Mixed Effects on U.S. Agriculture, but the 

Effects of Expanded Production Are Less 

Certain 

•

• Rising incomes. In recent years, rising world incomes have led consumers 

r per 

•

e, thus 

s 

s production, including advanced 

biofuels, could significantly affect U.S. agriculture by changing land-use 

ts of 

g 

profitability could also be affected. However, the effects are uncertain and 

particularly corn prices, will impact the agricultural and biorefining 

tion 

decisions. Some said it would bring even more land not currently 

cultivated into production, including pasture- and rangeland. Others said it 

 

Export restrictions. Rapidly rising food prices led some countries to 

restrict exports of agricultural commodities. In general, these countries

wanted to maintain an adequate and reasonably priced domestic food 

supply to avoid civil unrest. However, according to USDA, these trade 

disruptions only exacerbated the price increases on world markets. 

in developing countries, such as China and India, to increase thei

capita consumption of staple foods and include more meats, dairy 

products, and vegetable oils. 

Exchange rates and speculation. Historically, commodity prices move 

with changes in the dollar’s exchange rate. For example, depreciation of 

the U.S. dollar relative to the currency of importing countries makes 

purchases of U.S. commodities by foreign consumers less expensiv

stimulating demand and increasing the prices of these commodities, a

was the case from 2006 to 2008. In addition, increased purchases of 

financial instruments to hedge price swings may contribute to greater 

volatility in commodity prices. 

Many experts said increased biofuel

Biofuels

patterns. In addition, some experts said crop prices and other aspec

agricultural markets, such as use of inputs, land values, and farmin

will hinge on what energy crop feedstocks are used and whether these 

feedstocks are grown on existing farmland (crop-, pasture-, and 

rangeland).6

 Also uncertain is how the continuing world economic 

recession and increased volatility of agricultural commodity prices, 

sectors. 

Experts’ views varied on the effect that diverting an increasing propor

of the U.S. corn crop to the production of ethanol will have on land-use 

6

Pasture, or pastureland, is land used primarily for the production of domesticated forage 

y 

and shrubs. 

The Effects of 

Expanded Biofuels 

Production on 

Agriculture Are 

Uncertain but Could 

Be Significant 

plants for livestock. In contrast, range, or rangeland, is land where vegetation is naturall

occurring and is dominated by native grasses, grasslike plants, 

Page 45 GAO-09-446 
Chapter 2: Biofuels Production Has Had 

Mixed Effects on U.S. Agriculture, but the 

Effects of Expanded Production Are Less 

Certain 

would continue to increase the cropland acreage devoted to corn 

production and reduce the acreage available for other crops. Still others 

said that while such changes are possible, the overall shift in agricultur

land used to meet the future RFS-specified level for corn ethanol will be

relatively modest. 

al 

tion 

to meet the needs of the growing world 

population, according to the United Nations’ Food and Agriculture 

or 

re 

ue 

ase 

 production. Furthermore, a few experts 

noted that some feedstocks chosen for production of advanced biofuels in 

e future would require little or no agricultural land. These might include 

gy 

sion of 

jects to 

, it 

ore, 

y be little incentive for investors to embrace advanced biofuels at 

this time. As of early 2009, production in the ethanol industry had 

s made 

 

Some experts said that producing new energy crops, such as switchgrass,7

could increase competition for the use of existing farmland. However, 

several factors could mitigate this. For example, global food produc

must double by 2050 in order 

Organization and other sources. Any resulting increases in the demand f

highly productive farmland might limit shifts to energy crop production. 

Also, some experts said that energy crops such as perennial grasses a

more suited to marginal land than are most food and feed crops, although 

they emphasized that yields will be lower on such land. In addition, crop

residues could be produced along with food and feed, although resid

removal above recommended rates might reduce soil fertility and incre

soil erosion and thus affect food

th

municipal waste, forest thinnings, and algae. 

A few experts also noted that the commercial production of energy crops

is still several years away. Significant challenges involving feedstock 

production practices, transport infrastructure, ethanol conversion 

technologies, and market formation must be addressed before new ener

crops become economically viable. (See ch. 7 for a further discus

these factors.) While there are a number of ongoing test or pilot pro

produce advanced biofuels from a variety of crops or other materials

will be a considerable leap to commercial scale production. Furtherm

there ma

stagnated because of relatively low gasoline prices and excess ethanol 

production capacity. In addition, the U.S. recession, with its tight credit 

markets, numerous bank failures, and plummeting stock values, ha

investors and lenders particularly cautious regarding unproven 

7

Switchgrass is a native prairie grass long used for conservation planting and cattle feed in 

the United States. Switchgrass is a promising biofuel feedstock crop because it can be 

grown across a wide range of conditions, can yield great amounts of biomass, establishes 

deep roots to store carbon in the soil, and does well on marginal lands. 

Page 46 GAO-09-446 Biofuels
Chapter 2: Biofuels Production Has Had 

Mixed Effects on U.S. Agriculture, but the 

Effects of Expanded Production Are Less 

Certain 

technologies. Finally, future demand and supply projections for cr

currently used for biofuels production as well as new energy crops are 

sensitive to assumptions regarding crude oil prices and U.S. government 

policies. For example, according to a study by two Purdue University 

researchers, ethano

ops 

l production jumps significantly when crude oil prices 

increase from $40 to $60 a barrel, but the impact on ethanol production 

ch 

 the 

Valero Energy, one of the 

largest independent U.S. oil refiners, won a bid in March 2009 to purchase 

ice 

to find 

er 

ity and 

rbating 

would be less pronounced if oil prices were to increase from $140 to $160 

per barrel. (See app. II for information on several studies presenting su

projections.) 

Moreover, while crude oil prices historically have had an impact on

agricultural sector, the RFS created a tighter link between the prices of 

crude oil and corn, according to some economists. Ethanol’s share in the 

U.S. transportation fuel mix has increased, making up about 5 percent of

current U.S. gasoline consumption, while escalating RFS levels guarantee 

that this share will increase at least in the short term. Price volatility can 

have damaging effects for crop producers and biorefineries, as well as 

consumers, all of whom may have difficulty managing increased risk. For 

example, one large ethanol company filed for bankruptcy protection 

because it erred in making expensive hedges on the future price of corn. 

On the other hand, some oil refiners may be benefiting by being able to 

purchase shuttered ethanol plants. For example, 

eight ethanol plants. If this trend continues, more consolidation in the 

refining sector may help this set of corn users to weather increased pr

volatility. Crop and livestock producers, however, would still need 

their own mechanism for managing this volatility. 

Although potential growth in biofuel production is uncertain, various 

estimates suggest that global biofuel production could grow to supply ov

5 percent of the world’s transportation energy needs. This growth will 

likely mean an even greater use of crops and agricultural land for 

producing biofuel feedstocks, putting further pressure on commod

food prices. In addition, we previously reported on the potential 

implications of expanded biofuels production on food security, hunger, 

and international food aid.8

 For example, the diversion of grains to biofuel 

production contributes to increases in global grain prices, exace

 

8

GAO, International Food Security: Insufficient Efforts by Host Governments and 

Donors Threaten Progress to Halve Hunger in Sub-Saharan Africa by 2015, GAO-08-680 

(Washington, D.C.: May 29, 2008). 

Page 47 GAO-09-446 Biofuels
Chapter 2: Biofuels Production Has Had 

Mixed Effects on U.S. Agriculture, but the 

Effects of Expanded Production Are Less 

Certain 

food insecurity in regions such as sub-Saharan Africa by making food le

affordable for the poor and the food aid programs that assist them. 

However, we also reported that rural development opportunities could 

exist for African communities that are able to produce biofuels. 

According to USDA officials and experts, some USDA farm, forest, 

conservation, and extension programs could potentially reduce risk and 

provide incent

ss 

ives to encourage farmers to produce cellulosic energy 

crops (feedstocks) for biofuels. At current market prices and under 

op 

AP to 

e separate payments for 

2 years if they collect, harvest, store, or transport the feedstock to a 

need 

ergy 

making, 

Service Agency’s ability to effectively develop the BCAP regulations, 

according to agency officials. For example, it is unclear whether the Farm 

Biofuels

existing subsidy regimes for food and feed crops, returns to production of 

cellulosic feedstocks are not comparable with those for corn and other 

agricultural commodities. At present, it is not clear whether or how USDA

programs will be designed to reduce the gap or what role increases in 

biofuels prices will play. 

Several USDA officials and experts said a new program, the Biomass Cr

Assistance Program (BCAP), may provide a key means to reduce risk to 

producers of cellulosic feedstocks. The 2008 Farm Bill authorized BC

support the establishment and production of cellulosic feedstock and 

assist landowners with collection, harvest, storage, and transport of the 

feedstock to a biorefinery.9

 Under this program, producers would enter 

into multiyear contracts with USDA to obtain payments of up to 75 percent 

of the cost for planting and establishing a perennial energy crop. They also 

would be eligible for annual payments for the life of the contract, similar 

to the payments producers now receive for certain food and feed crops, 

including corn. In addition, producers could receiv

biorefinery. Cognizant Farm Service Agency officials told us they will 

to carefully consider these three potentially overlapping program 

payments as they develop the program rules and application process. A

few experts said that BCAP payments could help put dedicated en

crops on a level playing field with traditional commodity crops. Farm 

Service Agency officials expect to issue a notice of proposed rule

including a draft environmental impact statement, in fall 2009. 

However, several provisions in the 2008 Farm Bill may affect the Farm 

 t. 1651, 2089 (amending 7 U.S.C. § 8111). 

Some USDA 

Programs Could 

Support the 

Transition to 

Cellulosic Energy 

Crop Production for 

Biofuels 

9

Pub. L. No. 110-246 § 9001, 122 Sta

Page 48 GAO-09-446 
Chapter 2: Biofuels Production Has Had 

Mixed Effects on U.S. Agriculture, but the 

Effects of Expanded Production Are Less 

Certain 

Service Agency can pay costs associated with conservation measures 

under BCAP—such as dedicated wildlife corridors and riparian buff

in addition to costs specifically cited in the legislation, such as seeds, 

planting, and site preparation. Also, the 2008 Farm Bill excludes 

ers—

federal- or 

state-owned land from eligibility, which may have implications for Indian 

ibe lands held in trust by the U.S. Government and cropland owned by 

n 

 crops 

n of 

earch is authorized for $50 million annually 

through 2012 and the Cooperative State Research, Education, and 

ies 

m and 

 to 

r, our past 

work has found that funding available to these programs has lagged 

tr

local government entities, such as a school board. 

In addition, the 2008 Farm Bill contains a research provision focused o

(1) providing grants for enhancing the production of biomass energy

and the energy efficiency of agricultural operations and (2) developing a 

best practices database of publicly available information on both the 

production potential of various biofuel feedstocks and on the best 

practices for production, collection, harvest, storage, and transportatio

those feedstocks. This res

Extension Service would likely carry out the grant program component of 

this provision once these funds are appropriated. 

Lastly, a 2008 Farm Bill provision authorized studies of insurance polic

for dedicated energy crops. USDA Risk Management Agency officials said

that current methods to design insurance policies for covering pasture, 

range, and forage lands would be suitable to use for certain dedicated 

energy crops if farmers were interested in an insurance product. However, 

these officials also said that developing such products would likely be 

more complicated for agricultural residues or woody feedstocks. 

Producers of biofuel feedstocks may already be considered for USDA

conservation programs that the Natural Resources Conservation Service 

administers—such as the Environmental Quality Incentives Progra

the Conservation Stewardship Program—because eligibility is based on 

land type rather than what is grown on the land. While it is likely that 

some criteria for production of nonfood biofuel feedstocks would need

be developed or enhanced, officials said that once they have sufficient 

resources, they do not anticipate difficulty in doing so. Howeve

Page 49 GAO-09-446 Biofuels
Chapter 2: Biofuels Production Has Had 

Mixed Effects on U.S. Agriculture, but the 

Effects of Expanded Production Are Less 

Certain 

producers’ interest in participating.10 If the land on which producers m

grow energy crops is indeed eligible, demand for program participation 

may further increase. 

Currently, energy crops other than corn and soybeans do not represent 

viable commercial alternatives for farmers when deciding what to plant. 

As demand for cellulosic-based biofuels develops a

ight 

nd raises feedstock 

prices, returns to energy crop production may approach those for food 

ical 

tend 

op 

rices 

 

and feed crops. In the meantime, government subsidies may improve 

incentives to adopt production systems necessary to grow cellulosic 

feedstocks. However, the returns for food and feed crops also include the

benefits of government subsidies, among them direct and countercycl

payments.11 Experts said it may not be desirable or necessary to ex

similar benefits to dedicated energy crops if biofuels market prices rise 

sufficiently. Moreover, a USDA official said it is unclear how energy cr

subsidies could be designed in light of likely regional variation in p

that would develop. 

 

, 

 D.C.: 

Feb. 22, 2002). 

11As of the 2008 Farm Bill, direct payments are available for producers with eligible historic 

base acres of such crops as corn, wheat, grain sorghum, and oilseeds. Countercyclical 

payments are available for producers with eligible historic base acres when the 

commodity’s effective price is less than the target price. The effective price is the sum of 

the direct payment rate plus either the national commodity loan rate or the national 

average farm price for the crop year, whichever is higher. 

10GAO, Agricultural Conservation: USDA Should Improve Its Process for Allocating 

Funds to States for the Environmental Quality Incentives Program, GAO-06-969 

(Washington, D.C.: Sept. 22, 2006), Conservation Security Program: Despite Cost Controls

Improved USDA Management Is Needed to Ensure Proper Payments and Reduce 

Duplication with Other Programs, GAO-06-312 (Washington, D.C.: Apr. 28, 2006), and 

GAO, Agricultural Conservation: State Advisory Committees’ Views on How USDA

Programs Could Better Address Environmental Concerns, GAO-02-295 (Washington,

Page 50 GAO-09-446 Biofuels
Chapter 3: Increased Biofuels Production 

Could Have a Variety of Environmental 

Effects, but the Magnitude of These Effects Is 

Largely Unknown 

Page 51 GAO-09-446 

Chapter 3: Increased Biofuels Production 

Could Have a Variety of Environmental 

Effects, but the Magnitude of These Effects Is 

Largely Unknown 

The increased cultivation of corn, its conversion into conventional 

biofuels, and the storage and use of these fuels could have various 

environmental effects, including on water supply, water quality, air quality, 

ely 

ve 

ey are enrolled in conservation programs may be 

moved back into production, thereby increasing cultivation of land that is 

susceptible to erosion and decreasing available habitat for threatened 

species. However, it is important to recognize that some of the effects on 

water quality and habitat may be mitigated by the use of agricultural 

conservation practices. In the future, farmers may also adopt cellulosic 

feedstocks, such as switchgrass and woody biomass, which could reduce 

water and land-use effects relative to corn. In addition, the process of 

converting feedstocks into biofuels may also negatively affect water 

supply, water quality, and air quality as more biorefineries move into 

production. For example, biorefineries require water for processing the 

fuel and will need to draw from existing water resources, which are 

limited in some potential production areas. However, the effects will 

depend on the location and size of the facility and the feedstock used. 

Finally, the storage and use of certain ethanol blends may pose other 

at 

tain 

ls, 

soil quality, and biodiversity, but future movement toward cellulosic 

feedstocks for advanced biofuels could reduce some of these effects. 

Although input requirements have decreased over time, corn is a relativ

resource-intensive crop, requiring relatively higher rates of fertilizer and

pesticide applications and additional water to supplement rainfall 

depending on where the crop is grown. As a result, some experts belie

that increased corn starch ethanol production may result in the cultivation

of corn on arid lands that require irrigation, contributing to additional 

water depletion, and will lead to an increase in fertilizer and sediment 

runoff, impairing streams and other water bodies. Furthermore, experts 

believe that as cultivation of some crops such as corn for biofuels 

production increases, environmentally sensitive lands that are currently 

protected because th

environmental problems, such as leaks in underground storage tanks th

are not certified to store such blends and increased emissions of cer

air pollutants when ethanol is used in most cars; however, less is known 

about the extent of these effects. According to some experts and officia

focusing on sustainability will be important in evaluating the 

environmental implications of increased biofuels production. 

 Biofuels 
Chapter 3: Increased Biofuels Production 

Could Have a Variety of Environmental 

Effects, but the Magnitude of These Effects Is 

Largely Unknown 

Biofuels

The Biomass Research and Development Board projects that corn acre

will increase in all regions of the United States if corn starch ethano

production reaches the 15 billion gallons per year allowed by EISA for 

2015 through 2022, with the largest increases taking place in the Corn Belt 

and Northern Plains. Although the water requirements of corn produc

have decreased over time with new seed varieties and agricultural 

management techniques, increased corn production in these areas could 

strain the supply of groundwater in places that rely on irrigation and are 

already facing water constraints. It could also degrade water quality in 

local streams and waterways as far away as the Gulf of Mexico. In 

addition, biodiversity and habitat could be affected, as lands set aside for 

conservation are returned to crop production. In contrast, the cultivatio

of cellulosic feedstocks has the potential to reduce the environmental 

effects associated with corn-based biofuel cultivation. However, there is 

still a significant amount of uncertainty associated with the direction and

scale of the potential environmental implications of these feedstocks. 

Although advances have been made with regard to developing seed 

varieties for corn that are more drought tolerant, the cultivation of corn 

for ethanol production can require substantial quantities of water 

depending on where it is grown and on how much irrigation water is used

to grow the corn.1

 According to an Argonne National Laboratory study, the 

amount of water needed to produce 1 gallon of corn starch ethanol 

(considering both water used for irrigation and in the conversion proc

varies significantly, estimated at 10 to 324 gallons of water per gallon of 

ethanol for major corn production regions in the United States (see table

1). The upper part of this range generally represents regions that rely 

heavily on irrigation to grow corn, whereas the lower end reflects wate

use in those regions that rely primarily on rainfall. Another study 

examined water use as a function of vehicle miles per gallon associated 

with a range of transportation fuels. Corn starch ethanol derived from 

irrigated corn consumes an estimated 1.3 to 62 gallons of water per mile 

traveled in a vehicle using ethanol, while rainfed corn consumes 

 

age 

l 

tion 

n 

ess) 

r 

 

nsumes 

nd 865 gallons of water, on average, based on an evaluation by the Argonne 

ational Laboratory. The amount of water needed depends on precipitation, atmospheric 

demand (which is a result of solar radiation, wind, humidity, and temperature) and plant 

growth stage. Greater amounts of water are needed during peak growth stages (July and 

August for the U.S. Corn Belt), when rainfall may be insufficient to satisfy the needs of a 

rapidly growing plant. Good soil quality can help keep a plant from stress during dry spells 

by its moisture-holding capacity. 

Cultivation of Corn 

for Biofuel Has a 

Variety of 

Environmental 

Effects, but a Shift to 

Cellulosic Feedstocks 

Could Reduce These 

Effects 

Corn for Ethanol Could 

Further Stress Water 

Supplies, but Cultivation of 

Certain Cellulosic 

Feedstocks May Require 

Less Water 

Increased Cultivation of 

1

Producing one bushel of corn in any of the major corn-producing regions co

between 19 a

N

Page 52 GAO-09-446 
Chapter 3: Increased Biofuels Production 

Could Have a Variety of Environmental 

Effects, but the Magnitude of These Effects Is 

Largely Unknown 

significantly less water estimated at 0.15 to 0.35 gallons of water per mile 

traveled.2

 In contrast, the production, transport, and use of gasoline 

consumes between 3.4 and 6.6 gallons of water per gallon of gasoline, a

consumes between 0.07 and 0.14 gallons of water per mile traveled.3,4

n Ethanol Production in Primary Producing Regions in the United States, in Gallons 

nd 

Table 1: Average Water Consumed in Cor

of Water/Gallon of Denatured Ethanol P

Region 

ro

ins

n 7

ta, South 

duced 

Corn Belt

USDA Region 5 

(Iowa, Indiana, Illinois, 

Ohio, Missouri)

Great Lakes 

USDA Region 6 

(Minnesota, Wisconsin, 

Michigan)

Northern Pla

USDA Regio

(North Dako

Dakota, Nebraska, Kansas)

Corn irrigation, groundwater (gallons of 

water/gallon of ethanol) 

6.7 10.7 281.2

Corn irrigation, surface water 

(gallons of water/gallon of ethanol) 

0.4 3.2 39.4

Corn ethanol conversion process 

(gallons of water/gallon of ethanol) 

3.0 3.0 3.0

Total water consumption 

(gallons of water/gallon of ethanol) 

10.0 16.8 323.6

Source: Center for Transportation Research, Energy Systems Division, Argonne National Laboratory, “Consumptive Water Use in th

Production of Ethanol and Petroleum Gasoline,” Center for Transportation Research, Energy Systems Division, Argonne 

Laboratory, January 2009 

Note: The primary corn production regions are in the upper and lower Midwest and include 12 states 

classified as USDA farm production regions 5, 6, and 7. Together these regions accounted for 89 

percent of corn production in 2007 and 2008, and 95 percent of ethanol production in the Uni

States in 2006. The Argonne National Laboratory study estimated the water consumed in corn 

ethanol production in each of the major ethanol producing regions considering water consumed in 

both corn cultivation and conversion processing steps. Estimates were based on average 

consumption of 3.0 gallons of water per gallon of corn ethanol produced in a corn dry mill, average 

consumptive use of irrigation water for corn in major corn producing regions, and dry-mill yield of 2.7 

gallons of ethanol per bushel. In evaluating corn cultivation, the water consumed is based on to

amount of irrigation water used for corn production and total corn production for each region. In 

addition, based on U.S. Geological Survey research the calculation assumes that 30 percent of wat

recharges local surface and groundwater, and the remaining 70 percent of the water is co

evapotranspiration (water lost through evaporation from the soil and plants) and other factors. 

 

e

National 

ted 

tal 

er 

nsumed by 

 and 

3

Comparatively, biodiesel shows potential benefits over petroleum-based diesel if 

rigated soy is used. Irrigated soy consumes 0.6 to 24 gallons of water per mile 

led. 

). 

2

King and Webber, “Water Intensity of Transportation,” Environmental Science

Technology (2008), vol. 42, no. 21, pp. 7866-7872. 

nonir

traveled, while rainfed soy consumes .01 to .02 gallons of water traveled per mile trave

Comparatively, petroleum-based diesel consumes 0.05 to 0.11 gallons. (King and Webber, 

“Water Intensity of Transportation,” Environmental Science and Technology (2008), vol. 

42, no. 21, pp. 7866-7872.) 

4

See Center for Transportation Research, Energy Systems Division, Argonne National 

Laboratory, “Consumptive Water Use in the Production of Ethanol and Petroleum 

Gasoline” (Argonne, Ill.: Jan. 2009

Page 53 GAO-09-446 Biofuels
Chapter 3: Increased Biofuels Production 

Could Have a Variety of Environmental 

Effects, but the Magnitude of These Effects Is 

Largely Unknown 

Estimates of water consumed during the conversion process assumes use of a dry-mill ethanol 

production facility and considers water lost through evaporation and blowdown (periodic discharge of

water used to remove salts and other solids to minimize corrosion, etc.) from the cooling towe

boiler, evaporation from the dryer, as well as water contained in the ethanol and dried distiller’s grain 

co-products, among other factors. 

r and 

The effects of corn production for ethanol on water supplies are likely to 

s irrigation. For example, some of the largest increases in corn 

acres (1.1 million acres) are project rthern Plain

where, o rcent of tly grown is

(See is r n the Hig

(Ogallala) aquifer y a 

known water withdrawals that are greater than the natural recharge t

occurs through precipitation. A 1997 U.S. Geological Survey (USGS) report 

found water levels in the Ogallala aquifer ha ropped more than 100

in places where agricultural crop irrigation was most intense.5

in Corn Acreages Related to Increased Corn Ethanol Production Billion Gallons per Yea

be greatest in water constrained regions of the United States where corn 

require

ed for the No

 the corn curren

egion draw heavily o

 is alread

s region, 

 irrigated. 

h Plains 

stressed aquifer with 

n average, 40 pe

 table 2.) Parts of th

 aquifer. The Ogallala 

hat 

ve d feet 

Table 2: Projected Growth of 15 r 

(In millions of acres) 

Biofuels

2016 USDA baseline estimatea 2016 federal mandate 

U.S. region 

Total 

cropland Corn 

uous Total Continuous Increase in 

acres corn acresb

cropland Corn acres corn acresb corn acres

Contin

Appalachian 18.3 4.8 1.2 18.6 5.0 1.3 0.2

Corn Belt 101.0 44.6 8.8 102.6 45.9 9.4 1.3

Delta 15.9 0.7 0.3 16.4 0.8 0.3 0.1

Lake States 40.0 14.5 4.3 40.5 15.1 4.8 0.6

Mountain 20.8 1.2 1.2 20.3 1.3 1.3 0.1

Northern Plains 63.1 16.5 8.2 64.7 17.6 8.6 1.1

Northeast 15.1 3.9 2.0 15.2 4.1 2.0 0.2

Pacific 7.7 0.3 0 7.7 0.4 0 0.1

Southeast 7.5 2.3 1.1 7.6 2.4 1.1 0.1

Southern Plains 27.6 1.1 0.5 27.7 1.2 0.5 0.1

Total 317.0 90.0 27.6 321.4 93.7 29.3 3.7

Source: Economic Research Service, USDA. 

a

The 2007 USDA baseline projections for 2016 assumes ethanol production will mature to 12 billion 

gallons of ethanol per year. The 2016 federal mandate scenario assumed 15 billion gallons of cornbased ethanol per year under the RFS. 

 ka, HA 5

USGS, 1997, Groundwater Atlas of the United States: Kansas, Missouri, and Nebras

730-D. 

Page 54 GAO-09-446 
Chapter 3: Increased Biofuels Production 

Could Have a Variety of Environmental 

Effects, but the Magnitude of These Effects Is 

Largely Unknown 

b

Acres of cropland planted to corn on a continuous basis, rather than rotating between corn and 

planting of other crops, such as soybeans. 

The shift to cultivate certa

the 

in cellulosic feedstocks—such as woody 

biomass and switchgrass—may require less water. However, effects on 

h 

ey 

wever, if 

ay to allow 

for quick growth and maximum production may be more water intensive 

irrigate these crops with wastewater or saline water sources that would be 

unsuitable for food crops.7

the cultivation of corn as am most sig ant potenti

environmental effects of increased corn starch ethanol production. In 

contrast, the cultivation of certain cellulosic feedstocks may have less o

an effect on water quality, although the exte the effect w depend o

a number of factors, including the types of feedstocks grown here the

are grown, and the practices em d to cultiv e and harves . 

In ased fertilizer use can compromise sur

quality. Fertilizer noff from itional cor ltivation for biofuels 

production is likely to impair ams and loc ater bodies though 

agricultural conservation practices could mitigate some of th effects.

For example, corn requires ntial inpu g

water supplies are largely uncertain and will depend on the type of 

feedstock and where it is grown. For example, agricultural crop residues, 

such as corn stover, do not require additional water, since they are coproducts of already cultivated crops.6

 For cellulosic feedstocks, as wit

corn or any other crop, the effects on water supply may be minimal if th

are planted where they can be grown primarily with rainwater. Ho

the crop is irrigated, the implications on water supply could still be 

significant. While some experts assume that perennial cellulosic 

feedstocks will be rainfed, other experts and EPA officials pointed out that 

to achieve maximum yields for cellulosic crops, farmers may need to 

irrigate. In addition, woody biomass that is planted in such a w

than some perennial grasses, although there may be opportunities to 

Biofuels

Several ex pok ntif perts we s e with ide ied water quali en ty impairm ts from 

ong the nific al 

f 

nt of ill n 

, w y 

ploye at t them

cre face and ground water 

ru add n cu

stre al w , al

ese

substa ts, including hi her 

 

example, corn stover is the unharvested portions of the corn plant, including stalks, leaves, 

and cobs. 

7

According to EPA officials, the long-term impacts of irrigating with wastewater or saline 

ill need to be added to protect water quality. 

ls Is Lik o 

Water Qua

vation of Certain 

c Feedsto May 

ss of an E 

Water Quality Effects of 

sed Corn Produ n 

Increased Corn atio Cultiv n 

for Biofue ely t

Impair lity, but 

Culti

Cellulosi cks

Have Le ffect

Increa ctio

6

Crop residues are materials left in the field after the crop has been harvested. For 

water sources are currently unknown and may be detrimental. Additional controls on 

runoff w

Page 55 GAO-09-446 
Chapter 3: Increased Biofuels Production 

Could Have a Variety of Environmental 

Effects, but the Magnitude of These Effects Is 

Largely Unknown 

applications of fertilizers as compared to soybeans and other potential 

stocks.8 biofuel feed Fertilizer runoff containing 

can lead to overenrichment and excessive growth of algae in surface 

waters. In some lakes, this has resulted in potentially harmful algal 

blooms, decreased water clarity, and hypoxia, a condition of reduced 

oxygen, which impairs aquatic life.

nitrogen and phosphorus 

f the 

River basin if additional corn is grown 

eet the up to 15 billion gallons per year of corn starch ethanol allowed 12

 

9

 Similarly, in marine waters, excessive

algae growth can create a hypoxic or dead zone, a region that cannot 

support fish and other organisms, which require oxygen for survival. The 

number of reported dead zones around the world increased over the past 

decade to more than 400.10 Many of them are along the Gulf of Mexico and 

the Atlantic Coast, areas that receive drainage from agricultural and urban 

landscapes, including a large portion of the Corn Belt, where many o

existing and planned ethanol production facilities are located. A 2007 

USGS model estimated that 52 percent of the nitrogen and 25 percent of 

the phosphorus entering the Gulf system is from corn and soybean 

cultivation in the Mississippi River basin.11

Recent studies estimate that nitrogen runoff will increase by 2.5 percent 

per year in water bodies across the United States and by more than 10 

percent per year in the Mississippi 

to m

by EISA for 2015 through 2022. In addition, an analysis in EPA’s May 2009 

 

required, on average, 28 pounds of nitrogen per acre and 69 pounds of phosphorous per 

5] 

lete 

e 

11Alexander, Richard, Richard Smith, Gregory Schwarz, Elizabeth Boyer, Jacqueline Nolan, 

and John Brakebill, “Difference in Phosphorous and Nitrogen Delivery to the Gulf of 

Mexico from the Mississippi River Basin,” Environmental Science and Technology (2008), 

 and M. Aillery. “Growing Crops for Biofuels Has Spillover Effects.” Amber 

Waves, USDA Economic Research Service, vol. 7, issue 1, March 2009, pp. 10-15; and 

g 

. 4513–4518. 

8

Corn requires significantly higher applications of nitrogen as compared with soybeans, 

which are legumes that obtain their own nitrogen from the atmosphere. For example, in 

crop year 2005, the average annual applications for corn were 138 pounds of nitrogen per 

acre and 58 pounds of phosphorous per acre for 96 percent and 81 percent of planted 

acreage in the United States, respectively. In comparison, in crop year 2004, soybeans 

acre for 21 percent and 26 percent of total planted acres respectively [NASS 2006, 200

9

The algae themselves do not reduce oxygen; instead, when the algae die, bacteria dep

oxygen during the decomposition process. 

10Diaz, Robert and Rutger Rosenberg, “Spreading Dead Zones and Consequences for Marin

Ecosystems.” Science, vol. 321, 2008, pp. 926-929. 

vol. 42, no. 3, pp. 822-830. 

12Malcom, S.

Donner, S. and C. Kucharik. “Corn-based ethanol production compromises goal of reducin

nitrogen export by the Mississippi River.” Proceedings of the National Academy of 

Sciences of the United States, vol. 105, no. 11, 2008, pp

Page 56 GAO-09-446 Biofuels
Chapter 3: Increased Biofuels Production 

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Effects, but the Magnitude of These Effects Is 

Largely Unknown 

notice of proposed rulemaking for the RFS also projected an increase in

nitrogen, phosphorus and sediment in the Upper Mississippi River Basin a

a result of increased corn production for biofuels. Further, in the Upp

Mississippi River basin, surface or subsurface drainage—via ditches

subsurface pipes that move water from wet soils to surface water quic

so crops can be planted—is common and may increase nutrient runoff, 

further degrading water quality, according to some experts and EPA 

officials we spoke with. In addition, livestock feeding largely on dried 

distiller’s grains, a co-product of corn starch ethanol production, may 

produce manure that is especially high in phosphorus, which could also 

increase nutrient runoff, according to other experts and EPA’s proposed 

rulemaking. Although EPA projects that nutrient runoff as a result of 

increased corn production may decrease over time with improved crop

yields per acre, the nutrient load will be higher than the baseline 

measurement developed in 2005. 

s 

er 

 or 

kly 

Similarly, increased corn production for ethanol also may increase the 

High Plains and Northern Midwest, where increased corn cultivation for 

ethanol is anticipated.13 This study also predicted elevated nitrate levels of 

contamination of groundwater by nitrates, which are also found in 

fertilizers. The areas most vulnerable to nitrate contamination are those

with high fertilizer use that also depend on irrigation, have permeable 

soils, and have shallow groundwater. A 2006 USGS study predicted 

moderate to severe nitrate contamination of shallow groundwater in the 

deeper water supplies used for drinking water in these same areas. EPA 

has determined that levels of nitrate exceeding 10 milligrams per liter in 

drinking water have an anticipated adverse effect on public health.14 Some

groundwater aquifers in the Corn Belt already have elevated levels of 

nitrate in groundwater and increased corn production may add to the 

problem. For example, one study noted that water quality advisories are 

already common in Columbus, Ohio for elevated levels of nitrates in local 

waters. 

 

14

s 

er liter 

13Nolan, B. and K. Hitt. “Vulnerability of Shallow Groundwater and Drinking-Water Wells to 

Nitrate in the United States.” Environmental Science & Technology, vol. 40, no. 24, 2006, 

pp. 7834-7840. 

EPA’s maximum contaminant level goals for drinking water are set at the level at which 

no known or anticipated adverse effects on the health of persons occur and which allow

an adequate margin of safety. The maximum contaminant level goal for total nitrate and 

nitrogen is 10 milligrams per liter. This does not mean that less than 10 milligrams per liter 

poses no risk. Recent studies also indicate levels of nitrate as low as 2.5 milligrams p

may be associated with several types of cancer. 

Page 57 GAO-09-446 Biofuels
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Effects, but the Magnitude of These Effects Is 

Largely Unknown 

Increased pesticide use can compromise surface and ground water 

quality. Increased use of pesticides—including insecticides and 

herbicides—related to increased corn production will likely affect surfac

and ground water quality. For example, a 10-year nationwide study by 

USGS detected pesticides in 97 percent of streams in agricultural and 

urban watersheds.

e 

f 

t 

or the 

duction can impair groundwater 

supplies. For example, the USGS study found pesticides in 61 percent of 

on.

or 

s, 

ent 

, 

is a top water quality problem nationwide, as well as in the 

Mississippi basin, where a large fraction of the increased corn production 

is anticipated. Moreover, to take advantage of higher corn prices, farmers 

may shift to planting corn on the same land every year instead of rotating 

 

15 As would be expected, the highest concentrations o

pesticides have been found in the areas of highest use. For instance, 

application rates of atrazine, a commonly used pesticide for corn 

production, are highest in the Corn Belt, and atrazine was also the mos

widely detected pesticide in watersheds in this region, according to a 

USGS nationwide study. This adversely affected aquatic plants and 

invertebrates in some of the streams, according to the study, since 

organisms are vulnerable to short-term exposure to relatively small 

amounts of certain pesticides. Similarly, increased pesticide use f

cultivation of corn for ethanol pro

shallow wells sampled in agricultural areas. Once groundwater is 

contaminated, it is difficult to clean up. 

Increased cultivation of feedstocks for biofuels can increase soil erosi

Increased demand for corn for ethanol could also create incentives f

farmers to abandon agricultural conservation practices that would 

otherwise reduce soil erosion, according to many experts we spoke to. 

Soil erosion reduces fertility by removing nutrient-rich topsoil. It also 

contributes to sedimentation, which fills channels and deep areas of lake

streams, and rivers, affecting aquatic life and recreation. Sediment can 

also carry contaminants, such as pesticides and fertilizers, to these water 

bodies. A USDA Economic Research Service study estimates a 2.1 perc

increase in rainfall-driven erosion related to increased corn production

with higher erosion effects expected in the Northern Plains, Great Lake 

States, and Delta regions.16 Furthermore, the discharge of sediment into 

streams 

 

15Gilliom, and others. “The Quality of Our Nation’s Waters—Pesticides in the Nation’s 

Streams and Ground Water, 1992-2001.” U.S. Geological Survey Circular 1291, 2006, p. 

172. 

16Malcom, S. and M. Aillery. “Growing Crops for Biofuels has Spillover Effects.” Amber 

Waves, USDA Economic Research Service, vol. 7, issue 1, March 2009, pp. 10-15. 

Page 58 GAO-09-446 Biofuels
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to other crops such as soybeans—a practice known as continuous cor

cultivation. Crop rotation is a common agricultural conservation 

that reduces erosion, helps replenish nutrients in the soil, and helps 

control pests, reducing the need for fertilizer and pesticides. Based on 

Biomass Research and Development Board data, an estimated 1.7 milli

additional acres of continuous corn production is projected for 2016 to 

meet the up to 15 billion gallons of corn starch ethanol allowed to be 

included in the Renewable Fuel Standard (see table 2). USDA data

that conservation tillage practices, such as no-till, can help reduce soil 

erosion and sediment runoff. 

Expansion of corn and soybean production to marginal lands can

further affect water quality. Delivery of sediments, nutrients, and 

pesticides to water bodies may increase further if production of corn and

soybeans expands to marginal lands and lands highly susceptible to

erosion. Increased demand for biofuel feedstocks creates incentives for 

farmers to place such lands back into production. Marginal lands g

have lower productivity soils and are vul

n 

practice 

on 

 indicate 

enerally 

nerable to wind and water 

erosion. Moving these lands back into crop production may require more 

ts. 

tion of 

n 

moisture and nutrients in the soil and disturbing the land less. Additional 

techniques are also available to reduce the effects of fertilizers, including 

precision agriculture, controlled-release fertilizers, and practices that 

varying degrees, nutrients from agriculture are already a 

hniques 

nutrient and pesticide inputs and increased tillage as compared with more 

productive lands, potentially leading to further water quality impairmen

Increased sediment runoff is also anticipated with increased produc

corn and soybeans, especially on marginal and highly erodible lands. 

Millions of acres of such land are currently enrolled in the Conservatio

Reserve Program (CRP), which provides annual rental payments and costshare assistance to producers who contractually agree to retire highly 

erodible, environmentally sensitive cropland from agricultural purposes. 

As discussed in chapter 2, farmers are generally required to plant or 

maintain vegetative covers (such as native grasses) on CRP land, which 

provides a range of environmental benefits, including improved water 

quality, reduced erosion, and preserved soil productivity. 

Agricultural conservation practices—such as no-till, reduced till, crop 

rotation, rotation cover crops, and riparian buffer zones—can reduce 

nutrient and pesticide runoff as well as erosion by retaining additional 

match nitrogen fertilizer applications to a crop’s nitrogen demand. 

However, EPA officials noted that despite implementation of these 

practices to 

major source of water quality impairment throughout the country, 

especially in the Corn Belt. Furthermore, a number of irrigation tec

Page 59 GAO-09-446 Biofuels
Chapter 3: Increased Biofuels Production 

Could Have a Variety of Environmental 

Effects, but the Magnitude of These Effects Is 

Largely Unknown 

and technologies are available to conserve water and thus reduce runoff.

These include subsurface drip irrigation systems, real-time soil moisture 

and weather monitoring, rainfall harvesting, and use of reclaimed wa

See table 3 for a description of some of the agricultural conservation 

practices that can reduce degradation of surface and ground waters from 

the increase in cultivation of feedstock for biofuels production. 

ion Practices Available to Reduce the Environmental Effects of Feedstock 

ter. 

Table 3: Sample of Agricultural Conservat

Cultivation for Biofuels 

Agricultural conservation 

practice Description Environmental benefits 

Soil erosion prevention 

Biofuels

Crop residue management Any tilla

previou

the crop

unoff 

ge method that leaves a portion of the 

s crop residues (unharvested portions of 

) on the soil surface. 

• Reduces soil erosion caused by tillage 

and exposure of bare soil to wind and 

water 

• Reduces water lost to evaporation 

• Improves soil quality 

• Reduces sediment and fertilizer r

No-till Method

undistu

seed is

oil 

 that leaves soil and crop residue 

rbed except for the crop row where the 

 placed in the ground. 

• Reduces soil erosion caused by tillage 

and exposure of bare soil to wind and 

water 

• Reduces water lost to evaporation 

• Improves soil quality by improving s

organic matter 

• Reduces sediment and fertilizer runoff 

Cover crops A close

soil duri

is estab

s 

e by naturally 

breaking the cycle of weeds, insects, 

il 

-growing crop that temporarily protects the 

ng the interim period before the next crop 

lished. 

• Reduces erosion 

• Reduces nitrate leaching 

• Integrates crops that store nitrogen from 

the atmosphere (such as soy), replace

the nitrogen that corn and other grains

remove from the soil 

• Reduces pesticide us

and diseases 

• Improves soil quality by improving so

organic matter 

Nutrient pollution reduction 

Crop rotation Changi

planned

the follo

il 

lly 

ts, 

ng the crops grown in a field, usually in a 

 sequence. For example, crops grown in 

wing sequence corn-soy-corn. 

• Integrates crops that obtain nitrogen 

from the atmosphere (such as soy), 

replaces the nitrogen that corn and 

other grains remove from the so

• Reduces pesticide use by natura

breaking the cycle of weeds, insec

and diseases 

Page 60 GAO-09-446 
Chapter 3: Increased Biofuels Production 

Could Have a Variety of Environmental 

Effects, but the Magnitude of These Effects Is 

Largely Unknown 

Agricultural conservation 

practice Description Environmental benefits 

Biofuels

Nutrient management Use of 

and app

nutrients to match the rate, timing, form, 

lication method of fertilizer to crop needs. 

• Reduces nutrient runoff and leaching 

n of fertilizer below the soil surface. • Reduces runoff and gaseous emission 

from nutrients 

Subsurface fertilizer application Injectio

Controlled-release fertilizers Use of fertiliz

can prevent water-soluble nitrogen from dissolving. 

regardless of the crop. 

ers with water-insoluble coatings that • Reduces nutrient runoff and leaching 

Increases the efficiency of the way nutrients are 

supplied to and are taken up by the plant, 

Controlled drainage Water control structures, such as a flashboard 

 in the drainage outlet allow water 

vel to be raised or lower as needed. 

• Minimizes transport of nutrients to 

riser, installed

le

surface waters 

Irrigation techniques 

Subsurface drip irrigation systems Irrigation systems buried directly beneath the crop

apply water directly to the root zone. 

• Minimizes water lost to evaporation and

runoff 

Reclaimed water use Water recovered from domestic, municipa

industrial wastewater treatment plants that h

been treated to standards that allow safe reu

irrigation. 

l, and • Reduces demand on surface and 

as ground waters 

se for 

Multiple benefits 

Wetland restoration nd by filling 

tches or removing or breaking tile drains. 

ding downstream 

t for wetland plants, 

Restoring a previously drained wetla

di

• Reduces floo

• Filters sediment, nutrients, and 

chemicals 

• Provides habita

amphibians, and birds 

Riparian buffer zones 

ote other environ

benefits. 

Planting of strips or small areas of land along 

waterways in permanent vegetation that help 

control pollutants and prom me ta • Filters nutrients n l • Provides habitat and corridors for fish 

and wildlife 

• Traps sediment 

Precision agriculture A system of management of site-specific inputs 

(i.e., fertilizer, pesticides) on a site-specific basis 

such as land preparation for planting, seed, 

fertilizers and nutrients, and pest control. Precision 

agriculture may be able to maximize farm 

production efficiency while minimizing 

environmental effects. Key technological too

used in this approach include global positioning 

ystems, geographic information systems, realls s

time soil testing, real-time weather information, etc.

• Reduces nutrient runoff and leaching 

• Reduces erosion 

• Reduces pesticide use 

Source: GAO. 

Cultivation of some cellulosic feedst

including stabilizing soils, reducing s

increasing nutrient filtration, according to some experts that we spoke to. 

For example, research indicates that perennial cellulosic feedstocks, such 

Water Quality Effects of a Shift 

to Cellulosic Biofuels 

ocks can provide certain benefits, 

oil erosion and nutrient runoff, and 

Page 61 GAO-09-446 
Chapter 3: Increased Biofuels Production 

Could Have a Variety of Environmental 

Effects, but the Magnitude of These Effects Is 

Largely Unknown 

as switchgrass and other native prairie grasses, offer a range of water 

quality benefits related to their ability to cycle nitrogen more efficiently, 

s can also reduce the need for most 

ng greater diversity and an abundance 

ltural pests.17 Finally, the presence of 

dstocks across an agricultural landscape can help reduce 

t and pesticide input 

cording to USDA officials, nutrient 

uts are likely to be greater on marginal lands with poor soil quality. 

Furthermore, use of some cellulosic feedstocks, specifically agricultural 

he 

s corn 

stover—offer a large and readily resource for 

production of cellulosic ethanol. It is on 

—

ough residue is retained on f

ther water quality 

 conducted 

tified the need for different 

nservation practice standards to produce 

able manner. 

 

sequester carbon, and protect soil

perennial nature of these feedstock

from wind and water erosion. The 

chemical inputs and tillage after crops are established, which can lessen 

the need for fertilizer application and reduce soi

sedimentation. In addition, use of div

the need for pesticides by promoti

of natural enemies for agricu

cellulosic fee

l erosion and 

erse perennial species can minimize 

nutrient and chemical runoff from

riparian strips and windbreaks tha

 adjacent farmlands, and provide 

t minimize erosion. 

The type, location, and cultivation methods used to grow cellulosic 

feedstocks will influence the extent to which they can improve water 

quality. Since potential cellulosic 

commercially to date, there is littl

needs of these crops. In addition, ac

inp

feedstocks have not been grown 

e data on the nutrien

crop residues, could negatively aff

agricultural practices employe

ect water quality, depending on t

d. Agricultural crop residues—such a

available biomass

a common agricultural conservati

practice to leave residue—the portion of the cro

on the field to help protect the s

replenish the soil with nutrients and 

en

p which is not harvested

oil from wind and water erosion and 

carbon, among other benefits. If not 

 arm fields, there could be increased 

sediment loadings to waterways. E

increase the need for fertilizer, pot

degradation, according to som

for EPA’s proposed rulemaking iden

conservation systems and co

cellulosic feedstocks in a sustain

xcess residue removal may also 

entially leading to fur

e experts. Further, an analysis

 

17According to USDA officials, perennial grasses will probably have lower input 

requirements than corn, but incentives to increase yields will narrow any gap. Compared to

other crops, the difference in input requirements ultimately may be quite small. 

Page 62 GAO-09-446 Biofuels
Chapter 3: Increased Biofuels Production 

Could Have a Variety of Environmental 

Effects, but the Magnitude of These Effects Is 

Largely Unknown 

Promotion of biofuel production in a way that maintains soil quality ov

the long term is a critical environmental consideration about which 

several experts have expressed concern. Soil is a central, fundamenta

resource for all crops, including biofuel feedstock production, and 

ultimately determines crop productivity. Soil quality is directly affected by

soil organic matter (which includes decomposed crop residue 

microorganisms), soil structure and compaction, and soil microbial 

communities. In particular, soil carbon, a central component of soil 

organic matter, supports nutrient cycling, improves soil structure, 

enhances water exchange and aeration, and sustains microbial life in th

soil. 

er 

l 

and living 

e 

The effects of biofuel feedstocks cultivation on soil quality will depend on 

nting 

f 

n 

tion 

 soil 

 on how 

heir efforts, and it may take 

several years to make such projections. In the interim, USDA and DOE are 

eveloping some tools to help estimate safe residue removal rates, but 

efforts are still under way. When completed, these residue removal 

assessment tools will consider the broad variance of local conditions such 

as soil type, climate, and management practices. 

Biofuels Production Can 

Affect Soil Quality and 

Productivity 

which feedstock is planted and how it is cultivated. For example, pla

perennial feedstocks, such as switchgrass, can help store soil carbon, 

stabilize soils, and reduce erosion, largely because of the deep root

systems of many perennial plants. In addition, some cultivation methods 

can help maintain and potentially improve soil quality. Specifically, use o

conservation tillage practices, such as no-till or planting cover crops, ca

protect soil from erosion and help restore, maintain, or build soil organic 

matter. 

Overuse of agricultural residues as feedstocks for biofuel produc

would also likely have adverse effects on soil quality, according to several 

experts we interviewed. Considerable uncertainty exists regarding how 

much, if any, residue can be removed for biofuels production while 

maintaining soil and water quality. In addition to protecting the soil from 

wind and water erosion, crop residues left on the field help maintain

quality and replenish the soil with carbon and nutrients. If too much

residue is removed for use as a feedstock for biofuels, soil productivity 

may be compromised, according to these experts. USDA, DOE, and some

academic researchers are attempting to develop new projections

much residue can be removed without compromising soil quality, but 

sufficient data may not be available to inform t

d

Page 63 GAO-09-446 Biofuels
Chapter 3: Increased Biofuels Production 

Could Have a Variety of Environmental 

Effects, but the Magnitude of These Effects Is 

Largely Unknown 

The increased cultivation of corn and soy-based feedstocks to meet 

increases in corn and soy-based biofuels production could have sign

effects on wildlife habitat and biodiversity, according to experts we spo

with. As mentioned above, a portion of the land that may be cultivat

additional crop production is expected to come from environmentally 

sensitive lands currently enrolled in conservation programs, such as the 

CRP. According to experts we spoke with, these lands provide contig

habitat available for native wildlife in many parts of the country. Mov

these lands back into production could lead to effects on available 

and subsequently, biodiversity. In addition, the effects of more intensively

farme

ificant 

ke 

ed for 

uous 

ing 

habitat, 

d monocultures—production or growth of a single crop—over a 

wide area have been shown to lead to a decline in biodiversity and 

ean 

 monocultures. Furthermore, some research suggests that 

cellulosic feedstocks may be grown on marginal lands that have been 

ts. 

in 

ould 

f 

 not 

Biofuels

biodiversity-based benefits, such as pest suppression. For example, a 

recent study found that increased corn plantings can result in lower 

landscape diversity, altering the supply of natural predators to the soyb

aphid, a major food crop pest.18

According to some experts that we spoke to, cellulosic biofuel feedstocks 

that require few inputs and include a diverse mix of native and perennial 

species could promote greater biodiversity than input-intensive corn and 

soybean

removed from agricultural production with fewer environmental effec

For example, a 2006 study—in which diverse native prairie grass species 

were grown on a site with degraded soils similar to lands often set aside 

conservation programs—demonstrated that such perennial grasses c

generate promising feedstock yields with low nutrient and irrigation 

inputs.19 According to some experts we spoke to, crop choice and 

cultivation methods will influence the extent of biodiversity benefits o

cultivating cellulosic biofuel crops. For example, the cultivation of 

monocultures of cellulosic biofuel feedstocks, such as switchgrass, may be

economically favorable to the cultivation of diverse native prairie grasses.

However, according to some experts, these kinds of monocultures may

provide the same biodiversity benefits, and the characteristics that make 

 

apes.” Proceedings of the 

National Academy of Sciences of the United States of America, vol. 105, no. 51, 2008, pp. 

Tillman D., J. Hill, and C. Lehman. “Carbon-Negative Biofuels from Low-Input HighDiversity Grassland Biomass,” Science, vol. 314, issue 5805, 2006, pp. 1598-1600. 

ith 

fuel 

Feedstocks Cultivation 

Habitat and Biodiversity 

May Be Compromised w

Increased Bio

18Landis, D., M. Gardiner, W. van der Werf, and S. Swinton. “Increasing corn for biofuel 

production reduces biocontrol services in agricultural landsc

20552-20557. 

19

Page 64 GAO-09-446 
Chapter 3: Increased Biofuels Production 

Could Have a Variety of Environmental 

Effects, but the Magnitude of These Effects Is 

Largely Unknown 

the plant good for crop production, such as being fast growing, also 

increase its potential to invade natural environments. For instance, a 

recent study found that some monocultures of cellulosic feedstocks may 

be invasive in certain regions of the United States and have the potential to

affect plant biodiversity in these regions.

tes. 

ects 

nd the pollution control technologies 

deployed. 

ed 48 

th 

current 

20, 21 In addition, some USDA 

officials said that cultivation of new feedstock across large areas within 

the landscape will likely create new disease and insect problems for which 

there are limited control strategies. 

The processing of feedstocks into biofuels at biorefineries may have 

significant effects on water supplies in some parts of the United Sta

However, according to officials, existing water quality regulations over

effluents discharged by these facilities are expected to reduce the eff

of pollutants. These facilities may also affect air quality, but the effects will 

depend on location, feedstock, a

Biofuels

Although research indicates that the amount of water consumed in the 

corn ethanol conversion process has declined over time and is small 

compared to the amount of water consumed to grow irrigated corn, it may 

have significant effects on local water supplies. Specifically, from 1998 

through 2007, water consumption at corn ethanol biorefineries dropp

percent—from 5.8 to 3.0 gallons of water per gallon of ethanol—wi

improved equipment and energy efficient design, according to a 2009 

Argonne National Laboratory study.22 Nevertheless, at this rate, the 

average water needs for a single 100-million-gallon-per-year corn ethanol 

plant is almost the same as the annual water needs for a city with 

 

20Barney, J.N. and J.M. DiTomaso. “Nonnative Species and Bioenergy: Are We Cultivating 

the Next Invader?” Bioscience, vol. 58, no. 1, 2008, pp. 64-70. 

21An invasive species is a nonnative species whose introduction does or is likely to cause 

le, 

Wu, M., M. Mintz, M. Wang, and S. Arora. “Consumptive Water Use in the Production of 

s 

The Process of 

Converting 

Feedstocks into 

Biofuels Has 

Environmental 

Consequences, but 

the Effects Vary 

from Biorefineries Can Be 

Significant in Some 

Locations 

Effects on Water Supply 

economic or environmental harm or harm to human, animal, or plant health. For examp

an invasive plant may outcompete and displace native grasses and broadleaf plants that

serve as a primary source of forage for animals. 

22

Ethanol and Petroleum Gasoline.” Center for Transportation Research, Energy System

Division, Argonne National Laboratory (Argonne, Ill. January 2009). 

Page 65 GAO-09-446 
Chapter 3: Increased Biofuels Production 

Could Have a Variety of Environmental 

Effects, but the Magnitude of These Effects Is 

Largely Unknown 

approximately 8,200 people—approximately 300 million gallons, acco

to an EPA estimate.

rding 

arch 

er 

 the northern parts of the aquifer 

which include parts of Nebraska, Kansas, South Dakota, Colorado and 

yoming). 25 Furthermore, ethanol conversion requires high-quality water, 

pply 

f 

umption in ethanol production do not consider water 

discharged as a result of pre-treating water prior to use in the conversion 

rocess. 

 

23 In addition, a recent report by the National Rese

Council found that siting of some ethanol plants is occurring where water

resources are already under duress.24 As figure 4 shows, many existing and 

planned ethanol facilities that require 0.1 to 1.0 million gallons of wat

per day are located on the High Plains aquifer, where current water 

withdrawals are much greater than the aquifer’s recharge rates (about 0.02 

to 0.05 foot per year in most areas of

W

which can include groundwater, surface water, or municipal water su

sources.26 Because rural communities frequently rely on groundwater 

aquifers, which may take lifetimes to recharge, for their drinking water 

supplies, if several ethanol plants are built near one another or draw from 

the same aquifer, they could reduce the drinking water available to the 

surrounding communities. Finally, according to EPA, most estimates o

water cons

p

23Average water consumption in the United States is 100 gallons per day per person, 

National Research Council, “Water Implications of Biofuels Production in the United 

d 

a, 2003: U.S. Geological Survey Scientific 

 2006–5294, 2007. 

total dissolved solids. 

according to EPA. 

24

States,” 2008. 

25McMahon, P.B., J.K. Böhlke, and C.P. Carney. Vertical Gradients in Water Chemistry an

Age in the Northern High Plains Aquifer, Nebrask

Investigations Report

26Among the problems with using low-quality water in the biofuel conversion process, 

boilers lose heat capacity and may be spoiled if using water with high

Page 66 GAO-09-446 Biofuels
Chapter 3: Increased Biofuels Production 

Could Have a Variety of Environmental 

Effects, but the Magnitude of These Effects Is 

Largely Unknown 

Figure 4: Existing and Planned Ethanol Facilities (as of 2007) and Their Estimated Total Water Use Mapped with the Principal 

Bedrock Aquifers of the United States and

ion of cellulosic feedstock, the amount of water consumed will 

dy, water consumed in the biochemical 

 is 

 Total Water Use in 2000 

Source: Created by USGS for use in the National Research Council 2008 report Water Implications of Biofuels Production in the U.S. 

Principal Bedrock Aquifers

2000 Water Use

Irrigation/Public Supply/Industrial

Million Gallons Per Day

2007 Existing and Planned Ethanol Facilities

Estimated Total Water Use

Millions Gallons Per Day

For convers

depend on the process and on technological advancements that improve 

the efficiency with which water is used. For example, according to a 2009 

Argonne National Laboratory stu

conversion process for cellulosic feedstock using advanced technology

estimated at 5.9 gallons of water per gallon of ethanol, while 

Page 67 GAO-09-446 Biofuels
Chapter 3: Increased Biofuels Production 

Could Have a Variety of Environmental 

Effects, but the Magnitude of These Effects Is 

Largely Unknown 

thermochemical gasification processes for cellulosic feedstock may only 

require 1.9 gallons of water per gallon of ethanol or other fuel.27 According 

to the study, water required in the conversion process for cellulosic 

feedstock may also be reduced as technology improves, as has occurred in 

corn ethanol biorefineries. 

pollutants that could negatively affect water quality, discharges of these 

effluents are regulated under the requirements of the Clean Water Act’s 

National Pollutant Discharge Elimination System (NPDES) program. 

Effluents from refineries can be applied to land, treated on site, discharged 

to local wastewater treatment facilities, or discharged to water bodies. 

Under the act, refineries that discharge pollutants into federally regulated 

waters are required to obtain a federal NPDES permit from EPA or a state 

agency authorized by EPA to implement the NPDES program. These 

permits generally allow a point source, such as a refinery, to discharge 

specified pollutants into federally regulated waters under specific limits 

and conditions. According to EPA officials, the greatest potential 

pollutants are discharges of contaminated water from the reverse osmosis 

treatment used in ethanol refineries and the glycerin that is used in 

biodiesel refineries.28 According to EPA officials and state officials we 

spoke with, the NPDES permitting process is generally being effectively 

applied to discharges from refineries.29 For ethanol refineries, these 

permits cover blowdown (water containing salts built up in cooling towers 

and boilers), as well as discharges from the reverse osmosis process. The 

concentrated salts in discharges to streams and lakes from reverse 

osmosis are an area of concern due to their potential aquatic toxicity and 

other water quality effects, according to EPA officials. In addition, at small 

 

Water Pollutants While effluent from ethanol and biodiesel refineries may contain 

27Thermochemical gasification is a process where the entire biomass input is converted in a 

syngas (an intermediate mixture of carbon monoxide and hydrogen) that can then be 

refined into a number of biofuel products, including ethanol, diesel, methane, or butanol, 

among other fuels. 

Reverse osmosis is a filtration process used to purify fresh water by, for example, 

Discharged by 

Biorefineries Are 

Regulated under the 

Existing Permitting 

Process 

28

removing the salts from it. This process is used to treat the water supply for the ethanol 

plant. 

29EPA Region 7 has developed guidance manuals for the construction and operation of 

ethanol and biodiesel facilities: “Environmental Laws Applicable to Construction and 

Operation of Ethanol Plants; 2007” and “Environmental Laws Applicable to Construction 

and Operation of Biodiesel Production Facilities, 2008.” These guidance manuals can be 

viewed at http://www.epa.gov/sustainability/energy.htm. 

Page 68 GAO-09-446 Biofuels
Chapter 3: Increased Biofuels Production 

Could Have a Variety of Environmental 

Effects, but the Magnitude of These Effects Is 

Largely Unknown 

biodiesel refineries, biological oxygen demand from glycerin can be a 

problem in effluent released into local municipal wastewater facilities 

because it may disrupt the microbial processes used in wastewater 

treatment, according to EPA officials.30 However, according to EPA, in 

larger biorefineries, glycerin is less of a concern because it often is 

extracted from the effluent and refined for use in other products, including 

osmetics and animal feed. In the future, it is likely that new technologies 

cilities, 

nd 

le 

mon 

uch 

 

c

will make recovery of glycerin economically feasible in smaller fa

according to USDA. 

Certain air pollutants—known as criteria pollutants under the Clean Air 

Act—are released into the air during most industrial manufacturing and

refining processes, including the conversion of feedstocks into ethanol. 

These pollutants, which pose risks to human health and welfare, include 

particulate matter, nitrogen dioxide, carbon monoxide, ozone, lead, a

sulfur dioxide.31 In addition, ethanol refineries can emit volatile organic 

compounds, which are a precursor to ozone, a criteria pollutant. (See tab

4 for details on the public health and environmental effects of com

pollutants that can be released by ethanol refineries.) In addition to 

criteria pollutants, ethanol refineries emit hazardous air pollutants, s

as acetaldehyde, which are known or suspected to cause serious health

effects, including cancer, or adverse environmental effects such as 

damaging crops or trees. 

Biofuels

30Biological oxygen demand is a measure of how much oxygen it will take to break down 

o 

in, biodiesel wastewater has a biological oxygen demand of 80,000 

mg/liter. Pure glycerin has a biological oxygen demand of 1,000,000 mg/liter. 

ir 

 standards (NAAQS) for six air pollutants also known as “criteria” pollutants: ozone, 

particulate matter (PM2.5 and PM10), lead, nitrogen dioxide (NO2), carbon monoxide 

, 

nol 

 of the Clean Air Act. 

pend 

cation and Size of 

the Facility and the 

Feedstock Used 

Air Quality Effects of

Biorefineries Will De

on the Lo

the material. According to EPA officials, biodiesel wastewater with small amounts of 

glycerin and efficient recovery of methanol has a biological oxygen demand of 10,000 t

15,000 mg/liter, compared to a normal wash water biological oxygen demand of about 200

mg/liter. With glycer

31Under the Clean Air Act, EPA has established, and regularly reviews, national ambient a

quality

(CO), and sulfur dioxide (SO2). Additionally, EPA monitors volatile organic compounds

which are known ozone precursors. The volatile organic compounds emitted from etha

plants might include, but are not limited to, acetaldehyde, acrolein, formaldehyde, and 

methanol. Some volatile organic compounds are hazardous air pollutants, such as 

acetaldehyde, and are regulated as such under section 112

Page 69 GAO-09-446 
Chapter 3: Increased Biofuels Production 

Could Have a Variety of Environmental 

Effects, but the Magnitude of These Effects Is 

Largely Unknown 

Table 4: Potential Air Pollutants Associated with Ethanol Refineries and Their Related Health and Environmental Effects 

Pollutant Health effects Environmental effects 

Particulate matter Aggravation 

disease, dec

respiratory s

and 

of respiratory and cardiovascular 

reased lung function and increased 

ymptoms, and premature death. 

Impairment of visibility, effects on climate, and

damage and/or discoloration of structures 

property. 

Sulfur dioxide Aggravation 

symptoms. C

associated h

environmental effects. Causes injury to plants 

and suppresses crop yield. 

of asthma and increased respiratory 

ontributes to particle formation with 

ealth effects. 

Contributes to the acidification of soil and surface 

water and mercury methylation in wetland areas. 

Contributes to particle formation with associated 

Oxides of nitrogen (NOx) Aggravation of respiratory disease and 

creased su

tes 

Contributes to the acidification and nutrient 

in

Contribu

effects. 

sceptibility to respiratory infections. 

to ozone with associated health 

enrichment (eutrophication, nitrogen saturation) 

of soil and surface water. Contributes to ozone 

with associated environmental effects. Can 

adversely affect plants and crop yields. 

Carbon monoxide (CO) Reduces the

body tissues

of cardiovas

 ability of blood to carry oxygen to 

 including vital organs. Aggravation 

cular disease. 

None known. 

Volatile organic compounds Cancer (from

serious heal

formation wit

 some toxic air pollutants) and other 

th problems. Contributes to ozone 

h associated health effects. 

Contributes to ozone formation with associated 

environmental effects. 

Ozone (O3

)

a

Aggravation

disease, dec

respiratory s

respiratory in

 of respiratory and cardiovascular 

reased lung function and increased 

ymptoms, increased susceptibility to 

fection, and premature death. 

Damage to vegetation such as effects on tree 

growth and reduced crop yields. 

Source: EPA. 

a

Ozone is a secondary pollutant formed by a chemical reaction of volatile organic compounds and 

Ox in the presence of sunlight. 

Biorefineries that emit more than threshold quantities of criteria and 

hazardous air pollutants are subject to Clear Air Act permitting 

requirements. If a biorefinery’s emissions meet or exceed specific 

statutory or regulatory thresholds prior to its construction or any 

ing 

erating 

 

N

subsequent major modifications, the proposed facility or modification 

undergoes a New Source Review.32 Under New Source Review, permitt

authorities review a proposed facility or modification to ensure that it will

operate within emissions limits and utilize the requisite pollution control 

technologies. In addition, these biorefineries must obtain an op

permit and must comply with any applicable national emission standards 

 nificant 32A major modification is a physical or operational change that would result in a sig

net increase in emissions. 

Page 70 GAO-09-446 Biofuels
Chapter 3: Increased Biofuels Production 

Could Have a Variety of Environmental 

Effects, but the Magnitude of These Effects Is 

Largely Unknown 

for hazardous air pollutants.33 According to EPA regional officials, 

emissions from many of the existing and planned facilities in their region 

do not meet or exceed applicable not subject to a New 

A of

w 

opera wever, these officials said the 

io

According to some experts we sp oduction 

n air quali pend 

ery

any

proximity to where biofuel feeds s that 

lem ent air quality. However, 

xpressed concern that with increased 

availability of a more diverse group of biofuel 

a e 

 tha ired ambient air 

ls w

 important to also consider the additional 

erated by the transport of feedstocks to the 

ry as well as the transport of fuel from the facility for blending 

 addition, EPA regional officials expressed concern regarding elevated 

entrations 

 thresholds, and are 

Source Review.34,35 These EP

have experienced relatively fe

biorefineries once they are 

ficials and some state officials said they

permit compliance issues with 

tional; ho

number of new permit applicat

recent economic downturn. 

ns has been small, in part due to the 

oke with, as biofuels pr

increases, the effects o

on the location of the biorefin

according to some experts, m

ty from conversion processes will de

 and the feedstock used. For example, 

 facilities are currently located in close 

tocks are cultivated—in rural area

do not traditionally have prob

some state and EPA officials e

production and the 

s with ambi

feedstocks in a variety of geogr

located closer to urban areas

phic locations, future biorefineries may b

t already have impa

quality, thereby exacerbating existin

some experts and state officia

air emissions from biofuels it is

emissions that may be gen

g problems. In addition, according to

e spoke with, when looking at the total

biorefine

with gasoline prior to distribution. 

In

ambient levels of some hazardous air pollutants that may result from 

increased ethanol production, especially in areas with high conc

of ethanol refineries. For example, acetaldehyde, a hazardous air 

 

percent of existing U.S. ethanol production capacity is located in these states as of March 

2009. 

35According to EPA, the standards for biorefineries are less stringent given their size than 

for larger petroleum facilities on a per unit of production basis, and the result is that as 

e to biofuel production. 

33A Title V operating permit contains all existing federal Clean Air Act requirements, 

including reporting and monitoring requirements, applicable to the source in one 

document. These operating permits contain any applicable new source performance 

standards and national emission standards for hazardous air pollutants. 

34EPA Region 7 serves the states of Iowa, Kansas, Missouri, and Nebraska. About 44 

more and more biorefineries are built to displace gasoline, there will be a steady increase 

in nationwide emissions du

Page 71 GAO-09-446 Biofuels
Chapter 3: Increased Biofuels Production 

Could Have a Variety of Environmental 

Effects, but the Magnitude of These Effects Is 

Largely Unknown 

pollutant, forms during the ethanol conversion process and is also e

when ethanol is used as fuel.

mitted 

ice of 

e 

nt by 2022 when compared to business as 

usual estimates. According to EPA regional officials, EPA is planning a 

use 

 and put 

 

36 A 2008 study by the Nebraska Department 

of Environmental Quality showed that some ethanol refineries may have 

difficulties meeting national emission standards for some hazardous air 

pollutants, including acetaldehyde. Further, EPA’s May 2009 not

proposed rulemaking regarding the RFS included an analysis that found 

the production and distribution of biofuels could increase acetaldehyd

emissions by almost 14 perce

pilot study to monitor ambient acetaldehyde in localities with high 

concentrations of ethanol production in order to develop better estimates 

of acetaldehyde emissions in the ethanol conversion process. 

In contrast, at this time, according to some experts and EPA regional 

officials we spoke with, little is known about the potential air quality 

effects of converting cellulosic feedstocks to biofuels, primarily beca

commercial-scale cellulosic biorefineries have not been completed

into use. While some studies projecting potential emissions generated 

from the cultivation and conversion of biofuels show promise,37 some

experts we spoke with believe that predictions of potential emissions 

reductions from the conversion of cellulosic feedstock are speculative 

until facilities have been demonstrated at the commercial scale. 

36Acetaldehyde is mainly used as an intermediate in the synthesis of other chemicals. It is 

rritation 

 of 

 probable human 

carcinogen based on inadequate human cancer studies and animal studies that have shown 

ill, J., S. Polasky, E. Nelson, D. Tilman, H. Huo, L. Ludwig, J. Neumann, H. Zheng, 

and D. Bonta. “Climate Change and Health Costs of Air Emissions from Biofuels and 

e 

ubiquitous in the environment and may be formed in the body from the breakdown of

ethanol. Acute (short-term) exposure to acetaldehyde results in effects including i

of the eyes, skin, and respiratory tract. Symptoms of chronic (long-term) intoxication

acetaldehyde resemble those of alcoholism. Acetaldehyde is considered a

nasal tumors in rats and laryngeal tumors in hamsters. 

37See H

Gasoline,” Proceedings of the National Academies of Sciences, vol. 106, no. 6, 2009, pp. 

2077-2082; and Wu, M., Y. Wu, and M. Wang. “Energy and Emission Benefits of Alternativ

Transportation Liquid Fuels Derived from Switchgrass: A Fuel Life Cycle Assessment,” 

Biotechnology Progress, no. 22, 2006, pp. 1012-1024. 

Page 72 GAO-09-446 Biofuels
Chapter 3: Increased Biofuels Production 

Could Have a Variety of Environmental 

Effects, but the Magnitude of These Effects Is 

Largely Unknown 

Biofuels

As the percentage of ethanol used in motor fuels increases, the risk of 

leaks in the existing fuel storage and delivery infrastructure also increases

because some of these tanks are not currently certified for storing such 

blends. These leaks could result in contamination of groundwater and 

surface water. Furthermore, the potential effects of increased biofuels 

on air quality will depend on the ability of the existing fleet of vehicles to

adapt to fuel blends with an increased percentage of ethanol. 

use 

y 

 the 

tely 

hat 

t the 

expected life span of USTs is typically 30 years. This, combined with the 

ck of information on how many of these tank systems are ethanol 

compatible and where they are installed, makes it difficult for EPA to 

gather data on the level of leakage risk posed by a switch to different 

blends of ethanol. Officials also commented that substantial turnover in 

ownership further complicates the challenge of determining what type of 

UST system is in the ground without removing it. 

 

Ethanol is highly corrosive and poses a risk of damage to pipelines, ra

tanker trucks, underground storage tanks (UST), and above-ground 

storage tanks (AST), which could in turn lead to releases to the 

environment that may also contaminate groundwater, among other 

issues.

il or 

38 According to EPA officials, aside from UST systems specificall

designed to store fuel containing 85 percent ethanol, a large number of

617,000 federally regulated UST systems currently in use at approxima

233,000 sites across the country are not certified to handle fuel blends t

contain more than 10 percent ethanol.39 These officials stated tha

la

 

pills. In addition, the methane 

 in the subsurface can migrate into overlying buildings, degrading indoor air 

y 

thanol fuel blends. 

Storage and Use of 

Certain Ethanol 

Blends May Result in 

Further 

Environmental 

Effects that Have Not 

Yet Been Measured 

Delivery Infrastructure 

May Be Inadequate to 

Prevent Leaks and 

Potential Groundwater 

Contamination from 

Certain Ethanol Blends 

Current Fuel Storage and 

38There are other hazards that may occur from releases of ethanol-blended fuels. For 

example, some spills of gasoline with ethanol may pose an explosion risk. Large scale 

releases of ethanol have been shown to degrade under anaerobic conditions to produce 

explosive concentrations of methane. According to EPA, this can pose a significant 

challenge for emergency responders mitigating biofuel s

generated

quality. 

39According to EPA officials, owners using blends containing 85 percent ethanol generall

work with a licensed installer to use certified, compatible storage and dispensing 

equipment. UST systems are comprised of many components; however, some of these 

components have not been tested for use with high e

Page 73 GAO-09-446 
Chapter 3: Increased Biofuels Production 

Could Have a Variety of Environmental 

Effects, but the Magnitude of These Effects Is 

Largely Unknown 

Moreover, according to EPA officials, most tank owners do not have 

records of all the UST systems’ components, such as the seals and gaskets. 

Glues and adhesives used in UST piping systems were not required to be

tested for compatibility with ethanol until recently. Thus there may be 

many compatible tanks with incompatible system components, increasing 

the potential for equipment failure and fuel leakage, according to EPA 

officials, and EPA continues to work with government and industry 

partners to study the compatibility of UST system components with 

arious ethanol blends. In 2000, 39 states, territories and tribes identified 

leaking USTs as one of the top 10 causes of groundwater contamination in 

tate assessment reports. When leakage occurs from USTs storing ethanolblended fuels, the contamination may pose greater risks than petroleum. 

tudies show that ethanol causes benzene, a soluble and carcinogenic 

 

v

s

S

chemical in gasoline, to travel longer distances and persist longer in soil 

and groundwater than it would in the absence of ethanol, potentially

reaching a greater number of drinking water supplies.40,41

. This 

ed 

r A. 

and 

ilson. “Impact of Ethanol on the Natural Attenuation of Benzene, Toluene, and oXylene in a Normally Sulfate-Reducing Aquifer.” Environmental Science Technology, vol. 

nol003, 

40When ethanol is present, the ethanol is consumed by microorganisms in the soil first

decomposition takes up nutrients and oxygen needed to break down benzene and relat

compounds. As a result the benzene plume extends a greater distance. 

41Mackay, Douglas, Nicholas R. de Sieyes, Murray D. Einarson, Kevin P. Feris, Alexande

Pappas, Isaac A. Wood, Lisa Jacobson, Larry G. Justice, Mark N. Noske, Kate M. Scow, 

John T. W

40, 2006, pp. 6123-6130; and Ruiz-Aguilar, G., K. O’Reilly, and P. Alvarez. “A Comparison of 

Benzene and Toluene Plume Lengths for Sites Contaminated with Regular vs. Etha

Amended Gasoline.” Ground Water Monitoring & Remediation, vol. 23, no. 1, winter 2

pp. 48-53. 

Page 74 GAO-09-446 Biofuels
Chapter 3: Increased Biofuels Production 

Could Have a Variety of Environmental 

Effects, but the Magnitude of These Effects Is 

Largely Unknown 

In addition to emissions from biorefineries, research indicates that the

some concern regarding tailpipe emissions from vehicles and small 

nonroad engines using certain blends of ethanol.

re is 

ned 

and 

iate blends has 

been limited and efforts are under way to determine the magnitude of their 

 

42,43 In modeling done as 

part of its proposed rulemaking, EPA estimated that nitrogen oxide 

emissions are projected to increase due to the use of fuel blends with 10 

percent ethanol, and the use of fuel blends with 85 percent ethanol will

lead to more significant increases in ethanol, acetaldehyde, and 

formaldehyde emissions. Furthermore, while some vehicles are desig

to handle fuel blends of up to 85 percent ethanol, some conventional 

vehicles may not be equipped to handle blends containing greater than 10 

percent ethanol, according to an Oak Ridge National Laboratory study.44

Specifically, the study reported that the use of these intermediate ethanol 

blends by vehicles may have an effect on the pollution control systems 

emissions of some vehicles, particularly older vehicles.45 While EPA has 

conducted some research to quantify the emissions effects of ethanol 

blends of 10 percent and 85 percent, research on intermed

42The Clean Air Act Amendments of 1990 require areas with the worst air quality to use 

reformulated gasoline, which includes oxygenate additives that increase the oxygen 

content of the fuel and reduce emissions of carbon monoxide in some engines. In recent 

years, ethanol has been increasingly used as the primary oxygenate in gasoline. 

Before approving the use of intermediate ethanol blends, EPA would assess potential 

 

Use of Certain Ethanol 

Blends in Vehicles Is 

Expected to Increase 

Emissions of Certain Air 

Pollutants, but Research Is 

Ongoing to Better 

Establish the Magnitude of 

These Emissions 

43Small nonroad engines include leaf blowers, line trimmers, generator sets, lawn mowers, 

and small tractors. 

44

impacts on vehicle emissions. 

45Vehicles have pollution control systems—known as catalytic converters—that are located

between a vehicle’s engine and tailpipe. Catalytic converters work by facilitating chemical 

reactions that convert exhaust pollutants such as carbon monoxide and nitrogen oxides to 

normal atmospheric gases such as nitrogen, carbon dioxide, and water. As the catalytic

compound breaks down over time, the converter loses its capacity to reduce pollutant 

emissions.

Page 75 GAO-09-446 Biofuels
Chapter 3: Increased Biofuels Production 

Could Have a Variety of Environmental 

Effects, but the Magnitude of These Effects Is 

Largely Unknown 

potential effect.46 For example, DOE’s National Renewable Energy 

Laboratory and Oak Ridge National Laboratory and EPA are conduc

long-term studies on the effects of intermediate ethanol blends on 

emissions from vehicles in the existing fleet and small nonroad engin

Preliminary results have shown that, in vehicles, fuel blends greater than 

10 percent ethanol generally reduce emissions of some criteria pollutant

and some hazardous air pollutants, although acetaldehyde emiss

increased.

ting 

es. 

s 

ions 

me 

ethanol use may be relatively small. EPA plans to further analyze the 

potential air quality effects of increased renewable fuel use as a part of the 

final rulemaking for the RFS. 

 

47 The National Renewable Energy Laboratory, the Oak Ridge 

National Laboratory, and EPA are expected to report on the effects of

intermediate ethanol blends on the full useful life of the existing fleet of 

vehicles in 2010, including effects on pollution control systems and 

emissions.48 While the potential effects of intermediate ethanol blends on 

tailpipe emissions and catalytic systems are important, EPA emissions 

data indicate that tailpipe emissions of certain pollutants have decreased

substantially over time (see table 5). As a result, while there may be so

adverse effects, particularly in areas with existing air pollution problems, 

the effects of increased pollution from motor vehicles as a result of 

46A 2007 review of available literature by a team of researchers at Oak Ridge National 

Laboratory found that limited data existed on the use of intermediate ethanol blends in 

conventional gasoline vehicles in the United States. A study contracted by the Australian 

Department of Environment found nitrogen oxide emissions increases and accelerated 

fuel 

n, 

 National 

Laboratory, DOE, August 2007; Orbital Engine Company, “Market Barriers to the Uptake of 

 on the Australian Passenger Vehicle Fleet.” Report to Environment 

h 2003; and Orbital Engine Company, “Market Barriers to the Uptake of 

d Heritage of Australia, May 2004. 

ful life of a vehicle is considered to be 100,000 to 150,000 miles. 

long-term degradation of the vehicle’s pollution control system with 20 percent ethanol 

blends. See Bechtold, R., J. Thomas, S. Huff, J. Szybist, T. Theiss, B. West, M. Goodma

and T.A. Timbario. “Technical Issues Associated with the Use of Intermediate Ethanol 

Blends (>E10) in the U.S. Legacy Fleet: Assessment of Prior Studies.” Oak Ridge

Biofuels Study: A Testing Based Assessment to Determine Impacts of a 20% Ethanol 

Gasoline Fuel Blend

Australia, Marc

Biofuels Study: Testing Gasoline Containing 20% Ethanol.” Phase 2B-Final Report to the

Department of the Environment an

47Acetaldehyde emissions increased with fuel blends containing 20 percent ethanol by an 

average of 0.81 milligrams per mile when compared to regular gasoline. Increases for 

blends containing 10 percent and 15 percent ethanol were 0.38 milligrams per mile and 0.70 

milligrams per mile, respectively. 

48The full use

Page 76 GAO-09-446 Biofuels
Chapter 3: Increased Biofuels Production 

Could Have a Variety of Environmental 

Effects, but the Magnitude of These Effects Is 

Largely Unknown 

Table 5: Criteria Pollutants and Related Emissions from Stationary and Mobile Sources, 1990 and 2007 (thousands of short tons) 

 Year m

articulate 

5)a

Carbon 

onoxide (CO)

Nitrogen oxides 

(NOx)

Sulfur dioxide 

(SO2)

Volatile organic 

compounds

P

matter (PM2.

Highway vehicles 1990 110,255 9,592 503 9,388 323

 2007 41,610 5,563 91 3,602 114

Nonroad equipment 1990 21,447 3,781 371 2,662 300

 2007 18,762 4,164 396 2,650 276

Total U.S. 1990 154,188 25,527 23,077 24,108 7,560

emissions 2007 88,254 17,025 12,925 18,423 5,450

Source: GAO analysis of EPA data. 

a

PM2.5 includes particulate matter at most 2.5 micrometers in diameter. 

Experts from government, academia, and the private sector have stated 

that to better understand the environmental implications of different

choices, an increased focus on sustainability is needed. While there ar

standard criteria, nor a single working definition for sustainability, the 

Biomass Research and Develo

 fuel 

e no 

pment Board described sustainable 

renewable energy production as systems that are not only productive, but 

also environmentally, economically, and socially viable now and for future 

generations. Some experts and agency officials said that sustainability is a 

useful concept for understanding these effects and evaluating policy 

options because it takes into account a wide variety of potential effects. 

Several efforts are under way to evaluate biofuels using this broad 

concept. For example, the Biomass Research and Development Board has 

ental effects of 

 

Biofuels

drafted a proposed set of scientific sustainability criteria that cover the

critical elements of a sustainable biofuels system.49 Each criterion has a 

corresponding set of measurable indicators. For example, one of the 

environmental criteria is “soil quality and land productivity,” and its 

corresponding indicators are feedstock yield, soil loss, and soil organic 

matter content. Although some data are available, reliable science-based 

methods to predict likely outcomes from measurable indicators must still 

be developed, according to USDA. 

Furthermore, some experts and officials we spoke with highlighted the 

importance and need for lifecycle analysis of the environm

biofuels—throughout feedstock cultivation, harvest, transport, fuel 

 

Criteria have been developed to help measure environmental, economic, and social 

d security. 

Focus on 

Sustainability Will Be 

Important in 

Evaluating 

Environmental 

Implications of 

Increased Biofuel 

Production 

49

benefits and consequences, as well as the impacts on energy diversification an

Page 77 GAO-09-446 
Chapter 3: Increased Biofuels Production 

Could Have a Variety of Environmental 

Effects, but the Magnitude of These Effects Is 

Largely Unknown 

production, storage, and use. EPA is undertaking some of these analyses 

and included a partial assessment of water and air effects in the preamble 

of the d has s

ar author responsi und u

the C ter Act an Federal Insecticide, Fung nd 

Roden Act, to eva the environmental impacts of a biofuel’s 

lifecyc quir A to dete what fuels 

eligibl nsiderati er the RFS based on their lifecycle 

environmental effects hough a fuel’s lifecycle greenhouse gas 

emissi termine e ty (see ch. 4). Moreover, beginning in 202

EPA must establish the renewable fuel standard based in part on the 

n and use of renewable fuels on the environment. 

According t ysis of 

d benefits of gasoline compared with the various types of 

ns, 

ycle 

e 

lications must be compared to the 

environmental effects of gasoline and other transportation fuel options. 

ch an 

assessment in 2022, we believe developing a strategy to assess these 

effects now is an important first step in ensuring that future fuel choices 

 May 20

that it has cle

09 RFS propose

ity and

 rulemaking. In

bility 

 addition, EPA 

er other stat

tated 

tes, such as 

lean Wa d the icide a

ticide luate 

le. However, EISA does not re e EP rmine are 

e for co on und

even t

ons de ligibili 2, 

impact of the productio

o the experts we spoke with, any comprehensive anal

the costs an

biofuels will require a complete analysis of environmental effects as well. 

Ethanol, biodiesel, and advanced cellulosic biofuels are being promoted 

for their potential contributions to reducing net greenhouse gas emissio

achieving greater national energy security by decreasing the 

transportation sector’s use of imported petroleum, and developing rural 

economies by raising domestic demand for U.S. farm products. Although 

EPA’s May 2009 proposed rulemaking included a partial analysis of water 

and air effects of biofuels production, EISA does not require EPA to 

determine what renewable fuels are eligible for consideration under the 

RFS based on their lifecycle environmental effects, apart from lifec

greenhouse gas emissions. Given the significant environmental effects that 

could occur at every step of the biofuels production process—feedstock

cultivation, harvest, transport, conversion to biofuel, storage, and end 

use—and the potential for biofuels production to further exacerbate 

existing environmental problems, we believe that any assessment of 

biofuel feedstock will be incomplete without a full consideration of all th

related potential environmental implications associated with each type of

feedstock. Furthermore, for policymakers to be fully informed about the 

effects of their decisions, these imp

Conclusions 

While we recognize the challenge EPA faces in assessing the variety of 

environmental effects that increased biofuels production can cause and 

given that, at a minimum, the agency will be required to undertake su

will not lead to additional environmental degradation. 

Page 78 GAO-09-446 Biofuels
Chapter 3: Increased Biofuels Production 

Could Have a Variety of Environmental 

Effects, but the Magnitude of These Effects Is 

Largely Unknown 

Biofuels

In addition to the currently required lifecycle greenhouse gas emissions 

analysis, the Congress may wish to consider amending EISA to require that

the Administrator of the Environmental Protection Agency develop a 

strategy to assess the effects of increased biofuels production on the 

environment at all stages of the lifecycle—cultivation, harvest, tr

conversion, storage, and use—and to use this assessment in determini

which biofuels are eligible for consideration under the renewable fuel 

standard. This would ensure that all relevant environmental effec

considered concurrently with lifecycle greenhouse gas emissions. 

In commenting on a draft of this report, EPA addressed the Matter for 

Congressional Consideration to consider amending EISA to require EPA 

develop a strategy to assess the effects of increased biofuels productio

on the environment at all stages of the lifecycle and to use this assessment

ansport, 

ng 

ts are 

to 

n 

in determining which biofuels are eligible for consideration under the RFS. 

PA commented that this matter might be best addressed by the recently 

, 

ings. EPA 

. 

t 

only 

Matter for 

Congressional 

Consideration 

Agency Comments 

and Our Evaluation 

E

created Executive Biofuel Interagency Working Group co-chaired by EPA

USDA, and DOE, which has been tasked to promote the environmental 

sustainability of biofuel feedstock production, among other th

also commented that it has clear authorities and responsibilities under 

other environmental statutes that may regulate aspects of a biofuel’s 

lifecycle and is required by Section 204 of EISA to evaluate the 

environmental effects of biofuels and submit a report to the Congress

We acknowledge that EPA has the authority under other statutes to 

mitigate the environmental effects of biofuels and believe that the 

evaluation currently required by section 204 of EISA will provide a good 

foundation for the analysis we are suggesting. However, we believe tha

our matter for congressional consideration would require EPA to not 

assess the lifecycle effects of biofuels, but to actually use these 

assessments to determine which biofuels are eligible for consideration 

under the renewable fuel standard. 

Page 79 GAO-09-446 
Chapter 4: Researchers Disagree on How to 

Account for Indirect Land-Use Changes in 

Estimating the Lifecycle Greenhouse Gas 

Effects of Biofuels Production 

Page 80 GAO-09-446 

Chapter 4: Researchers Disagree on How to 

Account for Indirect Land-Use Changes in 

Estimating the Lifecycle Greenhouse Gas 

Effects of Biofuels Production 

Twelve recent scientific studies have used greenhouse gas or economic 

forecasting models to estimate the total emissions of carbon dioxide a

associated gas during a biofuel’s lifecycle—growing, harvesting, and 

transporting the feedstock; producing the biofuel; and using it in a 

vehicle—and comparing these results with greenhouse gas emissions of 

fossil fuels.1

 Overall, the estimated lifecycle greenhouse gas emissions 

biofuels compared with fossil fuels in these studies ranged from a 59 

percent reduction to a 93 percent increase in greenhouse gas emiss

nd 

of 

ions for 

corn starch ethanol, a 113 percent reduction to a 50 percent increase for 

ellulosic ethanol, and a 41 percent to 95 percent reduction for biodiesel. 

 in 

s 

on 

s 

general consensus on the approach for measuring the direct effects of 

about 

fects of 

rs 

food, feed, 

 

c

More specifically, studies that did not include indirect land-use changes

their lifecycle analysis generally reported that conventional corn starch 

ethanol can achieve some net greenhouse gas reduction benefits and 

cellulosic ethanol can likely achieve more reduction benefits as compared 

with fossil fuels. However, the three studies that addressed indirect landuse changes in their methodologies each reported that biofuels had a net 

increase in greenhouse gas emissions relative to fossil fuels. In addition, 9 

other scientific studies assessed the greenhouse gas emissions of variou

biofuels feedstocks using various other metrics, such as the carbon 

payback period—the amount of time needed to compensate for the carb

debt generated from clearing new lands to grow biofuel feedstocks. 

Many of the lifecycle analysis researchers we interviewed stated there i

increased biofuels production, but disagreement among researchers 

assumptions and assessment methods for estimating the indirect ef

global land-use change. EPA is required to assess significant greenhouse 

gas emissions from land-use change because only biofuels that achieve 

certain lifecycle emission reductions relative to petroleum fuels are 

eligible for consideration under the RFS. In particular, researche

disagree about what nonagricultural lands will be converted to replace 

land used to grow biofuels crops so that world production of 

1

Researchers have generally used Argonne National Laboratory’s GREET model to estimate 

fuel-cycle energy use and emissions associated with alternative transportation fuels and 

advanced vehicle technologies. In addition, some researchers have used (1) the University 

of Missouri’s and Iowa State University’s FAPRI model to estimate international crop 

expansion, (2) the FASOM model developed by Texas A&M University and others to 

estimate domestic crop expansion, (3) NASA’s MODIS satellite-based data to estimate the 

percentage of each land type converted to cropland, and (4) Purdue University’s GTAP 

general equilibrium model to predict the amount and types of land needed in a region to 

meet demands for both food and fuel production. 

 Biofuels 
Chapter 4: Researchers Disagree on How to 

Account for Indirect Land-Use Changes in 

Estimating the Lifecycle Greenhouse Gas 

Effects of Biofuels Production 

and fiber crops is maintained, and about future productivity trends in both 

existing and new farmland. Although research for measuring indirect land

use changes as part of the greenhouse gas analysis is only in the early 

stages of development, EISA directed EPA to promulgate a rule to 

determine the lifecycle greenhouse gas emissions of biofuels included in

the RFS, including significant emissions from land-use changes for each 

feedstock. Many researchers told us that the lack of agreement on 

standardized lifecycle assessment methods, combined with key 

information gaps in several areas—such as feedstock yields, domestic and 

international land-use data, and data on above-ground biomass and soil 

carbon for a variety of land cover crops worldwide—greatly complicate 

EPA’s ability to promulgate this rule. On May 26, 2009, EPA published a 

proposed rule in the Federal Register.

Twelve recent scientific studies that compared the estimated lifecycle 

greenhouse gas emissions of using ethanol with using gasoline generally 

showed a modest greenhouse gas reduction benefit for conventional corn 

starch ethanol and greater benefits for cellulosic ethanol (see fig. 5). For 

example, a 2006 Argonne National Laboratory study estimated that, for the 

entire fuel cycle, corn starch ethanol generated 21 percent to 24 percent 

less greenhouse gas emissions than gasoline, while cellulosic ethano

-

l 

ding 

 

Biofuels

produced from corn stover generated 86 to 89 percent less greenhouse gas 

emissions than gasoline.2

 Updated data presented in 2008 showed that 

such feedstocks as forest residues, corn stover, switchgrass, and fastgrowing trees reduced greenhouse gas emissions relative to gasoline from 

75 percent to 112 percent.3

 In comparison with gasoline, the estimated 

greenhouse gas emissions ranged from a 59 percent decrease to a 93 

percent increase for corn starch ethanol and from a 113 percent decrease

to a 50 percent increase for ethanol emissions from cellulosics, inclu

switchgrass, corn stover, and forest residues. 

 

g, 

g 

Estimates of the 

Lifecycle Greenhouse 

Gas Emissions of 

Biofuels Have 

Significantly Differed 

2

Argonne National Laboratory, Fuel-Cycle Assessment of Selected Bioethanol Production 

Pathways in the United States (Argonne, IL: Nov. 2006). 

3

Life-Cycle Analysis of Biofuels: Issues and Results, presentation by Dr. Michael Wan

Center for Transportation Research, Argonne National Laboratory, at an American 

Chemical Society forum for Congressional staff (August 2008). The reduction of 

greenhouse gas emissions exceeded 100 percent in one study because some feedstocks 

create a net carbon benefit by sequestering more carbon than is released when combustin

the fossil fuels used to produce the biofuel. 

Page 81 GAO-09-446 
Chapter 4: Researchers Disagree on How to 

Account for Indirect Land-Use Changes in 

Estimating the Lifecycle Greenhouse Gas 

Effects of Biofuels Production 

Figure 5: Estimated Lifecycle Greenhouse Gas Emissions of Ethanol as Compared with Gasoline 

Lifecycle analysis did not include indirect land use change

Ethanol feedstock Reduces greenhouse gases Increases greenhouse gases

Forest residues

Corn stover

Switchgrass

Corn starch

Lifecycle analysis included indirect land use change

-125% -100% -50% 0% 50% 100%

Source: Figure based on data from 12 key studies conducted by DOE, USDA, and academic researchers.

In addition, we examined 9 other scientific studies that estimated the 

greenhouse gas impacts of biofuels using different metrics to report their 

results than the studies shown in figure 5. For example, 3 of these 9 

studies estimated the greenhouse gas emissions of biofuels based on a

carbon payback period—defined as the amount of time needed to 

overcome greenhouse gas releases incurred when new lands are cleared

grow biofuel feedstocks—while 2 studies in this group used a net ene

metric, such as net energy input per unit output. Other studies in this 

group reported the greenhouse gas impacts from biofuels in terms of 

overall greenhouse gas emissions reductions o

 to 

rgy 

r increases without 

quantifying these reductions relative to fossil fuels. These 9 scientific 

studies reported both positive and negative greenhouse gas impacts for 

biofuels. 

Page 82 GAO-09-446 Biofuels
Chapter 4: Researchers Disagree on How to 

Account for Indirect Land-Use Changes in 

Estimating the Lifecycle Greenhouse Gas 

Effects of Biofuels Production 

Biofuels

The results of the 21 scientific studies we reviewe

researchers made different assumptions about the agricultural 

d vary primarily because 

management practices and biorefinery energy inputs required to produce 

biofuels, allocated these energy inputs to co-products in a number of ways, 

and considered direct and indirect land-use impacts to different extents. 

(See app. IV for a list of key studies on the lifecycle greenhouse gas effects 

of biofuels and app. VII for a summary of the assumptions and conclusions 

of 17 researchers about lifecycle greenhouse gas emissions of biofuels 

production.) 

inputs and practices related to biofuel production can strongly affect 

lifecycle analysis results. For example, assumptions about fertilizer 

production and its rate of application are important because corn farming 

requires intensive application of nitrogen-based fertilizer. One study 

estimated that 70 percent of greenhouse gas emissions in corn production 

are related to nitrogen fertilizer, which requires fossil energy to produce 

of nitrous oxide, a greenhouse-gas, from the 4

n 

5

ed 

 

Several researchers told us that different assumptions about agricultural 

and results in emissions 

farmed soil. Also, most researchers told us that certain agricultural and 

production efficiencies could reduce greenhouse gas emissions from corn

starch ethanol. For example, such farming practices as planting cover 

crops that bind the fertilizer’s nitrogen in the soil might mitigate nitroge

leaching and greenhouse gas emissions and improve soil organic levels.

Similarly, the no-till land management practice might improve soil organic 

levels and increase carbon sequestration rates in comparison with 

conventional tillage. In addition, the lifecycle analysis is affected by 

decisions on what type of land to bring into feedstock production, the

energy requirements of harvesting machinery, and the energy associat

with transporting feedstocks to biorefineries. 

 

4

Kim S. and Dale B. “Effects of Nitrogen Fertilizer Application on Greenhouse Gas 

Emissions and Economics of Corn Production.” Environmental Science and Technology, 

vol. 42, no. 16 (2008): pp. 6028-6033. 

5

Using a winter cover crop, such as wheat, in the cropping system, could reduce soil 

emissions of nitrous oxide compared to continuous corn cultivation without a cover crop. 

See Kim S., and Dale B. “Life Cycle Assessment of Various Cropping Systems Utilized for 

Producing Biofuels: Bioethanol and Biodiesel.” Biomass and Bioenergy, 29 (2005) pp. 426-

439. 

Assumptions about 

Agricultural and 

Energy Inputs, CoProducts, and LandUse Changes 

Determine Research 

Results 

Agricultural and 

Biorefinery Energy Inputs 

Can Strongly Affect the 

Results of Biofuel 

Lifecycle Assessment 

Models 

Assumptions about 

Page 83 GAO-09-446 
Chapter 4: Researchers Disagree on How to 

Account for Indirect Land-Use Changes in 

Estimating the Lifecycle Greenhouse Gas 

Effects of Biofuels Production 

Researchers have also made varying assumptions on the amounts and 

types of energy used to power biorefineries. For example, estim

lifecycle greenhouse gas emissions of corn ethanol as compared with 

gasoline have varied from a 3 percent increase when coal was used as the 

process fuel to a 52 percent decrease when wood chips were used.6

 For 

cellulosic ethanol biorefineries, some studies that assume coal will be 

used for power showed increased greenhouse gas emissions compared 

with other studies that assume lignin (the noncellulose portion of the 

feedstock) wi

v

ates of the 

ll be used as a source of power.7

 Furthermore, the models 

ary based on whether they measure biorefinery energy use with regional 

data or measure it at a specific biorefinery, and some studies vary based 

n whether they use energy data for dry mill processing or more energye 

d not 

ducts from ethanol 

production substitute for other products that require energy for their 

 

o

intensive wet mill processing. 

The same energy that a biorefinery uses to make ethanol or biodiesel also 

creates economically valuable co-products, including distiller’s grains

produced with corn ethanol using dry mill processing, soy meal produced 

by soybean crushing facilities, glycerin produced with biodiesel by 

biorefineries, and electricity produced by ethanol biorefineries that us

cellulosic and sugarcane feedstocks. To analyze the energy use and 

greenhouse gas emissions, the energy used by a biorefinery to produce coproducts needs to be subtracted out. Because future cellulosic 

biorefineries could be designed to co-produce electricity along with 

ethanol by burning the lignin in cellulosic feedstocks to generate heat or 

steam, this potential energy offset for producing cellulosic ethanol also 

needs to be taken into account. Researchers have used different 

approaches for addressing biofuels co-products. Some researchers di

include co-products as a factor in their analysis while other researchers

have allocated the energy use attributable to these products through (1) a

displacement method that assumes that co-pro

Biofuels

6

See Wang M., Wu M., and Huo H. “Life-Cycle Energy and Greenhouse Gas Emission 

 (2007). 

Production Using Corn, Switchgrass, and Wood; 

Biodiesel Production Using Soybean and Sunflower,” Natural Resources Research, vol 14, 

ergy 

ov. 2006). 

-

ially 

fecycle Analyses 

Assumptions about 

Allocating Energy to Co

Products Can Substant

Affect the Results of 

Biofuel Li

Impacts of Different Corn Ethanol Plant Types,” Environmental Research Letters, 2

7

See Pimentel D., Patzek T. “Ethanol 

no. 1 (2005): pp. 65-76; Schmer M.R., Vogel K.P., Mitchell R.B., and Perrin R.K. “Net En

of Cellulosic Ethanol from Switchgrass.” Proceedings of the National Academy of 

Sciences, vol. 105, no. 2 (2008): pp. 464-469; and Argonne National Laboratory, Fuel-Cycle

Assessment of Selected Bioethanol Production Pathways in the United States (Argonne, 

IL: N

Page 84 GAO-09-446 
Chapter 4: Researchers Disagree on How to 

Account for Indirect Land-Use Changes in 

Estimating the Lifecycle Greenhouse Gas 

Effects of Biofuels Production 

production, (2) a mass-based method that distributes energy among all 

products according to their mass output shares, and (3) an economic 

revenue shares method that distributes energy based on the revenue 

shares of each product. Several researchers told us that the methods used 

to allocate energy to these co-products is one of the largest variables in 

energy studies, and the variation can lead to widely different results.8

 A

recent Argonne National Laboratory study examining the implications of

selecting one method over others found that co-product method select

has significant effects on the biofuel greenhouse gas results, particularly

for corn ethanol and biodiesel—for corn starch ethanol from 19 percent to

46 percent of the greenhouse gas emissions could be allocated to the 

distiller’s grain co-product depending on the method used, and for 

cellulosic ethanol from 2 perce

ion 

nt to 31 percent could be allocated to cogenerated electricity depending on the method used.9

t 

 either 

s 

of crop, 

ult to 

mple, 

ural 

ases 

being released than were saved through the replacement of gasoline with 

ethanol. 

 

Some researchers believe that land-use changes are the most significan

factor in determining the greenhouse gas effects of certain types of 

biofuels. The land-use changes resulting from biofuel production are

direct or indirect. Direct land-use change examines the immediate effect

of displacing the existing use of land to grow feedstocks for biofuel 

production. For example, as corn ethanol production increases, farmers 

could grow more corn on land previously used for another type 

such as soybeans. Indirect land-use change is significantly more diffic

measure because it examines what nonagricultural lands may be 

converted to replace agricultural land used to grow biofuels crops to 

maintain world production of food, feed, and fiber crops. For exa

assessments of indirect land-use change attempt to measure the impact of 

increased biofuel production in the U.S. on agriculture patterns in other 

countries, such as those in tropical regions where land not currently used 

for agriculture might be cleared to produce corn and other agricult

commodities. Such land-use changes may result in more greenhouse g

Biofuels

 of 

 forthcoming in the Energy Policy Journal. 

e 

Assessing the Lifecycle 

Greenhouse Gas 

Emissions of Biofuels 

Land-Use Changes May B

the Most Important and 

Difficult Variable to 

Account for when 

8

In a 2006 survey of published and gray literature examining the greenhouse gas effects

ethanol, Farrell found that calculations about the net energy calculations for ethanol were 

most sensitive to co-product allocation. See Farrell A.E. “Ethanol Can Contribute to Energy 

and Environmental Goals,” Science, vol. 311, issue 5760 (2006): pp. 506-508. 

9

Wang M., Huo H., and Arora S. “Methods of Dealing with Co-Products of Biofuels in LifeCycle Analysis,”

Page 85 GAO-09-446 
Chapter 4: Researchers Disagree on How to 

Account for Indirect Land-Use Changes in 

Estimating the Lifecycle Greenhouse Gas 

Effects of Biofuels Production 

To date, only a few studies have attempted to account for the effects of 

indirect land-use change. One study estimated that (1) corn starch eth

resulted in a 93 percent increase in greenhouse gas emissions relative

gasoline when indirect land-use changes were included and (2) converting 

corn fields to grow switchgrass would trigger land-use changes that wou

result in a 50 percent increase in greenhouse gas emissions as compared

with gasoline.

anol 

 to 

ld 

ed 

t 

the payback period. 

One of these studies estimated this payback period to be about 86 to 840 

ears for biodiesel, depending on the tropical ecosystem being converted, 

r 

 models 

tain 

 

10 In addition, two other studies stated that biofuels 

production could increase greenhouse gas emissions if corn starch ethanol 

production required expanding agricultural production on other native 

habitats or if cellulosic feedstocks accelerated land clearing by adding to 

the agricultural land base needed for biofuels.11 These studies quantifi

the carbon debt, which determines the greenhouse gas releases tha

biofuels must overcome to provide greenhouse gas benefits. The time 

needed to overcome this carbon debt is referred to as 

y

and about 93 years for corn ethanol produced on newly converted U.S. 

central grasslands. The studies also reported that the expansion of 

biofuels into production in tropical ecosystems would always lead to net 

carbon emissions for decades to centuries, but expanding into degraded or

already cultivated land could reduce greenhouse gas emissions and 

provide carbon savings. However, while all three studies incorporated 

land-use change effects, other researchers have criticized these studies fo

either (1) not recognizing cultural and political interactions as well as 

other factors that also lead to land-use change, (2) using economic

that do not include all land-use factors in the modeling, (3) making cer

assumptions about the type of land being converted and agricultural 

practices used to plant the biofuel feedstocks, or (4) making assumptions 

regarding crop productivity of existing and new crop land that may not 

reflect technology potentials. 12 Other researchers told us that indirect 

 er T., Heimlich R., Houghton R.A., Dong F., Elobeid A., Fabiosa J, Tokgoz S., 

Hayes D., and Yu T.H. “Use of U.S. Croplands for Biofuels Increases Greenhouse Gases 

Through Emissions from Land-Use Change.” Science, vol. 319 (2008): pp. 1238-1240. 

Supporting online material was published on Science Express (Feb. 7, 2008). 

11

e 

10Searching

See Fargione J., Hill J., Tilman D., Polasky S., and Hawthorne P. “Land Clearing and the 

Biofuel Carbon Debt,” Science, vol. 319, issue 5867 (2008): 1235-1238; and Gibbs H.K, 

Johnston M, Foley J.A, Holloway T., Monfreda, C., Ramankutty N., and Zaks, D. “Carbon 

Payback Times for Crop-Based Biofuel Expansion in the Tropics: The Effects of Changing 

Yield and Technology.” Environmental Research Letters, vol. 3 (2008): 1-10. 

12For example, the development of hybrid seeds could offset some of the potential increas

in cultivated land. 

Page 86 GAO-09-446 Biofuels
Chapter 4: Researchers Disagree on How to 

Account for Indirect Land-Use Changes in 

Estimating the Lifecycle Greenhouse Gas 

Effects of Biofuels Production 

land-use changes could be significant but said that their effects cannot b

estimated because current models, methods, and data are inadequate. 

Two of these studies also estimated that biodiesel achieved a 41 percent to 

95 percent decrease in greenhouse gas emissions relative to diesel fuel.

e 

issions 

o 

n a 

g 

d 

e 

 

13

However, these studies did not consider the possible effects of biofuel 

production on land-use decisions and any new greenhouse gas em

that may be released. Other researchers told us that converting rainforests, 

peatlands, savannas, or grasslands to biodiesel crops would likely lead t

increased greenhouse gas emissions. For example, in a 2006 study, 

researchers did not consider land-use changes and reported greenhouse 

gas emission decreases for soybeans compared with diesel fuel, but i

2008 study, some of these researchers found greenhouse gas increases 

when land-use changes were considered.14 While these researchers did not 

quantify the results as a percent change compared with fossil fuels, they 

found that clearing certain land for crop-based biofuels would release 

more carbon dioxide than the greenhouse gas reductions from displacin

fossil fuels would provide. 

Despite the differences regarding how to quantify land-use change, the 

researchers we interviewed generally believe that certain cellulosic 

feedstocks, such as corn stover, wood waste, or municipal waste, woul

not cause significant indirect land-use changes and could decrease 

greenhouse gas emissions compared with fossil fuels, even though som

researchers said over-harvesting agricultural residues could increase soil 

erosion and adversely affect water quality, requiring mitigation. 

 and 

 of the 

getic Costs 

13Hill J., Nelson E., Tilman D., Polasky S., and Tiffany D. “Environmental, Economic, 

Energetic Costs and Benefits of Biodiesel and Ethanol Biofuels.” Proceedings

National Academy of Sciences, July 25, 2006, vol. 103, no. 30, pp. 11206-11210; and McCarl, 

B.A., “Bioenergy in a Greenhouse Mitigating World.” Choices, 23(1), pp. 31-33, 2008. 

14Fargione J., Hill J., Tilman D., Polasky S., and Hawthorne P. “Land Clearing and the 

Biofuel Carbon Debt,” Science, vol. 319, issue 5867 (2008): pp. 1235-1238, and Hill J., Nelson

E., Tilman D., Polasky S., and Tiffany D. “Environmental, Economic, and Ener

and Benefits of Biodiesel and Ethanol Biofuels.” Proceedings of the National Academy of 

Sciences, vol. 103, no. 30 (2006): pp. 11206-11210. 

Page 87 GAO-09-446 Biofuels
Chapter 4: Researchers Disagree on How to 

Account for Indirect Land-Use Changes in 

Estimating the Lifecycle Greenhouse Gas 

Effects of Biofuels Production 

Biofuels

Researchers told us there is a lack of consensus within the scientific 

community about whether biofuels reduce greenhouse gas emissions, 

citing in particular uncertainties about how to link biofuels production 

 RFS. 

modeling the indirect effects of rising demand 

for biofuel feedstocks highly uncertain. For example, some researchers 

l 

 that 

 and 

effect—that land in Brazil, for example, is being converted because of U.S. 

iofuel production. In addition, some models use profit maximization as 

the decision rule to predict how people will respond to changes in prices, 

but these models do not necessarily predict how people make decisions or 

how economic and social policy in the various nations affect land-use 

decisions in those countries. 

Some researchers cited the need for more research to address information 

gaps, such as limited data on land use, feedstock yield and agricultural 

with indirect land-use change. Underlying this lack of consensus are 

limitations to current forecasting models, a lack of standardized 

assumptions and metrics, and a lack of current data on the type of land

that would be brought into production to replace acreage used to grow 

biofuel feedstocks.15 Many researchers told us that limitations to current 

lifecycle models and key information gaps challenge EPA’s ability to 

promulgate a rule defining fuels eligible for consideration under the

Several researchers have cited a need for better and more sophisticated

models and analyses of lifecycle impacts. Many researchers we 

interviewed said a primary limitation in conducting lifecycle analyses is 

how to link biofuels production with indirect land-use change. The 

complexity of commodity markets, national policies and other factors 

influencing land use makes 

said the current models do not consistently (1) identify where the biofue

feedstocks are grown, (2) include marginal or unused land in the 

modeling, and (3) characterize the carbon content of the soil before and 

after the biofuel feedstocks are planted. Moreover, researchers said

none of the models alone can accurately quantify international aspects of

land-use change, since they essentially have to perform economic 

modeling of the whole world as well as conclusively prove cause

b

inputs data, and conversion data at cellulosic biorefineries. Specifically, 

researchers said there are gaps in the research for direct land-use change, 

 

15The International Organization of Standardization has developed lifecycle analysis 

standards. However, researchers use different assumptions and system boundaries in their 

analyses, which influence final results. 

Shortcomings in 

Forecasting Models 

and Data Make It 

Difficult to Determine 

Lifecycle Greenhouse 

Gas Emissions 

Lifecycle Impacts Are 

Currently Limited 

Models for Assessing 

Page 88 GAO-09-446 
Chapter 4: Researchers Disagree on How to 

Account for Indirect Land-Use Changes in 

Estimating the Lifecycle Greenhouse Gas 

Effects of Biofuels Production 

such as variations in the different ecosystems being studied.16 In addit

researchers identified data gaps in the amount of carbon in the biomass

that is lost when, for example, a forest is converted into farmland. 

Researchers also cited a lack of real data for different feedstock yield

because, for example, some feedstocks have not been widely gro

harvest on a large scale under typical farm conditions, and actual yields 

and fertilizer application rates may differ with large scales and on-farm 

conditions. Researchers also said limited information exists on the costs 

and efficiencies of cellulosic materials in a biorefinery, since the first 

biorefineries are just beginning to be built and have not yet produced 

ion, 

s 

wn for 

substantial real-world data. 

ize 

er, 

a 

 gas 

. As 

 The 

d’s regulation identifies carbon intensity 

values for gasoline and some biofuels produced under different process 

ral 

e 

 

International efforts are ongoing to address the need to standard

lifecycle models and metrics. For example, the International Organization

of Standardization has published lifecycle analysis protocols. Howev

some researchers have noted that these standards still do not contain 

guidelines for some important assumptions, such as indirect land-use 

impacts. The Global Bioenergy Partnership is also working to formulate 

methodological framework to measure greenhouse gas emission 

reductions from biofuels. 

In addition, in April 2009, the California Air Resources Board adopted a 

regulation that will implement California Executive Order S-01-07, the Low

Carbon Fuel Standard, which calls for the reduction of greenhouse

emissions from California’s transportation fuels by 10 percent by 2020

with the federal RFS, the California Low Carbon Fuel Standard is also 

attempting to measure the greenhouse emissions for the full lifecycle, 

including both the direct emissions associated with producing, 

transporting, and using fuels, as well as the indirect emissions that may be 

caused by land-use change when certain biofuel feedstocks are grown.

California Air Resources Boar

Biofuels

and input pathways, including 11 different pathways to produce ethanol 

from corn, and values for cellulosic ethanol from farmed trees, agricultu

waste, and forest waste are under development. In the draft regulation, th

16For example, while USDA’s National Resources Inventory surveys land use, natural 

resource conditions, and trends on domestic nonfederal, nonforest lands, it does not 

, these 

es in land use definitions. 

ifecycle 

Modeling and Data 

Concerns 

Some Efforts Are Being

Made to Address L

analyze comprehensive land use data gathered at the same locations every year. Also

survey data cannot be readily integrated with data from USDA’s survey of producers or 

agricultural census because of differenc

Page 89 GAO-09-446 
Chapter 4: Researchers Disagree on How to 

Account for Indirect Land-Use Changes in 

Estimating the Lifecycle Greenhouse Gas 

Effects of Biofuels Production 

carbon intensity values for corn ethanol vary based on location, type of 

processing facility, and wet or dry co-product, but each corn pathway 

includes the same carbon intensity value for land-use change. The 

preliminary results show that certain transportation fuels that substitute

for gasoline could meet the Low Carbon Fuel Standard, including some 

conventional corn starch ethanol using the dry mill conversion process 

and some corn starch ethanol produced in California, as well as ethanol 

from sugarcane produced in Brazil. Others would not, including corn 

ethanol produced in the Midwest or using the wet mill conversion proc

However, some associations have criticized the California rule for the 

of precision in measuring the

ess. 

lack 

 indirect effects of biofuels. For example, the 

Truman National Security Project, a group of retired military and 

telligence officers, criticized the global trade analysis model used to 

s 

he 

A 

ng those 

se changes. To be eligible for consideration 

under the RFS, conventional corn starch ethanol from biorefineries built 

ast 

emissions from biofuels production over time, (2) model linkages, (3) 

international agricultural greenhouse gas emissions and factors, and (4) 

r 

in

develop the draft rule for its variability depending on the assumption

used by the individuals conducting the research. 

Although research for measuring indirect land-use changes as part of t

greenhouse gas analysis is only in the early stages of development, EIS

requires that EPA develop a regulation for determining the lifecycle 

greenhouse gas emissions of biofuels included in the RFS, includi

emissions caused by land-u

after December 19, 2007, must generally reduce lifecycle greenhouse gas

emissions by at least 20 percent relative to petroleum fuels. Advanced 

biofuels and biomass-based diesel must generally reduce lifecycle 

greenhouse gas emissions by at least 50 percent, and advanced biofuels 

made from cellulosic biomass must generally reduce emissions by at le

60 percent relative to baseline petroleum fuels. 

On May 26, 2009, EPA published a Notice of Proposed Rulemaking in the 

Federal Register that proposes a regulatory structure to implement the 

RFS and methods for calculating the greenhouse gas impact of biofuels

and announced that key components of its lifecycle greenhouse gas 

emissions analysis would be peer reviewed. The four peer review analyses, 

which EPA has posted on its Web site, were completed in late July 2009: 

(1) methods and approaches to account for lifecycle greenhouse gas 

satellite imagery. 

Several DOE and USDA researchers we interviewed have expressed 

concern that the lifecycle models and data are not sufficiently mature fo

EPA to account for indirect land-use change in estimating biofuels 

Page 90 GAO-09-446 Biofuels
Chapter 4: Researchers Disagree on How to 

Account for Indirect Land-Use Changes in 

Estimating the Lifecycle Greenhouse Gas 

Effects of Biofuels Production 

greenhouse gas emissions. Some of these researchers also said that EPA

has not made its approach to address indirect land-use change by 

combining elements of the GREET, FAPRI, FASOM, and GTAP mod

sufficiently transparent so that others can closely examine key 

assumptions in EPA’s analyses and possibly replicate EPA’s simulations.

One DOE researcher noted that if secondary effects are to be included, 

they should be addressed on a consistent basis for all fuel pathways and 

uncertainties in understanding causal effects should be recognized. In

addition, the National Biodiesel Board has expressed concern that the 

production from many biodiesel refineries, particularly ones using 

soybean and other vegetable oil feedstocks, may not qualify as biomassbased diesel under EPA’s proposed RFS regulation because of the

land-use changes that result when soybeans are grown as an energy cro

On May 5, 2009, the President announced the form

els 

 indirect 

p. 

ation of an Executive 

Biofuel Interagency Working Group, co-chaired by the Secretaries of 

s from 

ave used markedly 

different assumptions and models to analyze the lifecycle greenhouse gas 

meet the greenhouse gas reduction requirements under 

the RFS. Without this information, EPA may be hampered in its ability to 

ls 

Conclusions 

Agriculture and Energy and the Administrator of EPA. The working group

is tasked with, among other things, identifying new policy options to 

promote the environmental sustainability of biofuels feedstock 

production, taking into consideration land use, habitat conservation, crop 

management practices, water efficiency, and water quality, as well as 

lifecycle assessments of greenhouse gas emissions. 

EISA requires EPA to determine lifecycle greenhouse gas emission

different biofuels and to define those fuels that would count toward the 

annual volume in the RFS because they sufficiently reduce emissions 

compared with gasoline. However, researchers h

emissions of corn starch and cellulosic biofuel feedstocks. Also, no 

commonly recognized standards exist to assess, in particular, indirect 

land-use changes associated with increased biofuels production, and 

researchers are limited by uncertain data in key areas. As a result, 

researchers have reported widely varying results on the aggregate quantity 

of greenhouse gas emissions for corn starch ethanol, cellulosic ethanol, 

and biodiesel as compared with gasoline and diesel. Such current 

scientific uncertainty makes it difficult for EPA to precisely determine 

whether a biofuel generated from corn starch or from cellulosic 

feedstocks would 

accurately define some feedstocks as acceptable or unacceptable fue

under the RFS. 

Page 91 GAO-09-446 Biofuels
Chapter 4: Researchers Disagree on How to 

Account for Indirect Land-Use Changes in 

Estimating the Lifecycle Greenhouse Gas 

Effects of Biofuels Production 

Biofuels

To improve EPA’s ability to determine biofuels greenhouse gas emissions and 

define fuels eligible for consideration under the RFS, we recommend t

Administrator of EPA and the Secretaries of Agriculture and Energy develo

coordinated approach for identifying and researching unknown va

major uncertainties in the lifecycle greenhouse gas analysis of increased 

biofuels production. This approach should include a coordinated effort to 

develop parameters for using models and a standard set of assumptions and 

methods in assessing greenhouse gas emissions for the full biofuel lifecycl

such as secondary effects that would include indirect land-use changes 

associated with increased biofuels production. 

USDA, DOE, and EPA each commented on our recommendation for 

hat the 

p a 

riables and 

e, 

determining biofuels’ lifecycle greenhouse gas emissions. Specifically, 

 not 

e 

SDA’s 

er, we believe that a 

coordinated approach for identifying and researching unknown variables 

nd major uncertainties will benefit EPA’s lifecycle analysis because only 

OE 

y to 

SDA 

e 

utside 

r review 

t well understood, and additional research is needed to 

address unknown variables and major uncertainties. 

Recommendation for 

Executive Action 

Agency Comments 

and Our Evaluation USDA agreed with the general premise implicit in the recommendation, 

but cited the need to ensure that coordinated scientific discussions do

lead to standard methods that become codified in regulations that would 

inhibit the adoption and use of new information and improved or mor

appropriate methods as they become available. We agree with U

concern that the RFS regulation should not codify standard methods that 

might inhibit the development of better information or methods for 

assessing lifecycle greenhouse gas emissions. Howev

a

three scientific studies have examined the effects of indirect land-use 

changes and USDA and DOE provide substantially greater funding in 

support of biofuels R&D. DOE noted that EPA already consults with D

on these matters and added that DOE would welcome the opportunit

become more engaged in this process if requested to do so by the EPA 

Administrator. EPA stated that the agency has worked closely with U

and DOE in developing the lifecycle assessment methodology for its 

proposed rule, and with the European Union and other international 

governmental organizations and scientists on modeling, including th

impact of indirect land-use change. We note that while EPA has obtained 

information from USDA and DOE, its lifecycle analysis methodology was

not transparent because EPA did not share its methodology with o

scientific groups before its Notice of Proposed Rulemaking for the RFS

regulation was published. We believe the recently completed pee

of EPA’s methodology, including key assumptions and its analytical model,

will improve the transparency of EPA’s lifecycle analysis. Furthermore, 

the indirect effects of land-use change on lifecycle greenhouse gas 

emissions are no

Page 92 GAO-09-446 
Chapter 5: Federal Tax Expenditures, the 

RFS, and an Ethanol Tariff Have Primarily 

Supported Conventional Corn Starch Ethanol 

Page 93 GAO-09-446 

Chapter 5: Federal Tax Expenditures, the 

RFS, and an Ethanol Tariff Have Primarily 

Supported Conventional Corn Starch Ethanol

The federal government supports the development of a domestic biofuels 

industry primarily through tax credits, the RFS, and a tariff on ethanol 

imports. Since 1978, the Volumetric Ethanol Excise Tax Credit (VEETC) 

and its predecessor have provided a tax incentive for blending ethanol 

with gasoline. In December 2007, the Energy Independence and Securi

Act (EISA) expanded the RFS by substantially increasing the required 

annual volumes of renewable fuels, including up to 9 billion gallons of 

conventional corn starch ethanol in 2008 and up to 15 billion gallons of 

conventional corn starch ethanol in 2015. As a result, the VEETC’s an

cost to the Treasury in forgone revenues could

ty 

nual 

 grow from $4 billion in 

2008 to $6.75 billion in 2015 for conventional corn starch ethanol, even 

ough the 2008 Farm Bill reduced the VEETC from 51 cents to 45 cents 

 a 

riff 

nd 

the 

e oil 

hat 

er 

rs 

ave 

th

per gallon of ethanol starting in 2009. The United States also imposes

tariff on ethanol imports, which qualify for the VEETC, by imposing a ta

of 54 cents per gallon plus 2.5 percent of the ethanol’s value. 

Two of these tools—the VEETC and the RFS—can be duplicative with 

respect to their effects on ethanol consumption. We and others have fou

that the VEETC does not stimulate the use of additional ethanol under 

current market conditions because conventional ethanol use in 

transportation fuel in 2009 is unlikely to exceed 10.5 billion gallons—

portion of the required 11.1 billion gallons of biofuels that the RFS allows 

to come from conventional corn starch ethanol. In light of this situation, 

some recent studies have suggested that the VEETC be terminated or 

phased out or be revised by, for example, modifying it to provide a 

stimulus when crude oil prices are low but reducing its size when crud

prices rise. 

Advanced biodiesel and cellulosic biofuels have high production costs t

have limited their ability to compete in fuel markets. To stimulate 

domestic production of these biofuels, the Congress has provided larg

federal tax credits—$1.00 per gallon to biodiesel producers or blende

and $1.01 per gallon to cellulosic biofuels producers—which, to date, h

predominantly supported biodiesel production. In addition, the RFS 

requires the use of at least 1 billion gallons of biomass-based diesel in and 

beyond 2012 and at least 16 billion gallons of cellulosic biofuels in 2022. 

 Biofuels 
Chapter 5: Federal Tax Expenditures, the 

RFS, and an Ethanol Tariff Have Primarily 

Supported Conventional Corn Starch Ethanol 

Biofuels

The VEETC and its predecessor excise tax exemption for ethanol have 

historically been important federal tools to establish and expand the 

domestic ethanol industry, which has predominantly used conventional 

corn starch because of lower production costs. To stimulate the 

production of ethanol for blending with gasoline, the Energy Tax Act of 

1978, among other things, established an excise tax exemption at the 

equivalent of 40 cents per gallon of ethanol. The American Jobs Creatio

Act of 2004 changed this original excise tax exemption to an excise tax 

credit called the VEETC and extended it through December 31, 2010.1

 The 

2008 Farm Bill subsequently reduced the VEETC from 51 cents to 45 ce

per gallon for ethanol, starting the year after at least 7.5 billion gallons o

ethanol were produced or imported. 

As shown in figure 6, both domestic ethanol production and federal tax 

expenditures through the VEETC have risen sharply in recent

n 

nts 

f 

 years. A key 

reason for this growth is that 25 states have banned the use of methyl 

eet 

s 

timated 

um 

motor 

hat some of the benefit of this tax credit gets passed forward 

to motor fuel purchasers in the form of lower prices at the pump and some 

 

tertiary butyl ether (MTBE) as an oxygenate blended into gasoline to m

Clean Air Act standards because of concerns about ground water 

contamination, leading to ethanol’s substitution. About 9.2 billion gallon

of ethanol were produced domestically in 2008, resulting in an es

$4 billion in tax credits for ethanol blenders, according to Treasury. If 

reauthorized and left unchanged, the VEETC’s annual cost to the Treasury 

in forgone revenues could be as much as $6.75 billion for conventional 

corn starch ethanol in 2015 and each year thereafter. Typically, petrole

refineries or gasoline wholesalers blend the biofuels with gasoline (

fuel blenders) and receive the 45-cent-per-gallon tax credit. Economists 

have found t

gets passed backward to biorefineries that produces the ethanol (ethanol 

producers) in the form of higher prices paid for ethanol. 

1

Producers may alternatively take this credit as an income tax credit to the extent the 

credits exceed the tax imposed on taxable fuel under 26 U.S.C. § 4081. 

The VEETC Provides 

a Tax Credit to 

Companies that Blend 

Ethanol with Gasoline 

Page 94 GAO-09-446 
Chapter 5: Federal Tax Expenditures, the 

RFS, and an Ethanol Tariff Have Primarily 

Supported Conventional Corn Starch Ethanol 

Figure 6: Domestic Ethanol Production and Federal Tax Expenditures, 1980-2008 

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

Gallons (in millions) Dollars (in millions)

Source: Renewable Fuels Association and the Department of the Treasury.

Year

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Ethanol production

VEETC tax expenditures

Note: The VEETC replaced the federal ethanol excise tax exemption in 2004. Domestic ethanol 

production is reported by calendar year and tax expenditures are reported by fiscal year. 

The VEETC was important in helping to create a profitable corn starch 

ethanol industry when the industry had to fund investment in new 

facilities. It is less important now for sustaining the industry because most 

of the capital investment has already been made—ethanol production can 

now be profitable as long as the revenue that producers receive is 

sufficient to cover operating costs and depreciation. Corn starch ethanol 

refining is a mature industry because the process technology for making it 

is well understood—the process for making corn starch ethanol is similar 

to making alcoholic beverages, and the industry has developed the 

appropriate yeasts and enzymes. Furthermore, domestic biorefinery 

capacity is approaching the 15-billion-gallons-per-year maximum allowed 

for corn starch ethanol under the RFS in 2015.2

 Corn starch ethanol 

consumption received a boost as a substitute for MTBE, providing a 

 

2

EPA’s proposed rulemaking on lifecycle greenhouse gas emissions will affect decisions 

after 

lify under the RFS. 

whether to construct new corn starch ethanol biorefineries because biorefineries built 

December 19, 2007, must reduce emissions by at least 20 percent to qua

Page 95 GAO-09-446 Biofuels
Chapter 5: Federal Tax Expenditures, the 

RFS, and an Ethanol Tariff Have Primarily 

Supported Conventional Corn Starch Ethanol 

consistent demand for ethanol. As a

(primarily from corn starch) grew fr

 result, ethanol consumption 

om about 2 billion gallons in 2002 to 

about 9.5 billion gallons in 2008. As of January 2009, the domestic corn 

starch ethanol industry has 11.5 billion gallons of refining capacity with an 

additional 1.8 billion gallons of capacity under construction, according to 

the Renewable Fuels Association. 

The Energy Policy Act of 2005 established the RFS, which required that 4 

billion gallons of renewable fuels be blended with gasoline in 2006, rising 

to 7.5 billion gallons in 2012. In December 2007, EISA substantially 

expanded the RFS by requiring that U.S. transportation fuels contain 9 

billion gallons of renewable fuels in 2008 rising to 36 billion gallons in 2022 

(see fig. 7). The RFS allows conventional corn starch ethanol—the 

predominant U.S. biofuel because of its relatively low production cost—to 

account for at most 10.5 billion gallons of the RFS’s annual requirement in 

2009 rising to at most 15 billion gallons in 2015 and remaining at this level 

through 2022. The RFS requires that, in 2022, at least 21 billion gallons of 

advanced biofuels must be blended, including at least 16 billion gallons of 

cellulosic biofuel and at least 1 billion gallons of biomass-based diesel. 

RFS Biofuels Volume 

Requirements Rise 

Annually 

Page 96 GAO-09-446 Biofuels
Chapter 5: Federal Tax Expenditures, the 

RFS, and an Ethanol Tariff Have Primarily 

Supported Conventional Corn Starch Ethanol 

Figure 7: Annual Biofuels Use under the RFS, 2009-2022 

Gallons (in billions)

Advanced biofuel mandate - biomass-based diesel

Advanced biofuel mandate - non-corn starch ethanol

Advanced biofuel mandate - cellulosic biofuels

Maximum amount of corn starch ethanol

Source: EISA.

0

5

10

15

20

25

30

35

40

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

To ensure compliance with the RFS, EPA annually sets a blending 

standard—10.21 percent for 2009—that represents the amount of biofuels 

that each obligated party (gasoline refiners, importers, or blenders, with 

certain exceptions) must meet.3

 To demonstrate compliance with EPA’s 

blending standard, each obligated party acquires a sufficient amount of 

renewable identification numbers (RIN)—a unique identification number 

that a producer or importer assigns to each gallon of biofuel.4

 RINs are 

 

3

The yearly blending standard is calculated as a percentage by dividing the amount of 

renewable fuel that the RFS requires to be used in a given year by the amount of gasoline 

expected to be used during that year, including certain adjustments and exemptions 

specified by the EISA. The percentage exceeds 10 percent in part because the numerator 

includes the combined RFS for ethanol and biodiesel while the denominator excludes 

biodiesel. 

4

A RIN consists of a 38-character code that includes the year the biofuel is produced or 

imported, the equivalence value for that type of biofuel, and a company and a facility 

identification. 

Page 97 GAO-09-446 Biofuels
Chapter 5: Federal Tax Expenditures, the 

RFS, and an Ethanol Tariff Have Primarily 

Supported Conventional Corn Starch Ethanol 

valid for both 

following calendar ye

the calendar year in which they were generated and the 

ar. Obligated parties with more RINs than needed to 

meet that year’s blending standard can either hold the extra RINs for use 

in the following year or sell them to another party that needs additional 

RINs to comply with the blending standard. 

EISA allows the Administrator of EPA, after consulting with USDA and 

DOE and holding a public notice and comment period, to reduce the 

amount of biofuels required to be blended in gasoline in whole or in part if 

the Administrator determines that (1) its implementation would severely 

harm the economy or environment of a state, a region, or the United States 

or (2) that there is an inadequate domestic supply. In April 2008, Texas 

requested that EPA waive 50 percent of ethanol produced from grain 

under the RFS because the RFS was unnecessarily having a negative 

impact on Texas’s economy and, specifically, increased ethanol 

production was contributing to higher corn prices that were adversely 

affecting its livestock industry and food prices. EPA denied the waiver 

because it determined that the evidence did not support a finding that the 

RFS would harm the economy of a state, region, or the country and the 

RFS would have no impact on ethanol production volumes or on corn, 

food, or fuel prices.5

In addition to the VEETC and the RFS, the federal government levies a 

riff on imported ethanol to support the domestic corn starch ethanol 

 per 

The United States has provided an exception to the tariff for Caribbean 

Basin Initiative countries which can export ethanol duty free to the United 

ries. 

 

ta

industry. Since 1980, the United States has placed a duty of 54 cents

gallon plus a tariff that is 2.5 percent of ethanol’s value. The tariff on 

imported fuel ethanol gives the domestic ethanol industry a price 

advantage relative to ethanol imports. Prior to 2006, U.S. ethanol imports

were less than 200 million gallons a year. In 2008, even though crude oil 

prices peaked above $130 per barrel, making ethanol price competitive 

with gasoline, ethanol imports only grew to 500 million gallons. 

Biofuels

States if at least 50 percent of the feedstock is grown in member count

Alternatively, Caribbean Basin Initiative countries can export volumes of 

up to 7 percent of U.S. ethanol consumption duty free if more than 50 

 

tic ethanol consumption exceeded the RFS’s required amount. 

The United States 

Imposes a Tariff on 

Ethanol Imports 

5

The RFS did not affect ethanol production volumes in the spring and summer of 2008

because domes

Page 98 GAO-09-446 
Chapter 5: Federal Tax Expenditures, the 

RFS, and an Ethanol Tariff Have Primarily 

Supported Conventional Corn Starch Ethanol 

percent of the feedstock comes from nonmember countries—Brazilian

European ethanol imports often come through Caribbean Basin Initiative 

countries. Imports of ethanol have recently been well below the 7 percent 

cap, however. 

 and 

S to 

t the 

t 

 of corn 

at 

 of 2005 had established. Specifically, in 2007, 

ethanol consumption rose to about 6.8 billion gallons, as compared with 

e 4.7 billion gallons of biofuels specified in the RFS. In 2008, ethanol 

sed 

dit) that 

blenders pay for ethanol, blenders may be able to retain some of this lower 

 

Biofuels

The RFS establishes an annual floor for the amount of renewable fuels to

be blended into U.S. transportation fuels. Economists consider the RF

be “binding” when the RFS mandate causes biofuels consumption to be 

higher than it would otherwise be. In these circumstances, the VEETC 

does not affect the level of ethanol consumption and is a duplicative policy 

tool for increasing ethanol consumption. Because the RFS would ensure

that the same amount of ethanol was used by blenders with or withou

VEETC, we and others have found that removing the VEETC would no

adversely affect the demand for corn for ethanol and the income

producers, which depend on the total level of ethanol consumption. 

Alternatively, the RFS is considered nonbinding if consumption exceeds

the blend volumes in the RFS, which could occur if crude oil prices rise 

significantly. From 2006 through 2008, the RFS was not binding because

U.S. corn starch ethanol consumption outpaced the annual RFS levels th

the Energy Policy Act

th

consumption reached 9.5 billion gallons, exceeding the RFS level of 9 

billion gallons of biofuels.6

 However, because EISA substantially increa

biofuels requirements through 2022, the RFS is now more likely to be 

binding in the future. 

When the RFS is binding, removal of the VEETC would not affect ethanol 

consumption but would eliminate the tax credit benefit to motor fuel 

blenders, motor fuel purchasers, and ethanol producers. Because the 

VEETC lowers the effective price (actual price minus the tax cre

effective price, but some or all of it may be passed forward to motor fuel

purchasers in the form of lower (blended) motor fuel prices—as much as 

4.5 cents for a gallon of E10 gasoline. Alternatively, some of this lower 

effective price may be passed backward to ethanol producers in the form 

f its 

The RFS and the 

VEETC Can Be 

Duplicative for Total 

Ethanol Consumption 

6

U.S. biofuels consumption has been limited primarily to corn starch ethanol because o

lower production costs. 

Page 99 GAO-09-446 
Chapter 5: Federal Tax Expenditures, the 

RFS, and an Ethanol Tariff Have Primarily 

Supported Conventional Corn Starch Ethanol 

of higher ethanol prices.7 However, economists do not expect corn 

growers to benefit from the VEETC when the RFS is binding because the 

total amount of ethanol consumption is limited to the RFS’s specified 

level. If the VEETC were eliminated, then motor fuel blenders would lose 

their tax credits, motor fuel purchasers may pay higher prices at the pump, 

nd ethanol producers may receive less for ethanol.8

the 

attle, 

C 

ld 

 who 

 

a

The RFS is not binding when ethanol consumption exceeds the RFS level. 

While consumption up to the RFS level would otherwise occur, some of 

this additional consumption above the RFS level is likely to result from 

VEETC’s ethanol price-lowering effects. In these circumstances, the 

VEETC directly benefits blenders by lowering their effective price for 

ethanol and could lead to lower prices at the pump for purchasers and 

higher prices received by ethanol producers. This in turn can lead to 

higher corn prices, which benefit corn growers and nongrower owners of

corn-producing land, while hurting other corn purchasers, including c

dairy, hog, and poultry ranchers and farmers and consumers. If the VEET

were removed in these circumstances, blenders’ demand for ethanol cou

fall. In turn, this would cause the price of ethanol received by ethanol 

producers to fall, lowering their demand for corn, and subsequently 

leading to lower corn prices. Throughout the marketing chain, those

had benefited from the VEETC would lose their benefits. 

 tail 

8

The VEETC, in the form of forgone federal tax revenues, pays part of the cost of a binding 

RFS. Without the VEETC, the entire cost would be borne by ethanol purchasers—blenders 

or motor fuel purchasers, or both—or others to whom the purchasers may be able to pass 

on the cost, such as workers at blending refineries. Because the cost of tax expenditures is 

7

With a binding RFS, much of the VEETC’s benefit may go to ethanol producers if the re

price of blended motor fuels is affected more by the price of gasoline than by the price of 

ethanol, as is the case of E10. 

often hidden, placing the cost on market participants can make the RFS cost more 

transparent. 

Page 100 GAO-09-446 Biofuels
Chapter 5: Federal Tax Expenditures, the 

RFS, and an Ethanol Tariff Have Primarily 

Supported Conventional Corn Starch Ethanol 

Biofuels

Whether the RFS is binding or not primarily depends on the relation

between crude oil prices and corn prices, because those prices determine 

whether it is cheaper to produce gasoline or ethanol. Relatively high oi

prices and relatively low corn prices (as might result from a bumper corn 

crop that exceeded forecasts) tend to favor ethanol consumption by 

increasing the cost of producing gasoline and lowerin

ship 

l 

g the cost of 

producing ethanol, respectively. Specifically, the RFS is less likely to be 

r 

e oil 

S. 

t they 

andard requires. 

conomists have disagreed about the circumstances necessary to make 

the RFS nonbinding in 2009—one economist told us that crude oil prices 

would have to reach $80 per barrel while another said $120 per barrel.9

 A 

third economist stated that relative gasoline and ethanol prices in June 

2009 approached the point that blenders would choose to blend more 

ethanol than the RFS requires because crude oil reached $70 on the spot 

market. Whether or not the RFS will remain binding in the next few years 

depends heavily on future oil and corn prices, which are hard to forecast. 

In addition, as corn starch ethanol consumption increases in future years 

under the RFS, higher oil prices will be needed to make the RFS 

nonbinding for a given level of corn prices. If oil prices continue to show 

the volatility that they have in the past 2 years, then periods in which the 

binding when oil prices are high relative to corn prices and more likely to 

be binding when oil prices are low relative to corn prices. Similarly, othe

factors that influence gasoline and ethanol production costs could affect 

the extent to which each is consumed and whether or not the RFS is 

binding. 

Many analysts believe that under current market conditions, with crud

prices well below the peaks they reached last year, the RFS for 2009 is 

binding. As evidence, some point to the prices that blenders are paying for 

RINs. When a blender uses more renewable fuel than is required by EPA’s 

blending standard for that year, the extra RINs associated with that fuel 

can be sold to other blenders, who can use them to comply with the RF

The sale prices for these RINs have been relatively high, implying tha

are scarce, and, therefore, that the RFS is likely binding because few 

blenders are using more ethanol than the 2009 blending st

E

 

 by 

dards, suggesting the potential for volatile corn prices. 

The Relationship 

between Crude Oil 

and Corn Prices Will 

Primarily Determine 

Whether the RFS Is 

Binding 

9

The crude oil price that would make the RFS nonbinding in 2009 will vary with corn 

prices, which are affected by such factors as the weather and export and livestock demand 

for corn. USDA data show the current ratio of corn stocks to a year’s corn use is low

historical stan

Page 101 GAO-09-446 
Chapter 5: Federal Tax Expenditures, the 

RFS, and an Ethanol Tariff Have Primarily 

Supported Conventional Corn Starch Ethanol 

RFS is binding and nonbinding may alternate, leading the VEETC to have 

different effects.10

Since December 2007, when EISA substantially expanded the RFS for

biofuels, several studies have examined the interaction of the RFS,

VEETC, and the import tariff (see app. V). Three economists who have 

studied this interaction stated that because the RFS is currently binding, 

the VEETC does not increase ethanol consumption and the benefits of the 

45-cent- per-gallon tax credit mainly go to ethanol consumers in the form 

of lower fuel prices. They noted that some benefits likely accrue to et

blenders 

Some Recent Studies 

Have Proposed that 

the VEET

 the 

hanol 

but no benefits accrue to corn growers or ethanol producers. A 

fourth economist stated that with a binding RFS, most of the VEETC’s 

VEETC, making taxpayer funds unnecessary. They also prefer the RFS 

t 

but 

s 

biofuels supports did not reach conclusions or make recommendations 

about future federal supports. 

 

C Be 

Revised 

benefits go to consumers when oil prices are low and go to ethanol 

producers when oil prices are high. 

Some of these recent studies have proposed that the VEETC be revised by 

(1) eliminating it, (2) phasing it out as the corn starch ethanol industry 

further matures, or (3) increasing the amount of the tax credit when oil 

prices are low and decreasing it when they are high. Three of the 

economists told us that when the RFS is binding it is as effective in 

stimulating ethanol consumption as the combination of the RFS and the 

over the VEETC as a way to stimulate ethanol consumption. One of the 

economists noted that the RFS is preferable because it is more transparen

about how much the government wants to stimulate ethanol consumption

than the combination of the RFS and the VEETC. The economist added 

that motor fuel blenders would likely lose if the VEETC was removed, 

the exact impacts would depend on supply and demand elasticities. Other

noted that the RFS alone costs taxpayers less than the VEETC, although 

one economist stated that eliminating the VEETC would increase the cost 

of E10 gasoline by at most 4-1/2 cents per gallon. The economists noted 

that ethanol blenders continued to receive the VEETC in June 2008—when 

gasoline prices exceeded $4 per gallon and ethanol prices reached $3 per 

gallon. Alternatively, two of the recent studies that examined federal 

ing to 10Crude oil prices on the spot market rose to $137 per barrel in July 2008 before dropp

$35 per barrel in January 2009 in response to lower demand because of the global 

economic recession. Crude oil prices on the spot market rose to $72 per barrel in June 

2009. 

Page 102 GAO-09-446 Biofuels
Chapter 5: Federal Tax Expenditures, the 

RFS, and an Ethanol Tariff Have Primarily 

Supported Conventional Corn Starch Ethanol 

Biofuels

High costs for producing advanced biodiesel and cellulosic ethanol have 

limited their ability to compete in fuel markets. The federal government 

has provided tax credits through the following tax incentives to stimulate 

roduction of these biofuels and assist small producers: 

t: 

g 

r 

005 

easury 

ire on December 31, 2009. In 2008, 

U.S. biodiesel production totaled 690 million gallons, according to the 

es or is 

 and 

e 

el 

ion gallons in 2012 and each year 

p

The Biodiesel Tax Credit and the Small Agri-Biodiesel Producer Credi

The Biodiesel Tax Credit provides a $1 per gallon tax credit for producin

or blending biodiesel or agri-biodiesel.11 The Small Agri-Biodiesel Produce

Credit provides a 10-cent-per-gallon credit for the first 15 million gallons of 

agri-biodiesel produced for businesses. This credit is limited to agribiodiesel producers with a production capacity of less than 60 million 

gallons per year. Together, these tax credits for biodiesel production—

including biodiesel exports—increased from $30 million in fiscal year 2

to $200 million in fiscal year 2008 according to Department of the Tr

estimates. Both are scheduled to exp

National Biodiesel Board. 

Biodiesel producers and blenders are eligible for these tax credits 

regardless of whether the biodiesel is consumed in the United Stat

exported. In October 2008, the Congress closed the so-called “splash

dash” loophole for biodiesel that allowed biodiesel to be imported into th

United States, blended with small amounts of diesel to claim the Biodies

Tax Credit, and then exported for final use to a third country—often the 

European Union, which provides tax credits for biodiesel consumption. 

However, biodiesel produced in the United States for export is eligible to 

claim both tax credits. While no accurate data exist on the import and 

export of biodiesel, two economists estimated that between January and 

August 2008 at least 285 million gallons—or about 65 percent of domestic 

biodiesel production during this period—were exported. In June 2008, the 

European Commission initiated an antidumping investigation and, in 

March 2009, the European Commission imposed provisional antidumping

and antisubsidy duties on U.S. biodiesel imports. The duty rates vary by 

producer. 

Annual RFS levels for biomass-based diesel begin with 500 million gallons 

in 2009 and rise to at least 1 bill

 

11Agri-biodiesel is defined as biodiesel produced from virgin agricultural products s

soybean oil or animal fats, as opposed to biodiesel produced from previously used 

agricu

uch as 

ltural products such as recycled fryer grease. 

Other Federal 

Biofuels Tax 

Expenditures Support 

Biodiesel and 

Cellulosic Biofuels 

Producers 

Page 103 GAO-09-446 
Chapter 5: Federal Tax Expenditures, the 

RFS, and an Ethanol Tariff Have Primarily 

Supported Conventional Corn Starch Ethanol 

thereafter.12 To qualify as biomass-based diesel under the RFS, a 

biorefinery’s production must generally achieve at least 50 percent less 

lifecycle greenhouse gas emissions than baseline petroleum fuels. 

Production that does not qualify as biomass-based diesel might be able to 

qualify for the RFS’s allocation of advanced biofuels that is not designated 

•

uel 

llowance for Cellulosic Biofuel Plant Property 

allows qualified cellulosic biofuel plant owners to take a depreciation 

r it is 

r 

•

of 

orn 

dit. This tax credit is scheduled to expire on December 31, 

2010. 

 

for biomass-based diesel or cellulosic biofuels. If not, it would then 

compete with conventional corn starch ethanol. 

Cellulosic Biofuel Producer Tax Credit and Special Depreciation 

Allowance for Cellulosic Biofuel Plant Property: The Cellulosic Biof

Producer Tax Credit provides a $1.01 per gallon tax credit for cellulosic

biofuel produced after December 31, 2008. The value of this credit is 

reduced by the value of other tax credits, including the VEETC and the 

Small Ethanol Producer Tax Credit, so that the maximum combined credit 

a cellulosic biofuel producer may claim is $1.01 per gallon. 

The Special Depreciation A

deduction of 50 percent of the adjusted basis of the plant in the yea

put in service. There have been no expenditures associated with either of 

these tax incentives. Both incentives are scheduled to expire on Decembe

31, 2012. 

The Small Ethanol Producer Tax Credit: The Small Ethanol Producer 

Credit provides a 10 cent per gallon credit for the first 15 million gallons 

ethanol produced each year by businesses with a production capacity of 

less than 60 million gallons annually. According to Department of the 

Treasury estimates, expenditures for income tax credits for ethanol have 

remained flat at around $40 million for fiscal years 2005 through 2008 with 

one exception in fiscal year 2006 when the expenditure was $50 million.13

To date, the small ethanol producer credit has primarily gone toward c

starch ethanol because no cellulosic ethanol has been commercially 

produced, but small producers of cellulosic ethanol are also eligible for 

this tax cre

12Biodiesel refineries have about 2.7 billion gallons of annual production capacity. 

13The Department of the Treasury reports expenditures for the Small Ethanol Producer 

Credit and other ethanol income tax credits together, so this total may include 

expenditures on other ethanol income tax credits. 

Page 104 GAO-09-446 Biofuels
Chapter 5: Federal Tax Expenditures, the 

RFS, and an Ethanol Tariff Have Primarily 

Supported Conventional Corn Starch Ethanol 

Biofuels

The RFS requires rapidly increasing levels of biofuels to be blend

U.S. transportation fuels through 2022 and allows the use of up to 15 

billion gallons of conventional corn starch ethanol in 2015 and annu

thereafter. Under current market conditions, the VEETC does not 

stimulate additional ethanol consumption above the required level, making 

it duplicative to the RFS with respect to ethanol use. As long as the R

binding, the VEETC benefits motor fuel blenders,

ed into 

ally 

FS is 

 ethanol consumers, and 

ethanol producers, but does not affect corn growers’ income. At the same 

 the 

nd 

uce 11.5 billion 

gallons of ethanol each year. The VEETC was more important in helping to 

e 

e to reduce, phase out, or modify the VEETC, the direct and 

indirect effects on motor fuel blenders and other market participants are 

s 

ar 

 the 

, either reducing the amount of the tax credit or phasing it out, or 

modifying the tax credit to counteract fluctuations in crude oil prices. 

Conclusions 

time, by increasing ethanol use through 2015, the RFS has increased

VEETC’s cost to the Treasury in forgone revenues because blenders are 

given a tax credit of 45 cents for each gallon of ethanol they blend with 

gasoline. The cost of this tax credit could reach $6.75 billion in 2015 a

each year thereafter for corn starch ethanol. Furthermore, the 

conventional corn starch industry is mature because the technology is 

well-understood and biorefineries have the capacity to prod

create a profitable industry when the industry had to fund facilities 

investment than it is now for sustaining the industry when most of the 

capital investment has already been made. The 2008 Farm Bill reduced th

VEETC from 51 cents to 45 cents per gallon while establishing a $1.01 per 

gallon tax credit for advanced cellulosic biofuels. While proposals have 

been mad

uncertain. Moreover, fluctuations in crude oil prices, such as that 

experienced in the past 2 years, create additional uncertainties as to 

whether the RFS will be binding in future years, with possible implication

for the VEETC. The Congress is expected to review the VEETC next ye

because it will be terminated on January 1, 2011, unless renewed. 

Because the RFS allows rapidly increasing annual amounts of 

conventional biofuels through 2015 and the conventional corn starch 

ethanol industry is mature, the Congress may wish to consider whether 

revisions to the VEETC are needed. Options could include maintaining

VEETC

Matter for 

Congressional 

Consideration 

Page 105 GAO-09-446 
Chapter 6: Federal Biofuels R&D Primarily 

Supports Developing Cellulosic Biofuels 

Page 106 GAO-09-446 

Chapter 6: Federal Biofuels R&D Primarily 

Cellulosic ethanol is a primary focus of federal biofuels R&D. DOE and 

USDA, the largest sponsors of biofuels R&D, obligated about $500 mil

in this area in fiscal year 2008. The Energy Independence and Security Ac

(EISA) of 2007 and the 2008 Farm Bill authorized significant new b

spending for 2009 and beyond, and the American Recovery and 

Reinvestment Act of 2009 provided DOE with $800 million for biofuels 

R&D. Many experts identified important R&D areas for stimulating 

cellulosic biofuels production. 

Federal agencies obligated about $505.5 million for biofuels R&D in fisca

year 2008 (see table 6).1

 DOE obligated $463.2 million in fiscal year 2008, 

primarily on cellulosic ethanol R&D. USDA obligated an estima

million on bioenergy and renewable energy R&D in fiscal year 2008. EP

Office of Research and Development obligated about $3 million for 

biofuels R&D related to EPA’s regulatory responsibilities in fiscal year 

2008. Each of these agencies significantly increased biofuels R&D 

obligations between fiscal years 2005 and 2008. 

Table 6: Federal Agencies’ Obligations for Biofuels R&D, Fiscal Years 2005-2008 

lion 

t 

iofuels 

l 

ted $39.3 

A’s 

Dollars in millions 

 Fiscal year 

Agency 2005 2006 2007

Supports Developing Cellulosic Biofuels 

Federal Biofuels R&D 

Programs Are 

Growing and Focus 

on Cellulosic Ethanol 

2008

DOE $117.8 $95.0 $213.6 $463.2

USDA 26.7 30.0 35.1 39.3

EPA 0.3 0.3 0.7 3.0

Total $144.8 $125.3 $249.4 $505.5

Sources: DOE, USDA, and EPA. 

t for 

ear 

. 

 

Note: Obligated amounts may differ from appropriated amounts because they accoun

deobligations, recast funds, carryover funds, and rescissions. USDA obligations data for fiscal y

2008 are estimates, as are obligations data for fiscal years 2005-2008 for DOE’s Office of Science

1

This total includes USDA obligations for all renewable energy programs because USDA 

could not break-out the total by focus or technology. USDA obligations data for fiscal year 

2008 are estimates, as are obligations data for fiscal years 2005-2008 for DOE’s Office of 

Science. 

 Biofuels 
Chapter 6: Federal Biofuels R&D Primarily 

Supports Developing Cellulosic Biofuels 

Biofuels

DOE’s obligations for biofuels R&D have increased almost fourfold since

fiscal year 2005, when it obligated $117 million on biofuels R&D. About 75 

percent of DOE’s fiscal year 2008 obligations for biofuels R&D supported 

the Office of Energy Efficiency and Renewable Energy’s Biomass Program

(about 70 percent primarily focused on cellulosic ethanol) and V

Technologies Program (about 5 percent). About 25 percent of DOE’s fis

year 2008 obligations for biofuels R&D supported basic research thr

the Office of Science. 

ehicle 

cal 

ough 

iomass Program: Biofuels R&D obligations by the Biomass Program 

c 

red. In 

 to $385 million over 5 

years, subject to annual appropriations, that would provide, at most, 40 

2 million in the remaining four projects, subject to annual 

fiscal years 200 (see table 7). 

Table 7: Integrated Biorefinery Projects Receiving DOE Funding 

DOE’s Obligations for 

Biofuels R&D Have Grown 

Substantially 

• B

more than quadrupled between fiscal years 2005 and 2008—from about 

$76 million to $327 million—with the percentage of funding going to 

cellulosic ethanol increasing to about 70 percent by fiscal year 2008. In 

particular, these funds support the Integrated Biorefineries Program with a 

goal of developing commercial-scale integrated biorefineries to 

demonstrate how these biorefineries can use a wide variety of cellulosi

feedstocks and operate profitably once construction costs are cove

February 2007, the Biomass Program awarded up

percent of the costs for each of six pilot integrated cellulosic biorefinery 

projects. Subsequently, two projects withdrew, and DOE now plans to 

invest up to $27

appropriations, between 7 and 2011

Dollars in millions 

Project company and location Technolo on capacity 

Potential DOE and 

industry funding 

yearsa

over 5 

gy, feedstock, and producti

Abengoa Bioenergy Biomass of 

Kansas, LLC Hugoton, Kansas 

Tech

Feed

(sorg

Prod on capacity: 11.4 million gallons/year of ethanol and 

sufficient energy to power the operation and sell excess energy to 

the co-located dry-grind ethanol production plant 

nology: Thermochemical and biochemical processing 

stock: 700 tons/day of corn stover, wheat straw, milo 

hum) stubble, switchgrass, and other opportunity feedstocks 

DOE: $76.3 

Industry: $114.2 

ucti

BlueFire Ethanol, Inc. 

Riverside and San Bernardino 

Counties, California 

Technology: Concentrated acid processing followed by 

fermentation of sugars to ethanol 

Feedstock: 700 tons/day of sorted green waste and wood waste 

from landfills 

Prod

DOE 

DOE: $40.0 

Industry: $61.8 

uction capacity: 19 million gallons/year in the unit in which 

will be participating 

Page 107 GAO-09-446 
Chapter 6: Federal Biofuels R&D Primarily 

Supports Developing Cellulosic Biofuels 

nology, feedstock, and production capacity 

Potential DOE and 

industry funding over 5 

yearsa

Project company and location Tech

POET Project Liberty, LLC 

Emmetsburg, Iowa 

Tech

mill p

Feed

Prod

perce

nology: Integrating production of ethanol into a dry grind corn 

rocess 

stock: 700 metric dry tonnes/day of corn fiber, corn stover 

uction capacity: 125 million gallons/year, of which roughly 25 

nt will be from lignocellulosics 

DOE: $80.0 

Industry: $123.5 

Range Fuels, Inc. 

near Soperton, Georgia 

Tech catalytic upgrading of syngas to 

ethanol and methanol 

DOE: $76.0 

Industry: $280.0 

nology: Conversion through

Feedstock: 2500 tons/day of unmerchantable timber and forest 

residues 

Production capacity: 20 million gallons/year from first unit and about 

100 million gallons/year of ethanol and about 20 million gallons/year 

of methanol from the commercial unit 

Source: DOE. 

a

DOE’s potential funding is subject to review and annual appropriations. 

• Vehicle Technologies Program: The Vehicle Technologies Program’s 

biofuels-related obligations increased from about $9 million in fiscal yea

2005 to about $22 million in fiscal year 2008. Its primary projects currently

are an intermediate ethanol blends test program, which is co-led by the

Biomass Program, and an ethanol optimization program. The intermediate

blends test program is studying the emissions, driveability, materi

r 

als 

compatibility, and emissions control system durability for E15 and E20 

ethanol blends. The ethanol optimization program is conducting R&D on 

-fuel vehicles that will run optimally on fuels of any 

ethanol blend. 

• Office of Science: Obligations for biofuels R&D at the

al year 2005 t t $114 million 

arily su c biofuels 

Science and 

arch Centers. Most of 

iscal year 2008 supported 

 led by Oak Ridge 

ence Berkeley 

 plans to provide each with a 

08 ect to 

appropriations, to accelerate basic research in the development of 

In addition, DOE’s Office of the Chief Financial Officer administers DOE’s 

loan guarantee program for categories of energy projects that provide a 

the design of flexible

 Office of Science 

increased from about $33 million in fisc o abou

in fiscal year 2008. The Office of Science prim pports basi

research through its Offices of Basic Energy 

Environmental Research and three Bioenergy Rese

s and Biological

the Office of Science’s biofuels obligations in f

the three Bioenergy Research Centers—individually

National Laboratory, the University of Wisconsin, and Lawr

National Laboratory. The Office of Science

total of up to $125 million between fiscal years 20

annual 

and 2013, subj

cellulosic ethanol and other biofuels. 

Page 108 GAO-09-446 Biofuels
Chapter 6: Federal Biofuels R&D Primarily 

Supports Developing Cellulosic Biofuels 

reasonable prospect of repayment and that commence construction by 

September 30, 2011, including leading edge biofuel projects that will use 

technologies performing at the pilot or demonstration scale that the 

i gies and 

ly re

nsportation fuels. DOE 

solar, and geothermal 

bout $27 million in 

fiscal year 2005 to about $39 million in fiscal year 2008. Most of these 

cultural Research Service, USDA’s chief scientific 

research agency, for R&D focused on develo gies for the 

harvest of biomass feedstocks and the 

o 

y 

 corn 

me the National Institute of Food and Agriculture on 

October 1, 2009, supports land grant university research, conducts 

h 

l 

nced biofuel production capacity. 

Biofuels R&D Have 

Gradually Risen 

Secretary determines are likely to become commerc al technolo

will produce transportation fuels that substantial duce lifecycle 

greenhouse gas emissions compared with other tra

is currently reviewing loan guarantee applications for several biofuel 

projects but, to date, has not approved any. 

USDA’s Obligations for USDA obligated an estimated $39 million in fiscal year 2008 for bioenergy 

and renewable energy R&D, including biofuel, wind, 

energy projects. USDA’s obligations increased from a

funds supported the Agri

ping technolo

sustainable production and 

production of biofuels at or near the farm. The goals of this R&D are t

identify (1) varieties and hybrids of bioenergy feedstocks with optimal 

traits, (2) optimal practices and systems that maximize the sustainable 

yield of high-quality bioenergy feedstocks, and (3) enabling commerciall

preferred biorefining technologies. For example, the renewable energy 

assessment program is assessing the maximum sustainable harvest of

stover while maintaining soil organic matter. 

USDA’s Cooperative State Research, Education, and Extension Service, 

which will beco

outreach and education activities, and co-administers a Biomass Researc

and Development Initiative competitive grant process with DOE. 

USDA guaranteed loans for biofuels projects grew from $13.3 million in 

fiscal year 2005 to $88.3 million in fiscal year 2007 but declined to $16.5 

million in fiscal year 2008 for four biofuels related projects. USDA’s Rura

Development program provides loan guarantees primarily through the 

Business and Industry Guaranteed Loan Program and the Rural Energy for 

America Program. The Rural Business Cooperative Service, within Rural 

Development, and the Commodity Credit Corporation, within the Farm 

Service Agency, administer grant, loan guarantee, and payment programs 

to expand ethanol, biodiesel, and adva

Page 109 GAO-09-446 Biofuels
Chapter 6: Federal Biofuels R&D Primarily 

Supports Developing Cellulosic Biofuels 

Obligations by EPA’s Office of Research and Development for biofuels 

R&D increased from $340,000 in fiscal year 2005 to about $3 million in 

fiscal year 2008. This R&D, which supports EPA’s mission and regula

responsibilities, focused on the biofuels lifecycle in fiscal year 2008. 

Specifically, this R&D includes (1) improving the characterization of

greenhouse gas emissions; (2) assessing the environmental and human 

health risks associated with existing and future feedstock, conversion

technology, and fuel pathways; (3) assessing

tory 

 the risks associated with 

genetically engineered plants and microbes; (4) assessing the 

nvironmental implications of increased biofuel concentrations stored in 

lid 

s 

g 

me 

ear 2012. For example, 

USDA’s former Bioenergy Program was revised to provide payments to 

ary of 

sing 

such sums as necessary from Commodity Credit Corporation funds 

in 

s 

s. 

million to DOE for biomass-related projects. In addition, the Omnibus 

ppropriations Act of 2009 appropriated $217 million for DOE’s biomass 

and biorefinery systems R&D program. 

EPA’s R&D Addresses the 

Full Biofuels Lifecycle 

The Congress Has 

e

tanks including impacts on leak prevention, detection, and remediation of 

releases, and implications for protection of ground water; (5) verifying 

emerging biofuels tank leak detection systems; (6) assessing the 

environmental implications of using animal manures and municipal so

waste as a feedstock; and (7) characterizing risks and updating EPA’s 

Integrated Risk Information System, particularly related to air emission

resulting from increased biofuels consumer use. 

The research and energy titles of the 2008 Farm Bill reauthorized existin

programs and created several new initiatives to promote biofuels use, 

develop advanced biofuels, and increase advanced refinery capacity. So

of these provisions provide mandatory funding, while others authorized 

the use of discretionary funds through fiscal y

Authorized and 

Appropriated 

Additional Funding 

for Biofuels R&D support and expand production of advanced biofuels, with mandatory 

funding of at least $300 million through fiscal year 2012. The act also 

created the Biomass Crop Assistance Program, directing the Secret

Agriculture to support the establishment of eligible perennial crops for 

bioenergy production and biofuels production through contracts u

through 2012. In addition, the act authorized (1) grants, contracts, and 

financial assistance for biofuels research, including at least $118 million 

mandatory funding through fiscal year 2012; (2) competitive grants and 

loan guarantees for the construction or retrofit of biorefineries for 

advanced biofuels production for $320 million to $920 million through 

fiscal year 2012; and (3) a R&D program to encourage using forest biomas

for energy and grants for energy efficient research and extension project

The American Recovery and Reinvestment Act of 2009 appropriated $800

A

Page 110 GAO-09-446 Biofuels
Chapter 6: Federal Biofuels R&D Primarily 

Supports Developing Cellulosic Biofuels 

Experts Identified 

R&D Areas for 

Many experts cited the importance of R&D in the following areas for 

stimulating cellulosic biofuels production: 

Long-term R&D on energy crops to improve plant and tree 

characteristics. Long-term R&D on certain food, feed, and fiber crops

led to improved yields and quality. For example, researchers are 

examining ways to improve physiological characteristics of the 

feedstocks, including greater ability to accumulate carbon through 

photosynthesis; a more conducive molecular structure for con

fuel; pest resistance; and greater drought, salt, and cold tolerance. 

Reducing environmental impacts. Several experts cited the importance

of examining the impacts of feedstock cultivation on soil quality, 

quality and quantity, wildlife, and greenhouse gas emissions by using such

tools as remote sensing and decision tools that consider biophysical, 

economic and social factors at scales ranging from field to farm to 

watershed. Real-world data will improve projectio

Improving Cellulosic 

Biofuels Production 

•

 has 

version into 

•

water 

ns and estimates that 

would help land managers and policy makers to better predict the 

utcomes of certain production and management practices and weigh 

•

g, 

e 

t of 

nic 

ted 

d 

imarily 

l 

o

their potential advantages and disadvantages. 

Conducting large-scale field trials. DOE’s and USDA’s Regional 

Feedstock Partnership initiated 38 herbaceous crop and corn stover 

removal field trials in 2008 to help develop best practices for producin

harvesting, and managing energy crops. For example, USDA and DOE ar

using field trial data to develop a computer tool to maximize the amoun

corn stover that can be removed without materially reducing soil orga

matter or increasing soil erosion. However, DOE’s manager for the 

partnership program stated that the 5-acre research plots used by the 

Regional Feedstock Partnership are too small to collect and integrate 

sufficient data on nutrient, carbon, and water cycles. The manager ci

the importance of large-scale field trial data for developing cropping an

harvesting approaches and estimating likely yields and environmental 

impacts. In addition, USDA’s Renewable Energy Assessment Project is 

conducting field trials assessing the impact of biomass removal—pr

corn stover but also cotton residues and switchgrass—on long-term soi

productivity at multiple locations across the nation. 

Page 111 GAO-09-446 Biofuels
Chapter 7: Significant Challenges Must Be 

Overcome to Meet the RFS’s Increasing 

Volumes of Biofuels 

Page 112 GAO-09-446 

Chapter 7: Significant Challenges Must Be 

Overcome to Meet the RFS’s Increasing 

Volumes of Biofuels 

The domestic biofuels industry faces multiple challenges to meet the R

increasing volumes of biofuels, particularly

FS’s 

 those volumes related to 

cellulosic biofuels. At least 16 billion gallons of the 21-billion-gallon 

ic feedstocks; 

ring the 

 by 

orking 

to do so through improved pretreatment processes and biochemical and 

 for 

 has 

e 

is blended as E10 and extra 

volumes of ethanol cannot be readily consumed—as early as 2011. If EPA 

cannot 

ited 

ces are 

uce 

, 

s, 

t. 

requirement for advanced biofuels must be met from cellulos

yet cellulosic ethanol currently costs at least twice as much to produce as 

conventional corn starch ethanol. Collecting, transporting, and sto

leaves, stalks, and even tree trunks of cellulosic biomass needed

cellulosic biorefineries presents numerous logistical difficulties that

increase costs. Also, cellulosic conversion technology needs further 

development to reduce processing costs. Scientists are currently w

thermochemical refining technologies. 

An immediate challenge that may limit the use of ethanol produced from 

either corn starch or cellulosic feedstocks is the lack of infrastructure

distributing and using the growing volumes of ethanol. Specifically,

because the Clean Air Act limits the ethanol content in gasoline to 10 

percent for most U.S. vehicles and the current economic slowdown

reduced U.S. gasoline demand, the nation may reach the blend wall—th

point where all of the nation’s gasoline supply 

and vehicle manufacturers find that the current U.S. vehicle fleet 

use higher ethanol blends, additional ethanol consumption will be lim

to specially designed vehicles known as flexible-fuel vehicles because they 

can use either gasoline or E85—a blend of 85 percent ethanol and 15 

percent gasoline. However, expanding E85 consumption will depend on 

substantial investment in the ethanol distribution infrastructure and 

consumer purchases of flexible-fuel vehicles. Alternatively, if advan

made in thermochemical refining technology, biorefineries could prod

products that are compatible with the existing oil refining, distribution

and storage infrastructure and the existing vehicle fleet—and therefore 

avoid blending wall issues. While the RFS requires more modest use of 

biodiesel beginning in 2009, this industry faces its own set of challenge

including the cost of feedstocks and a limited U.S. market for its produc

 Biofuels 
Chapter 7: Significant Challenges Must Be 

Overcome to Meet the RFS’s Increasing 

Volumes of Biofuels 

Biofuels

Various potential cellulosic feedstocks are being explored for commercial 

use. A 2005 study, sponsored by DOE and USDA, identified more than

billion dry tons per year of biomass potential in the United States—a

amount sufficient, according to the study, to produce biofuels that could 

replace 30 percent of U.S. crude oil consumption by around 2030 and still 

meet food, feed, and export demands.1

 The study identified two broad 

sources of biomass potential: 

From agricultural lands. 998 million sustainable dry tons are estima

be potentially available annually, assuming extensive development, 

including 428 million dry tons from annual crop residues; 377 million dry 

tons of perennial crops; 87 million dry tons of grains used for biofuels; and 

 1.3 

n 

• ted to 

106 million dry tons of animal manures, process residues, and other 

• tock 

rom 

a 

l 

losic 

 

miscellaneous feedstocks. 

From forest lands. 368 million sustainable dry tons of biomass feeds

are estimated to be available annually, including 145 million dry tons f

forest products industry residues, 64 million dry tons from logging and 

site-clearing residues, 60 million dry tons from fuel treatment operations 

to reduce fire hazards, 52 million dry tons in fuel wood, and 47 million dry 

tons in urban wood residues (yard and tree trimmings, packaging 

materials, and construction and demolition debris).2

Despite the vast availability of potential cellulosic feedstocks, 

uncertainties remain over how much of it will be profitable for either 

farmer to grow or a supplier to harvest. The chemical composition of fue

ethanol does not change whether it is made from corn starch or cellu

sources. In general, to operate profitably an ethanol refinery needs a yearround supply of large volumes of low-cost feedstocks that are of 

consistent quality. As a result, the relative cost, consistency, volume, and

accessibility of a feedstock is critical in determining whether it is 

ultimately sought by an ethanol refinery. In this context, farmers and 

 

Oak Ridge National Laboratory, prepared for DOE and USDA, Biomass as Feedstock for a 

Bioenergy and Bioproducts Industry: The Technical Feasibility of a Billion-Ton Annual 

Supply (April 2005). 

2

The Billion-Ton study may have overestimated the amount of feedstock that can be 

economically harvested because it did not calculate costs associated with harvesting 

potential feedstocks with existing technology. The study also included woody biomass 

from federal forest lands, but EISA subsequently excluded such biomass from qualifying 

under the RFS. An updated study is expected to be published later this year. 

Farmers and Other 

Suppliers Face the 

Challenge of 

Identifying and 

Developing 

Productive and 

Profitable Cellulosic 

Feedstocks 

1

Page 113 GAO-09-446 
Chapter 7: Significant Challenges Must Be 

Overcome to Meet the RFS’s Increasing 

Volumes of Biofuels 

suppliers face multiple challenges in identifying and developing productive

and profitable cellulosic feedstocks, including the following: 

The production, yield, and marketing of dedicated energy crops are 

uncertain. Switchgrass is considered a promising biofuel feedstock and 

offers the potential to expand the geographic range of biofuel refineries

due to its productivity on poor

•

 soil and low fertilizer and water needs. Yet, 

because switchgrass is a perennial crop that requires time to establish, 

gh 

e to develop the means to produce 

switchgrass on a large scale and to develop markets for this and other new 

ontrast to dedicated 

energy crops, agricultural residues, such as corn stover, are already 

d 

tical 

e, corn 

 and 

complicate their collection. Also, weather and soil conditions may not 

allow timely field drying of corn stover for safe storage. Corn stover can 

also become contaminated with dirt and other materials during harvesting, 

 

farmers may face a 2- to 3-year period before switchgrass fields mature 

and potentially become economically productive.3

 In addition, althou

switchgrass has frequently produced more than 10 tons of dry matter per 

acre on test plots, yields could vary widely depending on such factors as 

land quality, weather conditions, weeds, and overall management. 

Furthermore, it will take tim

feedstocks. Finally, potential feedstock producers would also have to 

consider less tangible factors, such as complexity, convenience, and 

ability to conserve soil and habitat. For example, advanced feedstock 

crops could require different planting and harvest schedules, which could

interfere with other tasks on the farm or with family obligations. 

• The use of agricultural residues may be limited. In c

produced in substantial quantities and located nearby existing ethanol

refineries. However, the amount of residues that farmers will be able an

willing to remove from their fields is unknown. Agricultural residues are 

vital for preventing soil erosion and improving soil fertility. The amount of 

agricultural residues that can be safely removed will vary by field and 

region and is the subject of ongoing research. There are also prac

considerations that could make corn stover harvesting unprofitable or 

make farmers unwilling to harvest remaining residues. For instanc

stover harvesting may compete with other crop harvesting operations

uled 

d 

y 

3

The Tennessee Biofuel Initiative includes a demonstration pilot refinery that is sched

to begin producing ethanol from switchgrass by the end of 2009. The university entere

into 3-year contracts with switchgrass producers to help reduce the financial uncertaint

that farmers face when deciding to grow switchgrass and ensure feedstock availability for

the refinery. 

Page 114 GAO-09-446 Biofuels
Chapter 7: Significant Challenges Must Be 

Overcome to Meet the RFS’s Increasing 

Volumes of Biofuels 

which can limit its consistency and therefore its desirability as an ethanol 

feedstock. 

• Feedstock demand for certain residues may conflict with current uses 

and restrictions. Mill residues such as bark, sawdust and shavings, are 

generally dry, consistent and concentrated—all desirable feedstock 

characteristics sought by ethanol refineries. However, mill waste is 

currently used for fuel, particleboard and mulch. Similarly, other potent

feedstocks, including willow, poplar, pines, and cottonwood, have alread

been established and are being commercially harvested, primarily for 

pulpwood and other wood products. As a result, ethanol refineries would 

have to compete with other markets for these higher-valued feedstocks. 

Growers of new stands of woody biomass face time lags even longe

for perennial herbaceous crops before trees mature and potentia

become economically productive. For example, hybrid poplar trees 

require 8 to 15 years of growth to reach their first harvest. Finally, biom

harvested from federal forest lands generally cannot be counted towa

RFS specified levels. The Energy Independence and Security Act (EISA

excludes forest-related slash and precommercial tree thinning—the 

trimming or removal of trees in a stand of trees to improve the gro

ial 

y 

r than 

lly 

ass 

rd 

) 

wth of 

the remaining trees—harvested from federal forest lands. 

able 

e 

ble 

projections assume that biofuels made from feedstock on federal forest 

lands will count toward the RFS, and they include these feedstocks in their 

projections of the amount of feedstock that will potentially be available for 

• EISA and the 2008 Farm Bill provide different definitions of renew

biomass. EISA requires that, for purposes of RFS-specified levels, 

cellulosic biofuels be derived from renewable biomass and provides a 

more limited definition of this term than the 2008 Farm Bill. For example,

EISA’s definition of renewable biomass excludes municipal waste and 

residues or other woody crops on federally managed forest land. Also, 

with regard to planted crops and crop residues, EISA defines renewabl

biomass as planted crops and crop residue harvested from agricultural 

land cleared or cultivated prior to its enactment that is either actively 

managed or fallow and nonforested. In contrast, the 2008 Farm Bill 

contains no similar exclusions or restrictions in its definition of renewa

biomass. The different definitions could cause confusion over where 

biomass may be grown or harvested. Some government and academic 

Page 115 GAO-09-446 Biofuels
Chapter 7: Significant Challenges Must Be 

Overcome to Meet the RFS’s Increasing 

Volumes of Biofuels 

biofuel production.4 Some USDA, DOE, and EPA officials told us that 

these inconsistencies have complicated rule formulation and could make it 

more difficult to meet the RFS’s advanced biofuel requirements. Without 

to 

eet 

, and 

n 

 gas 

e the 

 corn kernels 

that currently compose most of the biomass used in domestic ethanol 

re and 

s. 

nol 

ed 

c 

uch 

 states 

tion 

clarification of the renewable biomass definition and how it affects land 

eligibility, stakeholders and program officials may be unsure about how 

most efficiently and effectively reach individual program outcomes, m

interagency goals such as those in the National Biofuels Action Plan

achieve RFS’s specified levels. This could reduce the focus on and 

investment in a feedstock source that some experts consider among the 

most favorable options, provided an economical conversion process ca

be demonstrated. On the other hand, agency officials also expressed 

concern that if renewable biomass is defined too broadly, this could 

permit feedstock production on lands that now provide a carbon sink or 

other environmental benefits, thus potentially increasing greenhouse

emissions. 

Additional challenges for the cellulosic biofuel industry lie in the 

feedstock supply chain. Specifically, cellulosic feedstocks do not hav

established and efficient harvest, storage, and transportation 

infrastructure long since developed for corn. In contrast to

Biofuels

refineries, cellulosic feedstocks are less energy dense, bulkier, and more 

difficult and costly to transport. They are also harder to dry and sto

lack established feedstock quality standards sought by ethanol refinerie

According to DOE officials, cellulosic ethanol currently is estimated to 

cost at least twice as much to produce as conventional corn starch etha

and the uncertainty of the biomass feedstock supply chain and associat

risks are major barriers to procuring capital funding for start-up cellulosi

biorefineries.5

 The Biomass Research and Development Board estimates

that supply chain costs for cellulosic ethanol refineries constitute as m

as 20 percent of the projected cost of finished cellulosic ethanol and

that harvesting and collecting feedstocks from cropland or out of forest, 

feedstock storage, feedstock preprocessing, and feedstock transporta

 

4

The Biomass Research and Development Board’s November 2008 report, which models 

and projects potentially available feedstock amounts, does not consider materials from 

federal lands as eligible. 

5

The 2008 Farm Bill established a $1.01 per gallon tax credit through 2012 for cellulosic 

biofuels producers and reduced the VEETC, which is available for conventional corn starch 

ethanol, to 45 cents per gallon. 

Cellulosic Feedstocks 

Pose Unique 

Logistical Challenges 

for Biorefineries 

Page 116 GAO-09-446 
Chapter 7: Significant Challenges Must Be 

Overcome to Meet the RFS’s Increasing 

Volumes of Biofuels 

from the field to the refinery need to become more cost effective to meet 

the RFS.6

The industry faces several challenges in harvesting and collecting 

feedstocks, including operations to get cellulosic feedstock from its 

production source into storage. For example, as noted contamination of 

corn stover with dirt and other material can foul baling equipment. In 

addition, the contaminants can complicate feedstock grinding that o

during preprocessing and the unneeded weight can increase 

transportation costs to the ethanol refinery. Also, weather and soil 

conditions may not allow farmers to leave the stover in the field long 

enough to dry to prevent spoilage during storage. In response to thes

issues, DOE has funded R&D to evaluate machinery capable of 

simultaneously segregating and processing both corn ears and stover in 

one pass, w

ccurs 

e 

hich could minimize these harvesting and collection problems. 

To date, few such machines are commercially available. As with corn 

tover, specialized machinery would need to be developed to harvest, 

ess of 

ded 

ze 

a cellulosic ethanol refinery to minimize feedstock transportation costs. 

 

s

handle, and collect large volumes of cellulosic feedstocks, regardl

whether they are agricultural residues, dedicated perennial energy crops, 

forest residues, or other feedstocks. 

After harvesting and collection, adequate storage facilities are also nee

because cellulosic feedstocks generally have a narrow harvest window 

and are subject to spoilage, while ethanol refineries require a large, steady,

and year-round supply of a consistent-grade feedstock. Cellulosic 

feedstocks also require preprocessing steps, such as grinding, to minimi

quality variability so that feedstocks have the proper moisture content, 

bulk density, fluid thickness (viscosity), and quality needed by an ethanol 

refinery. Finally, cellulosic feedstock suppliers face additional 

transportation costs associated with their feedstock. The low bulk density

of cellulosic feedstocks would require additional deliveries to an ethanol 

refinery compared with a refinery that uses corn. Researchers at the 

National Renewable Energy Laboratory (NREL) forecast that cellulosic 

feedstock producers would generally need to be located within 50 miles of 

 

6

Biomass Research and Development Board, National Biofuels Action Plan (Washington, 

D.C., October 2008). 

Page 117 GAO-09-446 Biofuels
Chapter 7: Significant Challenges Must Be 

Overcome to Meet the RFS’s Increasing 

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Biofuels

Cellulosic conversion technology—whether through biochemical or 

thermochemical processes—needs more R&D and commercial 

development and is expensive relative to the cost of producing ethanol 

losic 

s a 

s 

ellulosic 

ated to 

llion 

ollecting 

ch 

ojects with a combined projected 

production capacity of up to 376 million gallons per year were under 

ks into 

emical 

e 

Federal R&D on thermochemical conversion technologies has focused on 

asification and fast pyrolysis: 

 

from corn starch. According to NREL researchers, producing cellu

ethanol through biochemical conversion is difficult because it require

complex chemical process to convert the plant material into simple sugar

to use for ethanol. 

The total project investment for a 50-million-gallon-per-year c

ethanol biorefinery using a biochemical conversion process is estim

be $250 million, as compared with a total project investment of $76 mi

for a similar capacity corn starch ethanol plant, according to NREL.7

Because of these biorefinery capital costs and higher costs for c

and transporting the feedstock, additional pretreatment steps, and 

enzymes to break down the sugars, the cost of producing a gallon of 

cellulosic ethanol is about twice that of producing a gallon of corn star

ethanol. Currently, while some small U.S. biorefineries are processing 

cellulosic feedstocks using biochemical or thermochemical conversion 

technologies, no commercial-scale facilities are operating. However, as of 

January 2009, 25 cellulosic ethanol pr

development and construction in the United States, according to the 

Renewable Fuels Association. 

To date, federal funding for R&D on processing cellulosic feedstoc

a biofuel has focused mainly on biochemical processes that use enzymes 

and microorganisms similar to a corn starch ethanol biorefinery to break 

down the sugars in cellulosic feedstocks to make ethanol. Less federal 

R&D funding has been spent on developing advanced thermoch

conversion processes, which use heat and chemical catalysts to break 

down cellulosic feedstocks. Thermochemical conversion processes can 

achieve higher fuel yields from a given feedstock than biochemical 

processes by converting more of the biomass into fuel. They also offer th

potential to convert biomass into products that oil refineries can use as 

direct replacements for petroleum-based fuels, in contrast to ethanol. 

g

7

Total project investment figures are in 2007 dollars and include plant construction, 

High Costs and the 

Limitations of Current 

Conversion 

Technology Are Key 

Challenges to Making 

Cellulosic Biofuels 

Competitive with 

Other Fuels 

equipment, installation, site development, and other costs such as startup costs and 

permits. 

Page 118 GAO-09-446 
Chapter 7: Significant Challenges Must Be 

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Volumes of Biofuels 

•

 to 

up 

fuel, jet fuel, or other biofuels. 

•

il or 

mix 

ouse 

iochar into soils on crop productivity, soil 

quality, carbon sequestration, and water quality.9

 Finally, about 13 percent 

ld 

es 

The gasification process heats the biomass at very high temperatures

(about 800 degrees Celsius) with a controlled amount of oxygen

produce a mixture called synthesis gas, or syngas. With additional clean

and conditioning, the syngas can then be used as a fuel itself to generate

steam or electricity or used as a feedstock for Fischer-Tropsch synthesis,

in which the syngas undergoes a catalytic reaction and can be converted 

into ethanol, diesel 

The fast pyrolysis process, based on centuries-old technology used to 

make charcoal, heats biomass at high temperatures (about 400 to 500 

degrees Celsius) in the absence of oxygen. About 60 percent to 70 percent 

of the conversion yield is an intermediate product referred to as bio-o

pyoil. However, oil refineries currently cannot use pyoil as a petroleum 

substitute or hydrocarbon fuel because of its instability, inability to 

with petroleum, acidity, and corrosiveness. NREL, ARS, and industry 

scientists are conducting R&D on chemical catalysts to improve pyoil’s 

stability and refinability by lowering its oxygen content and acidity. In 

addition, about 12 percent to 15 percent of the conversion yield of fast 

pyrolysis process is biochar, a carbon-rich charcoal similar in appearance 

to potting soil.8

 Injecting biochar in agricultural lands has been proposed

as a way to both increase the soil’s carbon content and reduce greenh

gas emissions into the atmosphere. USDA is conducting research to 

quantify the effects of adding b

to 25 percent of the conversion yield is syngas, which can be used as a fuel

for heat or power generation. Alternatively, the syngas from fast pyrolysis

can also be used as a feedstock for Fischer-Tropsch synthesis and 

converted into different liquid fuels. 

Researchers at NREL and USDA’s Eastern Regional Research Center to

us the pyrolysis conversion process offers two additional benefits. First, 

this technology can be used on a small, distributive scale that reduc

feedstock transportation and storage costs. Because of its energy density 

per unit volume, the resulting pyoil is more economical to transport. 

 ts biomass in the absence of oxygen over a longer 

time period, produces more biochar relative to pyoil than fast pyrolysis. The distribution of 

products on a weight basis for slow pyrolysis is about 30 percent liquid, 35 percent char, 

and 35 percent gas. 

 from 

tock 

8

The slow pyrolysis process, which hea

9

Biochar may enable the removal of more corn stover and other agricultural residues

fields than can currently be removed and therefore increase the productivity of feeds

crops. 

Page 119 GAO-09-446 Biofuels
Chapter 7: Significant Challenges Must Be 

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Second, pyrolysis converts more of the available biomass into fuels tha

biochemical conversion and is generally less energy intensive than e

biochemical conversion or gasification. As a result, it is likely to have a 

smaller carbon footprint than the other conversion processes. 

Furthermore, the process could actually achieve net greenhouse gas 

reductions if the biochar successfully increases the soil’s carbon content 

when it is injected in agricultural lands. However, r

n 

ither 

esearchers at both 

laboratories told us that pyrolysis R&D funding has been limited. NREL 

f 

er 

ch 

ily 

One option to avoid the blend wall is to determine whether higher ethanol 

e. 

d 

have to approve a waiver to the Clean Air Act that would classify the 

Blending Limits and 

has primarily participated in a cooperative R&D agreement involving 

DOE’s Pacific Northwest National Laboratory and UOP, a subsidiary o

Honeywell. The Eastern Regional Research Center recently entered into a 

cooperative R&D agreement with Siemens Energy & Automation, Inc., and 

UOP to improve pyrolysis oil production technology. 

In 2008, U.S. biorefineries produced and distributed more than 9.2 billion

gallons of ethanol. This ethanol was blended with gasoline to make eith

E10, which most vehicles can use as an oxygenate additive, or E85, whi

has a more limited market, primarily in the upper Midwest. Because the 

current economic slowdown has reduced U.S. gasoline demand, the nation

may reach the blend wall—the point where all of the nation’s gasoline 

supply is blended as E10 and extra volumes of ethanol cannot be read

consumed—as early as 2011. The United States may reach the blend wall 

limit solely with existing ethanol production from corn starch. This could 

greatly restrict the growth of the cellulosic biofuels industry, because 

ethanol is likely to be the first biofuel produced from cellulosic sources, 

rather than bio-oil or jet fuel. 

blends—E12, E15, or E20—can be used in the gasoline distribution and 

storage infrastructure and vehicles without adversely affecting the 

integrity of storage tank systems or vehicle equipment and performanc

E10 is the highest ethanol blend that may currently be used in most U.S. 

vehicles. Before a higher ethanol blend could be marketed, EPA woul

Transportation Pose 

Challenges to 

Expanded Ethanol 

Consumption 

Page 120 GAO-09-446 Biofuels
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Volumes of Biofuels 

blends as substantially similar to gasoline.10 Similarly, automobile 

manufacturers would have to determine that a higher ethanol blend than 

E10 has no long-term effects on vehicle equipment and performance. 

Without this determination, they might void their warranty prot

existing vehicles that use a higher blend of ethanol. In addition, there 

concerns that higher blends, or even E10, could damage non-auto engines

such as boat engines and small engines for equipment like lawn mower

and small tractors, and underground storage tank systems that were not 

rated to handle these higher blends. Also, leak detection technologies 

in underground storage tank systems were developed for use with 

petroleum fuel and would need to be tested for performance with higher 

ethanol blend fuels. 

ection for 

are 

, 

s 

used 

DOE’s NREL and Oak Ridge National Laboratory are collaborating with 

PA to conduct a short-term emissions study using 20 cars to test 31 fuels, 

he 

 to publish test results by June 2010. 

5, 

s, that 

 

E

including ethanol blends. The study is expected to be completed by 

December 2009. In addition, under DOE’s Intermediate Blends Test 

program, the two laboratories have initiated a project to test the long-term 

effects of using E15 and E20 blends by comparing them with vehicles that 

use unblended gasoline. Specifically, the laboratories are testing 32 cars 

over their full useful lives to assess emission control catalyst durability. T

cars will run 120,000 miles with stops for all required vehicle maintenance 

and emission testing at 60,000; 90,000; and 120,000 miles. Smaller programs 

conducted in collaboration with the automotive and petroleum industries 

are examining fuel system materials compatibility and evaporative 

emissions, and they plan to initiate a study of vehicle cold start and 

drivability. Researchers expect

A second option to avoid the blend wall is to increase E85 consumption by 

providing the infrastructure needed to distribute, store, and dispense E8

while also increasing the number of vehicles, called flex-fuel vehicle

can run on E85. Expanding ethanol consumption will be costly because of

the following: 

10Section 211(f)(1)(A) of the Clean Air Act Amendments of 1990 provides that fuel and fuel 

additives marketed in the United States for use in light-duty vehicles must be “substantially 

similar” to the fuels used by EPA for federal emissions test procedures. Any fuel or fuel 

additive with more than 2.7 percent oxygen (by weight) is not considered to be 

substantially similar although EPA may grant a waiver of the substantially similar 

requirement if certain standards are met. EPA has granted waivers allowing ethanol 

concentrations of up to 10 percent of the volume of gasoline—or 3.5 percent oxygen by 

weight. 

Page 121 GAO-09-446 Biofuels
Chapter 7: Significant Challenges Must Be 

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Volumes of Biofuels 

• more 

dy, the 

f-loading capacity to handle large train shipments of 

ethanol.11 In 2006, we reported that replacing, maintaining, and upgrading 

ad 

 areas 

 to 

nolblended gasoline are successful. A 2006 NREL report estimated the current 

 

Ethanol is transported primarily on the freight rail system, which is

costly than shipping by pipeline. According to NREL, the overall cost of 

transporting ethanol from refineries to fueling stations is estimated to

range from 13 cents per gallon to 18 cents per gallon, as compared to the 

overall cost of transporting petroleum fuels via pipelines from refineries to

fueling stations of about 3 cents to 5 cents per gallon. While ethanol cargo 

currently represents a relatively small share of overall rail volume, DOE 

and ethanol industry experts are concerned about the limited capacity of 

the freight rail system for transporting greater amounts of biofuels if 

production increases significantly. For example, in an April 2009 stu

National Commission on Energy Policy reported that few blending 

terminals have the of

the existing aging rail infrastructure is extremely costly, and while railro

officials plan to make substantial investments in infrastructure, the extent

to which these investments will increase capacity as freight demand

increases is unclear.12

Ethanol is not transported through the petroleum product pipeline system

because of concerns that, for example, it will attract water in the pipes,

rendering it unfit to blend with gasoline, according to DOE officials. Our 

June 2007 report found that even if ethanol could be shipped by existing 

pipelines, no pipelines exist to transport it from the Midwest, where it is 

mainly produced, to major markets on the East and West coasts.13

Alternatively, existing petroleum pipelines could be used in certain

to transport ethanol if ongoing efforts by operators to identify ways

modify their systems to make them compatible with ethanol or etha

costs of constructing pipelines at roughly $1 million per mile, although the 

costs can vary dramatically based on right-of-way issues, the number of 

required pumping stations, and other considerations. 

11National Commission on Energy Policy, Task Force on Biofuels Infrastructure 

gton, D.C.: June 8, 2007). 

(Washington, D.C., April 2009). 

12GAO, Freight Railroads: Industry Health Has Improved, but Concerns about 

Competition and Capacity Should Be Addressed, GAO-07-94 (Washington, D.C.: Oct. 6, 

2006). 

13See GAO, Biofuels: DOE Lacks a Strategic Approach to Coordinate Increasing 

Production with Infrastructure Development and Vehicle Needs, GAO-07-713 

(Washin

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Chapter 7: Significant Challenges Must Be 

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Volumes of Biofuels 

• Ethanol is corrosive, so gasoline stations will need to install dedicated 

tank systems for storing E85 and specialized pumps and equipment for 

dispensing it. EPA estimates that the cost of installing E85 refueling 

equipment will average $122,000 per facility—which may be a significant 

impediment for many potential retailers. Liability concerns are also a 

challenge to increasing the number of E85 pumps. According to the 

Biomass Research and Development Board, one of the most significant 

hurdles to retail ethanol expansion is the current lack of Underwriters’ 

Laboratory certification for pumps dispensing blends of E15 or higher

because large operators of fuel pumps, ranging from the Postal Service to 

large retailers, will be reluctant to sell E85 or potentially other appr

intermediate blends. 

In October 2008, we reported that the lack of E85 fueling stations greatly 

reduced the ability of the federal vehicle fleet to achieve its nationwide 

energy objectives for using alternative fuels.

oved 

l 

larly E85, is more widely available, federal agencies 

will likely continue to expend time and resources on acquiring flexible-fuel 

ns, 

•

y 168,000 gas 

stations. 

 

14 We concluded that unti

alternative fuel, particu

vehicles that can run on E85 with limited success in displacing petroleum, 

possibly missing opportunities to displace petroleum through other mea

such as through the purchase of conventional hybrids (vehicles that are 

powered by both an internal combustion engine and an electric motor) or

natural-gas-powered vehicles. 

Only about 8 million flexible-fuel vehicles out of more than 250 million in 

the nationwide vehicle fleet can use E85. However, many flexible-fuel 

vehicles are using E10 because a ready supply of E85 does not exist 

outside the upper Midwest. Fueling stations offering E85 are concentrated 

in the upper Midwest—15 states have less than 10 such fueling stations 

and 7 states have none. As of February 2009, only about 1,900 fueling 

stations nationwide offered E85, compared with nearl

hicles 

on, D.C.: 

14GAO, Federal Energy Management: Agencies Are Acquiring Alternative Fuel Ve

but Face Challenges in Meeting Other Fleet Objectives, GAO-09-75R (Washingt

Oct. 22, 2008). 

Page 123 GAO-09-446 Biofuels
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Volumes of Biofuels 

Biofuels

The domestic biodiesel industry faces several challenges that limit its 

potential market.15 Specifically, the biodiesel industry faces high feedsto

costs.16 The cost for soybean oil, the most common feedstock for U.S

biodiesel production, and other plant oils is high because the biodiesel 

industry competes with food and animal feed markets for these oils. T

high feedstock costs have prompted the biodiesel industry to look to

feedstock sources, including animal fats, recycled greases, and nonfoodgrade corn oil. The biodiesel industry also faces substantial production 

overcapacity. According to the National Biodiesel Board, as of September 

2008, the annual production capacity from 176 existing U.S. biodiesel 

refineries totaled 2.61 billion gallons—yet actual U.S. biodiesel production

reached 700 million ga

ck 

. 

hese 

 other 

llons from October 1, 2007, to September 30, 2008, 

leaving the capacity utilization at many of these facilities extremely low. 

rate the light-duty vehicle fleet beyond the 

B5 or B10 blending levels,17 additional biofuel-capable vehicles must be 

re 

f 

 that 

g 

nd other vegetable oil feedstocks, may not qualify as biomassbased diesel under EPA’s proposed RFS regulation because biomass-based 

iesel under the RFS must generally achieve at least a 50 percent 

 

In contrast to the U.S. ethanol industry, the nation’s biodiesel refining 

capacity is relatively dispersed. While many biodiesel refineries are 

located in the Midwest, substantial refineries are located in the South and 

on the West Coast. Yet, as with the U.S. ethanol industry, biodiesel cannot 

be blended at oil refineries and transported through product pipelines 

because of contamination concerns. Rather, biodiesel is transported by 

railroad cars and tanker trucks to fueling stations, which are expensive 

and slower than using pipeline and, in turn, add to product cost. In 

addition, for biodiesel to penet

produced and marketed to consumers. There are limited numbers of 

fueling stations carrying B20, because its physical properties may requi

the retrofit of storage tank systems and dispensing equipment. 

Furthermore, while the RFS requires use of at least 500 million gallons o

biodiesel in 2009, the National Biodiesel Board has expressed concern

the production from many biodiesel refineries, particularly ones usin

soybean a

d

15The Emergency Economic Stabilization Act of 2008 (Pub. L. No. 110-343 § 202 (2008)) 

provides that all biodiesel fuels are eligible for a $1 per gallon biodiesel tax credit beginning 

January 1, 2009. 

16Biodiesel production results in glycerol (glycerin) as a co-product. Rising biodiesel 

 5 percent biodiesel and 95 percent petroleum-based diesel. 

The Biodiesel 

Industry Faces 

Feedstock and Market 

Challenges 

production has created a need to find new uses for it. 

17B5 is a blend of

Page 124 GAO-09-446 
Chapter 7: Significant Challenges Must Be 

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Volumes of Biofuels 

reduction in lifecycle greenhouse gas emissions as compared with 

petroleum fuels. A new biodiesel feedstock for the future is algae. DOE 

and private companies are increasing their funding of R&D to develop 

technologies that can cost effectively use algae to produce biodiesel. 

The RFS allows the use of up to 15 billion gallons per year of conventiona

biofuel by 2015 and requires at least 21 billion gallons of advanced 

biofuels—with at least 16 billion gallons of this amount coming from 

cellulosic feedstocks—in 2022. Yet, at present, the distribution 

infrastructure and vehicle types necessary to transport and use increased 

ethanol production do not exist. In addition, the United States will reach 

the blend wall limit as early as 2011 solely with existing ethanol 

Biofuels

l 

production from corn starch, which could greatly restrict the growth of 

ies, 

at 

ram 

uels 

d 

To address inconsistencies in existing statutory language, we recommend 

that the Administrator of the Environmental Protection Agency, in 

dministrator determines may be needed to clarify what 

Conclusions 

the cellulosic biofuels industry. Thermochemical processing technolog

such as pyrolysis, have the potential to produce advanced biofuels th

can be used in the nation’s existing fuel distribution and vehicle 

infrastructure and therefore avoid future blend wall issues. However, DOE 

and USDA have not focused substantial R&D resources on developing 

these technologies. Furthermore, EISA and the 2008 Farm Bill define 

renewable biomass differently regarding feedstocks and land eligibility, 

creating difficulties for agencies to formulate rules, implement prog

activities, and effectively execute the interagency National Biofuels 

Action Plan. This may also create uncertainty for biofuels producers and

could potentially reduce the nation’s ability to increase advanced biof

feedstock production and realize their benefits. 

To minimize future blend wall issues and associated ethanol distribution 

infrastructure costs, we recommend that the Secretaries of Agriculture 

and Energy give priority to R&D on process technologies that produce 

biofuels that can be used by the existing petroleum-based distribution an

storage infrastructure and the current fleet of U.S. vehicles. 

Recommendations for 

Executive Action 

consultation with the Secretaries of Agriculture and Energy, review and 

propose to the appropriate congressional committees any legislative 

changes the A

biomass material—based on type of feedstock or land—can be counted

toward the RFS. 

Page 125 GAO-09-446 
Chapter 7: Significant Challenges Must Be 

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Volumes of Biofuels 

USDA and DOE commented on our recommendation for giving prio

R&D for producing biofuels that can be used by the existing petroleumbased infrastructure. Specifically, USDA agreed that this is an importan

goal which its R&D should address, but cited other similarly importan

rity to 

t 

t 

R&D goals that its scientists are simultaneously pursuing, such as the 

evelopment of feedstocks with physical and chemical properties that 

geous 

ted 

e that its 

ccelerate 

ith 

e the 

include materials that do not come from federal lands classified as 

nvironmentally sensitive and that can be grown and harvested in a 

Agency Comments 

d

make them effective for conversion, and the creation of productive 

methods that are environmentally sound and economically advanta

for producing large quantities of feedstocks. In its comments, DOE sta

that it has already expanded in this direction, noting for exampl

$480 million funding opportunity announcement for integrated biorefinery

operation, which closed on June 30, 2009, included green diesel and green

gasoline. DOE also cited a new solicitation to fund consortia to a

development of advanced biofuels under the American Recovery and 

Reinvestment Act supports infrastructure-compatible fuels and algaebased fuels. 

USDA, DOE, and EPA commented on our recommendation for clarifying 

what biomass material can be counted toward the RFS. USDA agreed w

the recommendation that the executive agencies should consult on a 

definition and propose any legislative changes to the appropriate 

congressional committees, stating that the department supports the 2008

Farm Bill’s definition. DOE stated that the department would welcom

opportunity to participate in deliberations about how to clarify the 

biomass definition if requested to do so by the EPA Administrator, adding 

that the department supports an expansion of biomass eligibility to 

e

sustainable manner. EPA stated that the agency is working with USDA to 

identify inconsistencies and interpret how biomass is treated under EISA

and the 2008 Farm Bill. 

Page 126 GAO-09-446 Biofuels
Appendix I: Key Studies on the Agricultural 

and Related Effects of Biofuels and on the 

Transition to Advanced Biofuel Feedstock 

Production 

Page 127 GAO-09-446 

Appendix I: Key Studies on the Agricultural 

and Related Effects of Biofuels and on the 

Transition to Advanced Biofuel Feedstock 

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Heaton, E.A., Dohleman, F.G., and Long, S.P. “Meeting U.S. biofuel goals 

with less land: The potential of Miscanthus,” Global Change Biology, 14 

(2008): 1-15. 

Hill, J., Nelson, E., Tilman, D., Polasky, S., and Tiffany, D. “Environmental, 

Economic, and Energetic Costs and Benefits of Biodiesel and Ethanol 
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and Related Effects of Biofuels and on the 

Transition to Advanced Biofuel Feedstock 

Production 

Biofuels,” Proceedings of the National Academy of Sciences, vol.

30 (2006): 11206-11210. 

 103, no. 

an, G., Sexton, S.E., and Zilberman, D. “The Economics of Biofuel 

Policy and Biotechnology,” Journal of Agricultural & Food Industrial 

 Wilhelm, W.W. “Biomass-Bioenergy Crops in the United 

States: A Changing Paradigm,” The Americas Journal of Plant Science 

Johnson, J.M.F, Reicosky, D., Allmaras, R., Archer, D., Wilhelm, W. “A 

il 

Khanna, M. “Cellulosic Biofuels: Are They Economically Viable and 

Systems Utilized for Producing Biofuels: Bioethanol and Biodiesel,” 

omics for Bioenergy 

Production from Fuelstock Grasses: Maize as the Model Species,” The 

ol. 

Low, S.A. and Isserman, A.M. “Ethanol and the Local Economy: Industry 

McDonald, S., Robinson, S., and Thierfelder, K. “Impact of Switching 

Hipple, P.C., Duffy, M.D. “Farmers’ Motivations for Adoption of 

Switchgrass,” in J. Janich and A. Whipkey (eds.),Trends in New Crops and 

New Uses (Alexandria, Va.: ASHA Press, 2002): 252-266. 

Hochm

Organization, vol. 6, no. 8 (2008): 1-22. 

Johnson, J.M.F, Coleman, M.D., Gesch, R., Jaradat, A., Mitchell, R., 

Reicosky, D., and

and Biotechnology, 1, 1 (2007): 1-28. 

Matter of Balance: Conservation and Renewable Energy,” Journal of So

and Water Conservation, Jul/Aug, 61, 4 (2006): 120A-125A. 

Environmentally Sustainable?” Choices, vol. 23, no. 3 (2008): 16-21. 

Kim, S. and Dale, B.E. “Life Cycle Assessment of Various Cropping 

Biomass and Bioenergy, vol. 29 (2005): 426-439. 

Lawrence, C.J. and Walbot, V. “Translational Gen

Plant Cell, 19 (2007): 2091-2094. 

Lawrence, J.D., Mintert, J., Anderson, J.D., and Anderson, D.P. “Feed 

Grains and Livestock: Impacts on Meat Supplies and Prices,” Choices, v

23, no. 2 (2008): 11-15. 

Trends, Location Factors, Economic Impacts, and Risks,” Economic 

Development Quarterly, vol. 23, no. 1 (2009): 71-88. 

Production to Bioenergy Crops: The Switchgrass Example,” Energy 

Economics, vol. 28 (2006): 243-265. 

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and Related Effects of Biofuels and on the 

Transition to Advanced Biofuel Feedstock 

Production 

Mitchell, D. “A Note on Rising Food Prices,” The World Bank, Policy 

Research Working Paper, no. 4682, July 2008. 

pacts of 

08. 

d 

, no. 9 (2007): 31-43. 

ass as 

OECD, Economic Assessment of Biofuels Support Policies, 2008. 

d Applied 

Economics, vol. 38, no. 2 (2006): 377-387. 

Switchgrass, and Wood; Biodiesel Production Using Soybean and 

. 

Zilberman, D. “Challenge 

of Biofuel: Filling the Tank without Emptying the Stomach?” 

Review of Environmental, Economic and 

Policy Aspects of Biofuels,” The World Bank, Policy Research Working 

.H., Doering, O.C., Hamburg, S.P., Melillo, J.M., 

Wander, M.M., et al. “Sustainable Biofuels Redux,” Science, vol. 322 (2008): 

dersen, J.F., 

Graybosch, R.A., and Vogel, K.P. “Opportunities and roadblocks in utilizing 

McPhail, L.L. and Babcock, B.A. “Short-Run Price and Welfare Im

Federal Ethanol Policies,” Center for Agricultural and Rural Development, 

Iowa State University, Working Paper 08-WP 468, June 20

Naylor, R.L., Liska, A.J., Burke, M.B., Falcon, W.P., Gaskell, J.C., Rozelle, 

S.D., and Cassman, K.G. “The Ripple Effect: Biofuels, Food, Security, an

the Environment,” Environment, vol. 49

Oak Ridge National Laboratory, prepared for DOE and USDA. “Biom

Feedstock for a Bioenergy and Bioproducts Industry: The Technical 

Feasibility of a Billion-Ton Annual Supply,” April 2005. 

Parcell, J.L. and Westhoff, P. “Economic Effects of Biofuel Production on 

States and Rural Communities,” Journal of Agricultural an

Pimentel, D. and Patzek, T.W. “Ethanol Production Using Corn, 

Sunflower,” Natural Resources Research, vol. 14, no. 1 (2005): 65-76

Rajagopal, D., Sexton, S.E., Roland-Holst, D., and 

Environmental Research Letters, vol. 2 (2007): 1-9. 

Rajagopal, D. and Zilberman, D. “

Paper, no. 4341, September 2007. 

Robertson, G.P., Dale, V

49-50. 

Sarath, G., Mitchell, R.B., Sattler, S.E., Funnell, D., Pe

forages and small grains for liquid fuels,” Journal of Industrial 

Microbiology and Biotechnology, vol. 35, no. 5 (2008): 343-354. 

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and Related Effects of Biofuels and on the 

Transition to Advanced Biofuel Feedstock 

Production 

Schmer, M.R., Vogel, K.P., Mitchell, R.B., and Perrin, R.K. “Net Energy

Cellulosic Ethanol from Switchgrass,” Proceed

 of 

ings of the National 

Academy of Sciences, vol. 105, no. 2 (2008): 464-469. 

Greenhouse Gases through Emissions from Land-Use Change,” Science, 

oward 

Bioenergy,” American Journal of Agricultural Economics, vol. 90, issue 5 

, B.A., Yu, T.H., 

Dong, F., and Hart, C.E. “Bottlenecks, Drought, and Oil Price Spikes: 

ltural 

Economics, vol. 30, no. 4 (2008): 604-622. 

eneral Equilibrium 

Approaches,” Journal of Agricultural and Food Industrial Organization, 

“Bioenergy Crop Production in the United States—Potential Quantities, 

): 313-333. 

Westhoff, P., Thompson, W., and Meyer, S. “Biofuels: Impact of Selected 

, 

USDA, Cooperative State Research, Education, and Extension Service, 

 for 

ist. “An 

Analysis of the Effects of an Expansion in Biofuel Demand on U.S. 

Agriculture,” May 2007. 

Searchinger, T., Heimlich, R., Houghton, R.A., Dong, F., Elobeid, A., 

Fabioso, J., et al. “Use of U.S. Croplands for Biofuels Increases 

vol. 319 (2008): 1238-1240. 

Senauer, B. “Food Market Effects of a Global Resource Shift T

(2008): 1226-1232. 

Tokgoz, S., Elobeid, A., Fabiosa, J., Hayes, D.J., Babcock

Impact on U.S. Ethanol and Agricultural Sectors,” Review of Agricu

Tyner, W., and Taheripour, F. “Biofuels, Policy Options, and Their 

Implications: Analyses Using Partial and G

vol. 6, article 9 (2008). 

Walsh, M.E., De La Torre Ugarte, D.G., Shapouri, H., and Slinsky, S.P. 

Land Use Changes, and Economic Impacts on the Agricultural Sector,” 

Environmental and Resource Economics, vol. 24, no. 4, (2003

Farm Bill Provisions and Other Biofuel Policy Options, Food and 

Agricultural Policy Research Institute at University of Missouri-Columbia

FAPRI-MU Report no. 06-08, 2008.

U.K. Renewable Fuels Agency. “The Gallagher Review of the Indirect 

Effects of Biofuels Production,” East Sussex, United Kingdom, July 2008. 

“The Human and Social Dimensions of a Bioeconomy: Implications

Rural People and Places,” Discussion Paper, March 2007. 

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and Related Effects of Biofuels and on the 

Transition to Advanced Biofuel Feedstock 

Production 

USDA, Office of the Chief Economist, De La Torre Ugarte, D.G., Walsh, 

M.E., Shapouri, H., and Slinsky, S.P. “The Economic Impacts of Bioe

Crop Production on U.S. Agriculture,” Agricultural Ec

nergy 

onomic Report, no. 

816, February 2003. 

. 

USDA, Economic Research Service. “Economic Measures of Soil 

008. 

esearch Service. “Feed Grains Backgrounder,” March 

2007. 

gust 2006. 

d 

USDA, Economic Research Service. “Ethanol Expansion in the United 

re, 

e Organization. The State of Food and 

Agriculture: Biofuels—Prospects, Risks, and Opportunities, Rome, Italy, 

Varvel, G.E., Vogel, K.P., Mitchell, R.B., Follett, R.F., and Kimble, J.M. 

USDA, Economic Research Service. “Productivity Growth in U.S

Agriculture,” Economic Brief Number 9, September 2007. 

Conservation Benefits,” Technical Bulletin Number 1922, September 2

USDA, Economic R

USDA, Economic Research Service. “Environmental Effects of 

Agricultural Land-Use Change: The Role of Economics and Policy,” 

Economic Research Report Number 25, Au

USDA, Economic Research Service. “Global Agricultural Supply an

Demand: Factors Contributing to the Recent Increase in Food Commodity

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States: How Will the Agricultural Sector Adjust?” May 2007. 

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Vol. 1, Part 51, February 2009. 

USDA, Office of the Chief Economist. “USDA Agricultural Projections to 

2017,” February 2008. 

United Nations Food and Agricultur

2008. 

“Comparison of Corn and Switchgrass on Marginal Soils for Bioenergy,”

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Page 132 GAO-09-446 Biofuels
Appendix II: Economic Studies Examining the 

Impacts of Increased Biofuel Production on 

U.S. Food and Agricultural Markets 

Page 133 GAO-09-446 

Appendix II: Economic Studies Examining 

the Impacts of Increased Biofuel Production 

on U.S. Food and Agricultural Markets 

We selected 12 key economic studies on the impacts of increased biofuel 

production on U.S. food and agricultural markets. The authors generally 

found, to varying degrees, that increased demand for biofuel production will 

affect many sectors throughout food and agriculture. We summarized the 

results of these studies for biofuel production, feedstock prices, feedstock 

es, land-

, net farm 

income, and other impacts. The variation in impact found between these 

eriods, 

that increased demand for corn ethanol had the following effects: 

• nd soybean prices rose significantly, with the amount of the rise 

varying with the baseline, time period, and the scenario that the 

ns and 

• The production of other traditional crops declined with increases in 

• and other feed crops caused livestock 

production to decline, but the amount of this decline varied by animal, 

• Increased production of dried distiller’s grains (DDG)—a livestock feed 

ort run. 

•

tock feed increased, while land planted to soybeans 

and other crops declined sharply. 

•

d caused small increases in food prices. 

f 

umptions they made about the 

land that was available and type of cellulosic feedstock assumed. 

In table 8, we describe the basic methodology and modeling assumptions 

of the economic studies of the impacts of increased biofuel production. 

Specifically, we explain several aspects of the studies, including the main 

production, food prices, other crop and livestock production and pric

use effects, changes in government program/welfare impacts

studies may be due, in part, to the different economic models, time p

data and assumptions that they used. However, in general, the studies found 

Corn a

researchers used to make assumptions about economic conditio

ethanol demand. 

biofuel demand while their prices increased. 

The increased prices of corn 

with the deepest declines in dairy, swine, and poultry. 

and a co-product of ethanol production—mitigated the effects of increased 

feed prices somewhat in the sh

Land area devoted to corn increased and some other crops, such as barley

and oats, used for lives

In six of the studies that looked at retail food prices, increased biofuel 

deman

Several of the studies also looked at the impacts on agricultural markets o

increased biofuels from cellulosic feedstocks, and their outcomes varied, in 

part based on the baseline used, model, and ass

 Biofuels 
Appendix II: Economic Studies Examining the 

Impacts of Increased Biofuel Production on 

U.S. Food and Agricultural Markets 

Page 134 GAO-09-446 Biofuels

objective, type of model, data and time period, major assumptions, mod

scenarios, government policies examined, and other aspects examined

For most of them, the sources of biofuel feedstock examined was corn for

ethanol, but corn stover, switchgrass, and other cellulosic feedstocks w

also included, as well as soybeans for biodiesel. The studies assumed 

various analytical frameworks, including partial equilibrium and general 

equilibrium,1

 and employed a range of different modeling techniques

including econometric models, simulation models, optimization models

break-even analysis, and representative farm models.2

 For the most part, 

we selected studies that took a broader, more national approach. We also 

included studies that were quantitative or empirical in nature, in

el 

. 

ere 

, 

, 

 order to 

measure the impacts of increased biofuel production on various sectors of 

he studies 

s, 

alls, higher productivity levels, various subsidy and 

biofuel mandate levels, and land-use policies. Also, three of the studies 

h as 

rs, taxpayers, and 

consumers. 

 

the food and agricultural market. To observe the impact of increased 

biofuels production on various market conditions, a majority of t

included a variety of different scenarios, including higher crude oil price

production shortf

that we examined measured the impacts on various stakeholders, suc

biofuel producers, crop and livestock produce

rices and quantities of all goods and 

services. 

economic relationships by statistical and 

mathematical methods, using such tools as regression analysis, for the purpose of 

 a 

e question, “what would happen 

if” and is often used to assess the likely impacts of various economic policies. (3) 

ize 

variable costs 

used to model or simulate the impact on reforms or policy changes on the individual farmer 

1

Partial equilibrium models study a market for a commodity or industry in isolation, given

the prices and production of all other commodities or industries in the economy are held 

constant. General equilibrium analysis looks at an economic system as a whole and 

observes the simultaneous determination of all p

2

Although each model in the studies is adapted to the particular analysis at hand, a brief 

description of these general economic techniques is as follows: (1) Econometric analysis 

seeks to verify economic theory and measure

forecasting future events and choosing desirable policies. (2) Simulation techniques are

form of forecasting that generates a range of alternative projections based on differing 

assumptions about future events, specifically to answer th

Optimization models are a type of mathematical model that attempts to optimize (maxim

or minimize) an objective function subject to certain resource constraints; they are also 

known as mathematical programming models. (4) Break-even analysis is an investigation of 

how changes in volume of production affect costs and profit, and is a valuable tool in 

setting price. The break-even point is the one which insures that all fixed and 

are covered, given a particular selling price. (5) Representative farm models are typically 

or household. This type of model relies on the identification of a typical or representative 

farm and production decisions made by the farm subject to resource constraints are 

generally modeled for the farm. 
Appendix II: Economic Studies Examining the 

Impacts of Increased Biofuel Production on 

U.S. Food and Agricultural Markets 

Table 8 presents some of the main results of these studies, including the 

impacts of increased biofuels production on feedstock production and 

prices, food prices, other crop and livestock prices, land-use impacts, 

government programs, and other effects. For most studies, we reported 

the results for all scenarios, but for a few we only reported on the majo

scenario due to space limitations. 

ultural Market Impacts of Biofuels Production 

r 

Table 8: Major Economic Studies of Agric

Model Description 

Biofuels

Objective of the 

study Model/Time/ Data 

M

a

ajor 

ssumptions Scenarios Results 

Economic Research Service and Office of Chief Economist, USDA, May 2007. 

Main purpose is 

to assess the 

effects on 

agriculture of 

alternative levels 

of biofuels 

production from 

corn (ethanol) 

and soybean oil 

(biodiesel). Also, 

to review the 

expansion of 

cellulosic ethanol 

production. 

National Model: Food 

and Agricultural Policy 

Simulator (FAPSIM) 

using 2007 USDA 

baseline for years 

2007-2016. 

Regional Model: 

Regional 

Environmental and 

Agricultural 

Programming Model 

(REAP) uses crop mix 

from 1992 National 

Resources Inventory. 

-

b

w

o

o

2

-

d

g

-Conservation 

Reserve Program 

(CRP) acres 

remain constant 

in 2016. 

gallons by 2016, 

biodiesel to 1 billion 

gallons. 

3) Effects of a 

production shortfall of 

10% below baseline in 

2012 for each scenario 

-Retail prices for pork, dairy, and broilers 

increase by 5.4, 4.8 and 4.4% (scenario 1) 

and 2, 1.4, and 1.9% (scenario 2) annually 

during 2007- 2016. 

-Net farm income increases by $2.6 and $7.1 

billion, in scenarios 1 and 2, respectively. 

Increase in 

iofuel production 

as assumed to 

ccur gradually 

ver time, from 

007-2016. 

Assumes only 

ried distiller’s 

rain. 

3 Scenarios: 

1) Corn ethanol 

increase to 15 billion 

gallons by 2016, 

biodiesel to 1 billion 

gallons. 

2) Corn ethanol 

increase to 20 billion 

-For scenarios 1 and 2, respectively: 

Corn production and price rise in both 

scenarios; 5.4 and 7.2 billion bushels and 

$3.61 and $3.95 per bushel in 2016. 

-Overall livestock production is reduced. 

-Soybean, wheat, cotton, and rice acreage 

declines over baseline. 

above. 

, American Journal of Agricultural Economics, 2007.a De La Torre Ugarte, English, and Jensen

Projects 

economic impacts 

of increasing 

ethanol beyond 

RFS: production 

to 10, 30, and 60 

billion gallons by 

2010, 2020, and 

2030, and 

biodiesel 

production by 1 

and 1.6 billion 

gallons by 2012 

and 2030. 

POLYSYS/ IMPLAN 

Integrator (PII) – a 

dynamic agricultural 

sector model 

incorporating an 

economic input-output 

model. 

2006 USDA baseline. 

Facility output costs, 

feedstock and 

associated costs 

based on prior 

studies. 

a

2

-

p

c

f

1) ETH60-attain targets 

assuming cellulose-to-

-Corn, soybean, and wheat prices increase. 

Corn ethanol production until 2012. After 

s 

e of 

-Cellulose-toethanol assumed 

commercially 

3 Scenarios: ETH60 Scenario; 

vailable by 

012. 

Switchgrass is 

roxy for energy 

rop with yields 

rom 1.5 to 5%. 

-No-till increases 

from 20-55%. 

-307 million acres 

crops plus hay 

and 56.2 million 

for pasture. 

-DDGs in feed 

ration are 30% for 

beef, and 10% for 

dairy, hogs, and 

broilers. 

ethanol by 2012; 

2) ETH60CA- allows 

corn ethanol to adjust 

as cellulose-to-ethanol 

is available in 2012; 

3) ETH60CACD-delays 

cellulose-to-ethanol 

until 2015, and corn 

ethanol adjusts. 

2012, switches to cellulose of wood residue

and then dedicated energy crops. 

- Higher feed prices, but lower cattle 

inventories reduce demand for feed, 

offsetting feed prices. DDGS more heavily 

incorporated into cattle rations. 

-Savings in government payments of $150 

billion and increase in net farm incom

$210 billion in 2007-2030. 

-Economic impacts of $368 billion per year 

and 2.4 million jobs. 

Page 135 GAO-09-446 
Appendix II: Economic Studies Examining the 

Impacts of Increased Biofuel Production on 

U.S. Food and Agricultural Markets 

Model Description 

Biofuels

Objective of the 

study Model/Time/ Data 

M

a

ajor 

ssumptions Scenarios Results 

Tokgoz, Elobeid, Fabiosa, Hayes, Babcoc

Vol. 30, No. 4, 2008. 

k, Tun-Hsiang, Dong, and Hart, Review of Agricultural Economics, 

The study 

estimates how 

large the U.S. 

biofuels sector 

and assesses the 

likely impact of 

this sector on 

nd on 

A multi-commodity, 

multi-country, partial 

equilibrium 

econometric model of 

which incorporates a 

biofuels comp

Feedstocks include 

s. 

based on 2006 data. 

Projections between 

-

r

conditions 

baseline and for 

2. 

f flexicles and 

m 

this 

es 

crude oil prices ($10 

demand from an E-85 

“bottleneck.” 

2) Short-crop scenario 

the 1988 

le 

riod) 

e to 

Scenario 1: Ethanol production increases to 

22.4 billion gallons or a 55% increase in 

2016-17. Corn production increases by 11% 

and price increases by 20% from $3.15 to 

 per bushel. Wheat and soybean 

production decreases, and prices increase 

y 9%. Planted area for corn increases by 

1% and other crops decrease 3 – 6 %. 

verall food price increases small, about 

l meat, dairy, and egg prices would 

increase. 

orn 

rice 

y 

% 

 for 

Assumes longun equilibrium 2 Scenarios: 

1) Scenario with higher 

could become the agriculture sector Scenarios 1 and higher on $60/barrel oil) 

but with constrained $3.75

crop markets, 

trade, a

wholesale and 

retail livestock switchgrass, although -Parameters 

drought in 2012-13 

marketing year (midd

markets. 

onent. -Analysis o

ethanol from corn, 

corn stover, and 

ethanol only one 

included in baseline 

and scenarios due to 

positive returns. 

Data for supply and

use from F.O. Lichts, 

FAO, and USDA. 

Macro data from 

Global Insight and 

other various source

Adjusted NYMEX 

crude oil prices. 

Baseline for U.S. and 

international 

commodity models 

2007 through 2016. 

fuel veh

“E-85 Bottleneck” 

issue. 

estimated fro

the literature, or 

expert opinion. 

-Assumes 20 

DDGs for pork 

and poultry; 

does not affect 

quality. 

-Assum

domestic and 

border policies 

(duties, tariff-rate 

quotas, export 

subsidies) in all 

scenarios. 

that mimics 

of projection pe

with an ethanol 

mandate in place of 

14.7 billion gallons. 

Results of the 2 

scenarios are 

considered relativ

the baseline 

projections. 

b

1

O

1%. Retai

Scenario 2: Ethanol production from c

falls 2.4% to 14.3 billion gallons. Corn p

increases 44% and production decreases b

23%. Soybean production decreases by 21

and price increases by 22%. Planted area

corn increases by 2%, wheat stays the 

same, soybeans area declines. Livestock 

production decreases. 

Overall: Finds no ethanol price that justifies 

growing switchgrass. 

Page 136 GAO-09-446 
Appendix II: Economic Studies Examining the 

Impacts of Increased Biofuel Production on 

U.S. Food and Agricultural Markets 

Model Description 

Objective of the 

study Model/Time/ Data 

Major 

assumptions Scenarios Results 

Tyner and Taheripour, Journal of Agricultural & Food Industrial Organization, Vol. 6, Article 9, 2008.

The study Bre

investigates

economic 

consequences 

further ethanol 

expansion for k

economic 

variables of the 

U.S. agriculture

and energy 

markets under

several policy 

options. They 

extend the

 the 

of 

ey 

analysis to look at 

global biofuels 

impacts. 

ak-even analysis, 

y 

s of 

-All simulations 

ck for fall in 

t restrict 

4 Scenarios-partial 

odel:b

r 

Partial Equilibrium Analysis; 

. 

idy. 

. 

w costs at higher oil 

rices, and manifests only at lower oil prices.

an the fixed subsidy. 

partial equilibrium 

model simulating 

various polic

scenarios, and 

computable general 

equilibrium built on 

GTAP. 

For the break-even 

analysis, use actual

price observation

corn and ethanol from 

2000 to 2008. For

partial equilibrium, 

models calibrated for 

2004-2006 data. 

done with a 5% 

fuel demand 

shock. 

-A 40% corn 

export demand 

sho

value of dollar. 

-Infrastructure 

and blending wall 

does no

the market. 

equilibrium m

1) A fixed subsidy of 45 

cents per gallon, 

starting 2009. 

2) No ethanol subsidy. 

3) Variable subsidy 

beginning at $70 for 

crude oil, increasing 

$0.0175 for each dolla

of crude that falls below 

$70. 

4) A renewable fuel 

standard (RFS) of 15

billion gallons. 

Under $40 oil prices and fixed subsidy, 10.25

billion bushels of corn production (less than 

15 billion RFS). With oil at $100 or greater, 

the subsidy induces higher corn production

Above $120 oil, the RFS is not binding. 

Models show a tight linkage between oil and

corn prices. Price increase from 2004-2008 

due to ethanol subsidy ($1) and due to an 

increase in oil prices ($3). At $140 oil, see 

corn price of $6 under all scenarios except 

fixed subs

-RFS cost is paid by the consumer at the 

pump and is high at low prices and low at 

high oil prices. 

- Fixed and variable subsidy costs are 

financed through the budget. 

- Fixed subsidy rises linearly with oil prices

-Variable subsidy has lo

p

-At oil prices greater than $80, the cost of 

RFS is always lower th

Walsh, De La Torre Ugarte, Shapouri, and Slinsky, Environmental and Resource Economics, 24, 2003.

The study seeks 

to identify what 

prices are needed 

for bioenergy 

crops to compete 

r agricultural 

nd, and what 

ould happen to 

aditional crop 

rices and farm 

come if a 

oenergy market 

ould be 

eveloped to use 

l of the biomass 

otentially 

vailable at a 

ven price. 

ioenergy crops 

clude 

witchgrass, 

ybrid poplar, and 

illow. 

aseline for 8 major 

crops and 1999 

FAPRI baseline for 

alfalfa and other hay. 

Baseline timeframe 

runs from 1999-2008. 

CRP baseline is 1998. 

Crop enterprise 

budgets using the 

APAC Budgeting 

System which 

estimates costs 

associated with 

traditional crops. 

BIOCOST estimates 

costs for bioenergy 

crops — hybrid poplar 

and willow.c

0 

years with a real 

discount rate of 

6.5%. 

On CRP acres, 

existing contracts 

can be renewed 

under same 

conditions or 

planted to 

bioenergy crops 

with 25% of rental 

rate forfeited. 

- Rational 

expectations is 

incorporated into 

farmers’

decisions. 

- Prices of biofuel 

crops are 

exogenous to the 

model. 

2 Scenarios 

1) Prices of $30/dt, 

$31.74/dt, and 

$32.90/dt for 

llow, and 

ybrid poplar. Assumes 

wildlife management 

practices are employed 

on CRP acres and 

farmers receive 75% of 

rental rate for producing 

bioenergy crops. 

2) Prices of $40/dt, 

$42.32/dt, and 

$43.87/dt for 

switchgrass, willow, and 

hybrid poplar. Assumes 

production 

management practices 

employed on CRP 

acres and 75% of rental 

rate. 

-Overall: Authors conclude government 

policies needed to encourage use of 

bioenergy production. Switchgrass is more 

profitable than poplars or willows in nearly all 

regions, but under the wildlife scenario (1) 

cres are split between switchgrass and 

poplars. 

-Scenario 1: Supplies about 8.5 billion 

gallons of ethanol. For feedstock, total 

switchgrass production of 60.4 million dry 

tons annually. Poplar annualized to 35.5 

million dry tons. Traditional crop prices 

increase by an estimated 4 to 9 percent. An 

estimated 19.4 million acres planted to 

bioenergy crops. 

-Scenario 2: Supplies 16.7 billion gallons of 

ethanol. All from Switchgrass (188 million dry 

tons). Traditional crop prices rise by 9 – 14 

percent with 41.9 million acres planted to 

bioenergy crops. 

fo

la

w

tr

p

in

bi

c

d

al

p

a

gi

B

in

s

h

w

POLYSYS, a 

simulation model of 

the U.S. agricultural 

sector. 

Uses 1999 USDA 

b

- A planning 

horizon of 4

- 

switchgrass, wi

h a

 

Page 137 GAO-09-446 Biofuels
Appendix II: Economic Studies Examining the 

Impacts of Increased Biofuel Production on 

U.S. Food and Agricultural Markets 

Model Description 

Objective of the 

study Model/Time/ Data 

Major 

assumptions Scenarios Results 

Anderson, Outlaw, Bryant, Richardson, Ernstes, Raulston, Welch, Knapek, Herbst, and Allison, Agricultural and Food Policy 

Center, Texas A&M, April, 2008.

Objectives of this

study that w

focused on are to 

1) examine the 

impacts of higher 

corn and e

prices on food 

price increases, 

2) evaluate t

impacts of highe

crop prices on 

livestock indus

and 3) analy

the effects of a 

reduction of the

renewable

e 

nergy 

he 

r 

the 

try. 

ze 

 fuel 

standard for 3 

different ethanol 

policy scenarios.d

d 

 uses 

rm 

 price 

nd 

il 

Central Illinois, 

Primark Datastream. 

Feeder cattle prices 

from AMS/USDA, Fed 

price from TexasOklahoma average 

price. 

Use monthly data for 

rios, 

d 

s 

hocks in any 

ables; 

-Labor price is 

affected by same 

period crude oil 

shocks; 

-Corn price could 

be affected by 

shocks in the 

same period for 

either oil or labor 

 B. 

t 

her 

t 

ll 

try 

 passed on to 

 of 

orn price about $0.50 

ice. 

For the effect of fee

prices on livestock

markets, study

representative fa

models and costs 

studies. 

For food

section–time series 

vector autoregression

econometric model. 

Uses DOE oil prices, 

BLS labor prices, a

BLS and USDA reta

food prices. No. 2, 

yellow corn prices

2006-2008. prices. one-half RFS waiver c

For RFS scena

authors use a hybrid

stochastic simulation 

model. 

For the retail foo

model: 

Assume

underlying 

structural model 

is recursive 

with— 

- Price of crude

oil in one period 

is not affected by 

same period

s

other vari

-Retail food 

prices are 

determined last. 

For the RFS 

model: tax credits 

for ethanol and 

biodiesel blending 

are assumed to 

continue and 

biodiesel RFS

continues at 1

gallon after 2012.

For the RFS model 3

scenarios: 

1) First, the curren

RFS, and all ot

government programs, 

proceed as currently

planned. 

2) The conventional 

biofuel RFS is 

immediately and 

permanently reduced 

by one-quarter. 

3) The conventional 

biofuel RFS is reduced 

by one-half. 

For livestock model: For dairy, feed costs 

increased from 17 to 22 percent from 2006-

2008. For cattle, breakeven feed prices wen

from $94 to $107 per cwt as feed costs 

increased and feeder steer prices fell from 

$110 to $98 per cwt over the same period. 

For broilers, feed costs increased from an 

index of 93.5 in 2006 to 144.3 in 2008. 

For retail model: High corn prices have sma

overall impact on retail food prices. On a 

product-by-product basis, they found a 

significant effect of corn price on eggs, 

bread, and milk prices. The livestock indus

is in the middle of transition, and higher 

livestock prices have yet to be

the retail level to reflect the higher costs

feed. 

For RFS model: Relaxing the RFS does not 

significantly reduce corn prices—they are 

fairly steady under all scenarios. However, 

they gradually diverge, with the one-quarter 

RFS waiver corn prices falling about $0.30 

per bushel below the full RFS price, and the 

to $0.60 per bushel below the full RFS pr

Page 138 GAO-09-446 Biofuels
Appendix II: Economic Studies Examining the 

Impacts of Increased Biofuel Production on 

U.S. Food and Agricultural Markets 

Model Description 

Objective of the 

study Model/Time/ Data 

Major 

assumptions Scenarios Results 

The Biomass Research and Development Board, 2008.e

The goal of this Two comprehen

report was to 

research and 

make 

recommendation

to address the 

constraints 

surrounding the 

availability of 

biomass 

feedstocks. As 

part of this study, 

an economic 

assessment was

developed that 

linked an analysis 

of environmental 

consequences 

feedstock 

production from 

s 

of 

agriculture and 

forestry sources. 

sive 

ing model, 

gricultural 

. 

op prices and 

roduction used 

xtended to 2022 

ased on an 

extrapolation of trends 

in the last 3 years of 

the USDA baseline. 

Report uses the 

renewable fuel 

olumes in EISA as 

basis for scenarios. 

Some key 

ds are 

k 

y 

 among 

rn 

% 

w. 

be 

an offset lost 

forage 

production. 

- In cellulosic high 

productivity 

scenario, corn 

productivity 

doubles the rate 

over baseline in 

2022 and energy 

crops increase at 

an annual rate of 

1.5% starting in 

2012. 

First generation 

case: for 

l 

lion 

iesel. 

ivity by 

 cost of 

nergy-intensive inputs of 

ent over baseline. 

4) A price of $25 is 

assumed for the positive 

carbon price scenario 

Cellulosic scenarios:f

1) Reference Scenarios: 

36 BGY biofuel scenario -

15 BGY of corn-based 

ethanol, 1 BGY soybean 

diesel, and 20 BGY of 

cellulosic biofuels. This is 

broken down into 3 cases 

of various proportions of 

cropland, forestland, and 

imported biofuels. 

2) Increased Productivity: 

Same as reference case 

scenarios only with high 

productivity assumption 

ee assumptions). 

Reference case: A 3.6% increase in corn 

e 

n 

se of 

e 

n 

sts 

1.8% for other crop producers. The lower price 

of corn lifts returns for livestock producers by 

1.4%. Total acres planted is 1.6 million less; 3 

million fewer corn acres are planted nationally 

than the reference case. 

Cellulosic Scenarios: For the reference cases: 

Cellulosic feedstock prices coming entirely from 

cropland reach over $60/dry ton in 2022. About 

36 percent of this feedstock would come from 

perennial grasses, woody crops, and annual 

gy crops with the remainder from crop 

sidues, mainly corn stover. For a cropland 

scenario of 15 BGY, prices needed to secure 

sufficient feedstock are about $15/dry ton less 

than under the previous scenario and are about 

$20/dry ton less under the 12 BGY scenario of 

advanced biofuels from cropland. Scenarios with 

less cropland bring in larger shares of energy 

crops relative to crop residues. 

models: 

REAP — Regional 

Environment and 

Agriculture 

Programm

a mathematical

optimization model 

which analyzes the 

feedstocks associated

with producing firstgeneration biofuels. 

The baseline case 

uses the USDA 

baseline for 2007, 

which provides 

projections to 2016. 

POLYSYS, an 

agricultural policy 

simulation model, 

used to assess the 

impacts of cellulosic 

production of ethanol 

in 2022 on a

prices and production

To simulate 2022, the

2007 USDA baseline 

for all cr

p

e

b

v

assumptions: 

REAP: 

- All deman

national except 

for regional 

livestoc

demands. 

-Crop rotations 

are allocated 

proportionatel

and yields fixed at 

average levels. 

-Total CRP land

is fixed, but 

allowed to 

reallocate

regions. 

POLYSYS: 

- Constrained to 

remove no more 

than 34% of co

stover and 50

of wheat stra

- Cropland used 

as pasture will 

converted to 

energy crops 

provided the net 

returns are 

greater than the 

rental rates, they 

are the most 

profitable, and 

hay production 

c

scenarios: 

1) Reference 

2016 represents a tota

biofuel target of 16 bil

gallons, 15 billion of cornbased ethanol and 1 

billion biod

2) A high productivity 

scenario represents an 

increase in product

an additional 50% above 

baseline assumptions. 

3) A high input cost 

scenario represents an 

increase in the

e

50 perc

(s

production is accompanied by a 4.6% increas

in price over baseline. The price of soybeans is 

3.2 percent higher, while the prices of other 

crops increase by less than 1 percent. 

Planted acreage in 2016 is 4.4 million acres over 

USDA baseline. Corn acreage expands by 3.7-

million-acres with an additional 700,000 acres i

other crops. Each region exhibits an increa

3% -7% in corn acres, most new corn acres are 

in the Corn Belt, Northern Plains, and the Lak

States. The Corn Belt absorbs about 1 millio

CRP acres, with CRP acres in the Mountain 

region increasing by 1 million acres. 

Net farm returns increase by 10.4% for corn and 

3.5% for other crops. Returns for livestock 

producers decline by 0.8% due to increased 

feed co

High Productivity Scenario: In the highproductivity case, a 50% increase in yield growth 

led to a 6.3% decline in corn price with a 2.6% 

increase in production. Also, the price and 

production effects on other crops are mostly 

mitigated. 

Net returns for corn producers decline by 2.7% 

compared to the reference case and decline 

ener

re

Page 139 GAO-09-446 Biofuels
Appendix II: Economic Studies Examining the 

Impacts of Increased Biofuel Production on 

U.S. Food and Agricultural Markets 

Model Description 

Objective of the 

study Model/Time/ Data 

Major 

assumptions Scenarios Results 

Rajagopal, Sexton, Roland-Holst, and Zilberman, Environmental Research Letters, No. 2, 2007. 

The objective of 

the study is to 

estimate the 

maxim

of ethanol that 

could be 

produced fro

principal food 

crops today if 

they were

diverted entirely

to energy 

production. Th

authors also 

estimate the 

impacts of 

biofuels on food 

and fuel 

production 

develop a 

framework for 

estimating the 

um amount 

m 

e 

and 

ealth transfers 

l 

production. 

d 

nalysis -

uthors employ a 

d 

th multiple 

f 

n 

r 

nd 

orn supply 

 of 0.2 

f 0.25 

short-

 not 

s, 

estock, import 

5 

emand 

duction—

. consumer surplus to nonw

from biofue

Conceptual model an

welfare a

a

conceptual model of

supply and deman

for a crop wi

uses, like food and 

fuel. With this 

conceptual model, 

they develop 

estimates of short-run 

costs and benefits o

the ethanol productio

tax credit for the yea

2006. 

Corn dema

elasticity of -0.5

C

elasticity

Gasoline demand 

elasticity of -0.23

and supply 

elasticity o

Elasticities 

run (inelastic), 

whereas in the

long-run both 

supply and 

demand are more 

elastic. 

Conceptual 

model does

include impacts of 

other crop

liv

tariffs, RFS, or 

deficiency 

payments. 

N/Ag

Corn market –U.S. corn production was 12.

billion bushels with 1.8 billion allocated to 

ethanol. Average price of corn for marketing 

year 2006-07 was $3 per bushel. Increase in

corn price due to additional ethanol d

was estimated to be 21% higher; price of 

corn in absence of ethanol demand $2.48 

per bushel. Gasoline Market - The average 

price of gasoline was $2.53 per gallon and 

was estimated to be 3% higher or $2.61 per 

gallon in the absences of ethanol. 

Welfare estimates: 

Cost to taxpayers from ethanol pro

$2.5 billion 

Increase in corn producer surplus—$6.4

billion 

Loss in U.S

ethanol corn users—$4.4 billion 

Loss in consumer surplus (from corn) to rest 

of the world -$1.1 billion 

Page 140 GAO-09-446 Biofuels
Appendix II: Economic Studies Examining the 

Impacts of Increased Biofuel Production on 

U.S. Food and Agricultural Markets 

Model Description 

Objective of the 

study Model/Time/ Data 

Major 

assumptions Scenarios Results 

Fabiosa, Beghin, Dong, Elobeid, Tokgoz, and Yu, Working Paper 09-WP 488, Center for Agricultural and Rural Development, 

Iowa State University, March 2009. 

Authors 

investigate the

trade-offs 

between food, 

feed, ener

environment and

where they occ

in terms of 

geographic

market location. 

In particula

authors examine

the land 

allocation effe

of ethanol 

expansion and its

effects on

devoted to 

feedstock a

competing crop

gy, and 

ur 

 and 

r, the 

cts 

 land 

nd 

s. 

RI 

ket, 

8 to 2016/17. 

ata from F.O. Lichts, 

FAOSTAT, USDA, 

and the European 

Commission 

Directorate General 

for Energy and 

Transport, and 

UNICA. 

Macroeconomic data 

from IMF and Global 

sight. 

ted 

ontinuity of 

ies in the 

oming decade. 

- Domestic and 

international 

policies include 

tariffs, tariff-rate 

quotas, export 

subsidies, 

intervention 

prices, set-aside 

programs, and 

other domestic 

support. 

2 Scenarios: 

1) A 10% exogenous 

increase in the U.S. 

demand for ethanol 

leading to a 3% 

increase in ethanol use.

2) An exogenous 5% 

increase in world 

demand for ethanol 

(specifically, in Brazil, 

China, the EU, and 

India) leading to an 

increase in aggregate 

demand in these 

countries of about 3%/. 

ks 

o corn increases. Land 

and barley increases. 

nt 

FCS; other food use falls by much 

t 

cenario 2: U.S. ethanol production and 

feedstock are barely affected because of the 

segmentation of the U.S. and world markets 

ue to the ethanol import tariff and sugar 

trade protection. U.S. and world ethanol 

markets are segmented by the ethanol tariff. 

Authors believe that removing the ethanol 

tariff would remove the corn land area effect 

of the current U.S. ethanol expansion. 

Analysis uses FAP

model, a multi-mar

partial-equilibrium 

model of world 

agriculture. 

They compute 

average effects of 

ethanol shocks in 

deviations from 2007 

FAPRI baseline and 

calculate proportional 

impact multipliers on 

key variables for 

2007/0

D

In

- Supply and 

demand 

elasticities for 

crop and livestock 

based on 

econometric and 

consensus 

estimates. 

- Supply and 

demand 

elasticities for 

ethanol estima

at the sample 

average of 2000 - 

2004. 

- Profit margins 

do not signal 

entry and exit, 

except in ethanol 

capacity. 

- Baseline 

assumes 

c

polic

c

Scenario 1: A 3% increase in ethanol use 

elicits a much smaller increase in total corn 

use. Derived demand for feedstock 

increases, as corn displaces other grains. 

Corn for feed use falls and seed use 

increases. Corn exports decrease and stoc

fall substantially. Lower DDG prices result. 

There is a short-run departure in prices of 

DDGs and corn, going back to their strong 

correlation in the long-run. 

Land area devoted t

area planted to hay 

There is a sharp reduction in land devoted to

soybeans. 

Food corn use falls slightly; most significa

being H

less. Small reduction in aggregate mea

production. Wholesale prices increase 

moderately while retail prices increase by 

less. 

S

d

 

Page 141 GAO-09-446 Biofuels
Appendix II: Economic Studies Examining the 

Impacts of Increased Biofuel Production on 

U.S. Food and Agricultural Markets 

Model Description 

Objective of the 

study Model/Time/ Data 

Major 

assumptions Scenarios Results 

McDonald, Robinson, and Thierfelder, Energy Economics, Vol. 28, 2006. 

To evaluate the Policy simulations 

effects of

substituting a 

biomass pr

in this case 

switchgrass, for 

crude oil in the 

production of 

petroleum in

U.S. In particular

the study focuses 

on the global 

general 

equilibrium

implications using 

a multi-regi

general 

equilibrium mod

with detailed 

commodity 

markets. 

oduct, 

 the 

, 

on 

el 

ange 

 model 

de 

n 

the 

 U.S. 

- Model 

he 

t 

nd 

ts 

oes not 

e 

 that if 

nd 

ed to 

re 

ts of 

4 Scenarios: 

” direct 

ss 

—

r use of switchgrass. 

4) “With land”—land 

restored to agricultural 

production (such as 

land restored to 

production from 

government “set aside” 

programs) is used to 

produce switchgrass. 

1) “One-on-one”- translates into about a 3% 

uction. 

en 

e 

, 

 welfare effects 

uction less efficient. Decreased 

due 

 increase in total factor productivity of 

etroleum sector would offset productivity 

. 

results — world price of cereals increases 

slightly. As the U.S. imports less crude oil, its 

exchange rate appreciates. Regions that 

depend upon U.S. imports are hurt because 

their imports become more expensive. 

using a global 

computable general 

equilibrium (CGE) 

model. 

The policy ch

simulated in the

is substitution of cru

oil by switchgrass i

the petroleum activity.

The database used is

a Social Accounting 

Matrix (SAM) 

representation of 

Global Trade Analysis

Project (GTAP). For 

this study, it was 

necessary to add a 

switchgrass 

commodity and 

activity accounts to 

the SAM for the

incorporates t

Armington

approach—tha

domestically 

produced a

consumed 

products are

imperfect 

substitutes for

both imports and 

exports. 

-Assumes that 

the private cos

equal the social 

costs; d

consider negativ

externalities of 

crude oil 

consumption. 

-Assumed

6% of US la

was chang

switchgrass 

production, the

would be a 4% 

decline in use of

crude oil activity. 

-Assumed 

equivalent 

variations for 

measure of 

welfare effec

policies.h

1) “One-to-one

substitution—4% 

increase in switchgra

for 4% decrease in 

crude oil. 

2) “Calibrated” 

simulation—6% of land

is devoted to 

switchgrass. 

3) With total factor 

productivity or “TFP”

estimates extent to 

which the efficiency in 

petroleum activity must 

increase to compensate 

fo

increase in land to switchgrass. Production

increases by 4.83% in the U.S. and draws 

land from other food commodity prod

Production in the U.S. of cereals, other 

crops, and livestock decline by betwe

0.22% and 0.4%. . U.S. has small increase in 

welfare of $1.1 billion. While in U.S. there ar

inefficiencies due to switchgrass production

these costs are offset by lower crop 

subsidies for cereals. World

are slightly negative. 

2) This scenario results in 6% of land area 

converted to switchgrass, but this increase 

makes prod

production of cereals, other crops, and 

livestock by 0.40% to 0.69%. Increased 

prices for U.S. cereals between 1.5 and 2%. 

Welfare declines by $2.02 billion in U.S. 

to loss of productivity. 

3) 30%

p

loss of using switchgrass. Increase of U.S

price of cereals between 1.5 and 2%. Same 

increase in land area as in scenario 2. 

Welfare increase to U.S. of $700 million. 

4) Drawing land from “set-aside” program 

nullifies nearly all negative U.S. price 

impacts from earlier scenarios. Welfare 

change in U.S. of $190 million. 

Overall: Impacts same as partial equilibrium 

 

Page 142 GAO-09-446 Biofuels
Appendix II: Economic Studies Examining the 

Impacts of Increased Biofuel Production on 

U.S. Food and Agricultural Markets 

Model Description 

Objective of the 

study Model/Time/ Data 

Major 

assumptions Scenarios Results 

Congressional Budget Office, April 2009. 

The 2009 CBO 

study exam

the period from

April 2007 to April 

2008, during

period in which 

rapidly increasin

production of 

ethanol coincided

with rising prices 

for corn, food, 

and fuel. CBO

estimated

much of the 

in food prices 

during that time

was due 

increase in the 

consumption o

ethanol and 

much the 

ines 

 the 

g 

 how 

rise 

to an 

f 

how 

rise in 

od prices would 

oosted 

federal 

expenditures on 

food assistance 

programs. In 

addition, they 

examine how 

increased use of 

ethanol may 

lower emissions 

of greenhouse 

gases. 

thanol, CBO 

ered 

g 

O 

f 

verage price 

increase of corn. 

For the federal food 

programs, CBO 

estimated the 

changes in the CPI-U 

categories for food 

consumed at home 

and food away from 

home attributable to 

increased production 

of ethanol. 

d rising 

 pass 

sts 

r 

l feed 

er 

ong in 

t” 

d 

n in the 

e 

d 

d 

 the 

t of 

calories were 

consumed at 

nd 34 

ercent of 

calories were 

consumed away 

from home. Also 

assumed 

program 

participation 

remained 

somewhat 

constant. 

s 

ce of 

 – 15% of the increase) 

)

d expenditures on 

d child 

od 

ue 

fo

have b

Time period of April

2007 to April 2008. 

For corn price 

increases attributed

only to e

used estimates of 

supply elasticities, 

along with the actual 

price increases from 

USDA. CBO used a 

range of corn supply 

elasticity estimates of

0.3 to 0.5 gath

from the agricultural 

economics literature. 

To estimate the 

impact of changin

corn prices on the 

CPI for food, CB

used the proportion o

corn used in total food

expenditures and 

a

- Assume

demand allowed 

producers to

along the 

increase in co

to consumers fo

corn, anima

prices, and oth

crops. 

- Assumed all 

food costs were 

passed al

the same period. 

Study notes that 

the computation 

used a “snapsho

from 2007 of the 

consumption an

use of cor

United States. 

- CBO did not 

consider how th

amount of 

biodiesel 

produced in 2007 

and 2008 affecte

prices for corn 

and soybeans. 

- For the foo

programs, 

calculations 

incorporated

assumption that 

66 percen

home a

p

N/A -CBO estimates that corn prices increased 

by between 50 and 80 cents per bushel 

between April 2007 and April 2008. This wa

a range equivalent to between 28 percent 

and 47 percent of the increase in the pri

corn, which rose from $3.39 per bushel to

$5.14 per bushel during the same period. 

-Overall, CBO estimates that from April 2007 

to April 2008, the total rise in food prices 

resulting from expanded production of 

ethanol contributed between 0.5 and 0.8 

percentage points (10

of the 5.1 percent increase in food prices as

measured by the consumer price index (CPI

-To break this down, CBO estimated the 

higher prices of corn resulting from the 

production of ethanol increased consumers’

expenditures on food by an additional 0.2 

percent to 0.4 percent. Similarly, an increase 

in soybean prices raise

food by between 0.2 percent and 0.3 

percent. 

-CBO projected for 2009 that increased 

production of ethanol and higher prices for 

food most likely would account for an 

estimated $600 million to $900 million, or 

roughly 10 percent to 15 percent of the 

change in federal spending for food an

nutrition programs as a result of higher fo

prices.i

-The impact of higher prices for food will 

probably be greater in other countries 

because the percentage of households’ income spent on food is larger and the val

of commodities makes up a bigger share of 

the cost of food. 

 

 

Page 143 GAO-09-446 Biofuels
Appendix II: Economic Studies Examining the 

Impacts of Increased Biofuel Production on 

U.S. Food and Agricultural Markets 

Model Description 

Objective of the 

study Model/Time/ Data 

Major 

assumptions Scenarios Results 

Hayes, Babcock, Fabiosa, Tokgoz, Elobeid, Yu, Dong, Hart, Chavez, Pan, Carriquiry, and Dumortier, Center for Agriculture 

and Rural Development, March 2009. 

In an earlier 

paper, Tokgoz 

(2007) analyzed 

the likely impact 

of the growing 

biofuel sector on 

the grain and 

livestock sectors 

and on consumer 

prices. This report 

updates that 

earlier paper, 

specifically, to 

allow for recen

economic 

changes and 

policy changes 

introduced by the

provisions of the 

EISA, 

endogenizes 

gasoline and 

ethanol 

adjusts for the 

new blenders’

credits, and 

increases 

international 

farm-level 

production co

when energy 

prices rise. 

t 

prices, 

sts 

 to 

er 

l. 

I 

al 

en 

 is 

 a 

act of 

line 

he 

sed on 

n 

ce 

un. 

all 

t 

sses 

xtra 

sts 

orScenarios: 

Baseline: Used the 

provisions of the EISA 

and the energy 

provisions of the farm 

bill of 2008, coupled 

with a crude oil price of 

$75 per barrel. 

1) “High Energy Price” 

scenario crude oil 

prices are increased by 

40%, to $105, and 

increased natural gas 

prices 19%. 

2) “High Energy Price 

—Removal of Biofuel 

Tax Credits” high 

energy price scenario 

without biofuel tax 

credits. 

3) “Removal of Biofuel 

Support” includes the 

baseline $75 crude oil 

price with the 

elimination of tax 

credits, the RFS, and 

import tariffs and duties.

4) The “no bottleneck” 

scenario where the 

energy price is high and 

there are no 

bottlenecks in the 

delivery mechanism for 

ethanol. Assumed that 

market can absorb all 

ethanol mandated by 

RFS plus that by 

market forces. 

6.9 

2 

e of 

of 

rice 

y 11% and corn price falls by 16%. 

land 

anol 

orts rise by 24%. Corn used for 

ble 

d ethanol use is 

approximately 40% of gasoline use. The 

ethanol sector uses more than 13 billion 

bushels of corn, and price is $5.63. 

Food Prices: CPI food component would 

increase by 0.8% for $1 increase in corn. 

Price impacts greatest for grain-intensive 

products such as eggs and poultry and 

impacts of value-added products much 

smaller. 

The model is similar

that used in the earli

paper by Tokgoz et a

(2007, 2008). 

It utilizes the FAPR

model, a broad parti

equilibrium model of 

the world agricultural 

economy that is used

to develop a baseline 

calibrated on data 

from January, 2008.

The projection period 

is extended to the 

year 2022. 

Crude oil price 

projections were tak

from NYMEX and 

extended to 2022 

using a simple linear 

trend. The price of 

unleaded gasoline

calculated through

price transmission 

mechanism. 

- The model was 

revised to allow 

for the imp

ethanol 

production on 

gasoline prices. 

Wholesale price 

of gaso

responsive to t

changes in 

ethanol supply at

the rate of $0.03 

per billion gallons

- Revisions in 

model are made 

to explore longrun equilibrium 

effects. 

- Ethanol capacity 

is fixed at 

2008/09 and 

2009/10 ba

constructio

reports, beyond 

that, model 

solves for it. 

- International ri

and cotton 

models were r

- Higher crude oil 

prices in the U.S. 

increase the 

costs of 

production for 

crops. 

-Assumes tha

the livestock 

producer passes 

along costs in full.

Also, that the 

retailer pa

along these e

production co

on a dollar-f

dollar basis. 

Baseline: Ethanol production from corn 1

billion gallons and uses 5.9 billion bushels of 

corn with total ethanol production at 32.9 

billion gallons. The ethanol price is at 

$1.55/gallon. The price of corn reaches 

$3.73/bushel and corn area planted is 101.

million acres. Soybean area planted is 73.6 

million acres with a price of $9.79/bushel. 

High Energy Price: With a crude oil pric

$105/barrel, total ethanol production from

corn increases by 50% and price increases 

by 18%. The price of corn increases by 

about 20%, and corn net exports decline by 

23%. Soybean planted area decreases by

7%, and price increases by 9%. 

High Energy Price with Removal of Biofuel 

Tax Credits: Total ethanol production from 

corn declines by 35% relative to the case of 

a high petroleum price and a continuation 

biofuel support policies. The ethanol p

declines b

Less area planted to corn leads to more 

available for other crops. 

Removal of Biofuel Support: Ethanol 

production from corn declines by 72%. The

ethanol price increases by 13%, and eth

use declines by 68%. Corn price decreases 

by 18%, planted area decreases by 9%, and 

corn exp

exports and for feed increases. Less area

going into corn means more area is availa

for other crops. 

High Energy Price - No Bottleneck: Cornbased ethanol production reaches 39.8 

billion gallons, an

Source: GAO analysis. 

We report only the results of the ETH60 scenario due to space limitations. The authors also depict 

scenarios, including ETH60CA, which allows corn-to-ethanol to adjust as cellulose-toethanol becomes available in 2012, and ETH60CACD, which delays the cellulose-to-ethanol 

y until 2015, and the corn ethanol indust is allowed to adjust. 

a

two other 

technolog ry

Page 144 GAO-09-446 Biofuels
Appendix II: Economic Studies Examining the 

Impacts of Increased Biofuel Production on 

U.S. Food and Agricultural Markets 

b

We excluded the results for the two scenarios in this article that include the CGE modeling: (1) the 

effects of country biofuel mandates in land-use changes and (2) one incorporating biofuels byproducts. 

c

BIOCOST is a budget generator model developed by the Oak Ridge National Laboratory to estimate 

d

We report on only certain questions or objectives posed by the Texas A&M study that are pertinent to 

 a arios f

th t

er ye

on

ange in th

t t n 

G al Econ

l

am

t Pro ro

the cost of producing bioenergy crops. 

our analysis. 

e

We report on only

study regarding bo

f

Billion gallons p

g

Not applicable. 

h

Equivalent variati

make them as well o

welfare effect of tha

(Deardorff’s Online 

i

These programs inc

Food Stamp program

 limited number of scen

 the first and second genera

ar. 

s is the amount of money tha

ff as a specified ch

or the Biomass Research and Development Board 

ion biofuels analyses. 

t, paid to a person, group, or whole economy, would 

e economy. It provides a monetary measure of the

 not in general the same as, compensating variatio

omics). 

tion Assistance Program, formerly known as the 

s such as the National School Lunch Program, the

grams. 

 change that is similar to, bu

lossary of Internation

uded the Supplemental Nutri

 and Child Nutrition Progr

School Breakfas gram, and other, smaller p

Page 145 GAO-09-446 Biofuels
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Environmental Impacts of Biofuels 

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8 on Science

xpress. 

roducer and Consumer of Energy, Arlington, VA, June 24-25, 2004. 

Schmer M.R., Vogel K.P, Mitchell R.B., and Perrin R.K. “Net Energy of 

Cellulosic Ethanol from Switchgrass,” Proceedings of the National 

Academy of Sciences, vol. 105, no. 2 (2008): 464-469. 

Searchinger T., Heimlich R., Houghton R.A., Dong F., Elobeid A., Fabi

J., Tokgoz S., Hayes D., and Yu T. “Use of U.S. Croplands for Biofuels

Increases Greenhouse Gases through Emissions from Land-Use Chan

Science, vol. 319 

Searchinger T., Heimlich R., Houghton R.A., Dong F., Elobeid A., Fabiosa

J., Tokgoz S., Hayes D. and Yu T. “Supporting Online Material to ‘Use of

U.S. Croplands for Biofuels Increases Greenhouse Gases Through 

Emissions from Land-Use Change.’” Published 7 February 200

E

Shapouri H. Duffield J., and McAloon A.J. "The 2001 Net Energy Balance of 

Corn Ethanol." Proceedings on the Conference on Agriculture as a 

P

Page 156 GAO-09-446 Biofuels
Appendix IV: Key Studies on the Lifecycle 

Greenhouse Gas Effects of Biofuels 

Sheehan, J., Aden, A., Paustian, K., Killian, K., Brenner, J., Walsh, M., and 

Nelson, R. “Energy and Environmental Aspects of Using Corn Stover for 

uel Ethanol,” Journal of Industrial Ecology, vol. 7, no. 3-4 (2004): 117-

s 

. 

ewable Fuels Agency. United Kingdom: 2008. 

2006): 1598-1600. 

ction Pathways in the United States.” Sponsored by the U.S. 

epartment of Energy, Office of Energy Efficiency and Renewable Energy. 

, Hong H., and Arora S. "Methods of Dealing with Coroducts of Biofuels in Life-Cycle Analysis and Consequent Results within 

ang M.Q. “Wells-to-Wheels Energy and Greenhouse Gas Emission 

u M., Wang M., Liu J., and Huo H. “Life-Cycle Assessment of Corn-Based 

rgy. 

u M., Wu Y., and Wang M. “Energy and Emission Benefits of Alternative 

F

146. 

Sylvester-Bradley, R. “Critique of Searchinger (2008) and Related Paper

Assessing Indirect Effects of Biofuels on Land-Use Change.” ADAS UK Ltd

Prepared for the U.K. Ren

Tillman D., Hill J., and Lehman, C. “Carbon-Negative Biofuels from LowInput High-Diversity Grassland Biomass,” Science, vol. 314, no. 5805

(

Wang M. and Huo H. “Fuel-Cycle Assessment of Selected Bioethanol 

Produ

D

Argonne National Laboratory Center for Transportation Research, 2006. 

Wang M., Huo H.

P

the U.S. Context," Forthcoming in Energy Policy Journal. Submitted 

November 2008; Revised in June 2009 

W

Results and Issues of Fuel Ethanol.” Chapter from Biofuels, Food and 

Feed Tradeoffs. 2008 (prepublication). 

W

Butanol as a Potential Transportation Fuel,” Sponsored by the U.S. 

Department of Energy, Office of Energy Efficiency and Renewable Ene

Argonne National Laboratory Center for Transportation Research, 2007. 

W

Transportation Liquid Fuels Derived from Switchgrass: A Fuel Life Cycle 

Assessment,” Biotechnology Progress, vol.22 (2006): 1012-1024. 

Page 157 GAO-09-446 Biofuels
Appendix V: Recent Studies on Federal 

Supports for Biofuels 

Page 158 GAO-09-446 

Appendix V: Recent Studies on Federal 

Supports for Biofuels 

Bruce A. Babcock, Center for Agricultural and Rural Development, Iowa 

ongressional Budget Office, The Impact of Ethanol Use on Food Prices 

onfronting Climate Change: A Strategy for U.S. Foreign Policy, (New 

d David R. Just, “The Economics of a Blend Mandate 

r Biofuels” forthcoming American Journal of Agricultural Economics,

s 

il Consumption and Has No Impact on Ethanol Consumption,” 

o. 

arry de Gorter and David R. Just, “The Welfare Economics of the U.S. 

ied 

 2007) 

e Benefits?” Purdue University, paper presented at Biofuels, Food and 

Alternatives,” Department of Agricultural Economics, Purdue University, 

aper presented at Biofuels, Food, and Feed Tradeoffs Conference, St. 

Louis, MO (April 12-13, 2007). 

Pat Westhoff, Wyatt Thompson, and Seth Meyer, “Impact of Selected US 

Ethanol Policy Options,” Food and Agricultural Policy Research Institute, 

Report No. 04-09, University of Missouri (Columbia, MO: May 2009). 

State University, Statement before the U.S. Senate Committee on 

Homeland Security and Governmental Affairs, Hearing on Fuel Subsidies 

and Impact on Food Prices (May 7, 2008). 

C

and Greenhouse-Gas Emissions (Washington, D.C.: April 2009). 

Council on Foreign Relations, Independent Task Force Report No. 61, 

C

York, N.Y.: June 2008). 

Harry de Gorter an

fo

vol. 91: in press (2009). 

Harry de Gorter and David. R. Just, “The Law of Unintended 

Consequences: How the U.S. Biofuel Tax Credit with a Mandate Subsidize

O

Department of Applied Economics and Management Working Paper N

2007-20, Cornell University (Oct. 23, 2007). 

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1024525

H

Ethanol Consumption Mandate and Tax Credit.” Department of Appl

Economics and Management Working Paper unpublished, Cornell 

University (Nov. 4, 2008). 

Bruce Gardner, “Fuel Ethanol Subsidies and Farm Price Support,” Journal 

of Agricultural & Food Industrial Organization, vol. 5, iss. 2 (Dec.

Farzad Taheripour and Wallace E. Tyner, “Ethanol Subsidies, Who Gets 

th

Feed Tradeoffs Conference, St. Louis, MO (April 12-13, 2007). 

Wallace E. Tyner and Farzad Taheripour, “Future Biofuels Policy

p

 Biofuels 
Appendix VI: Economic Linkages of the Corn 

Ethanol Industry to Food and Agricultural Appendix VI: Economic Linkages of the Markets Corn 

Ethanol Industry to Food and Agricultural 

Markets 

Figure 8 depicts some of the complex economic linkages of the ethanol 

industry to food and agricultural markets. Each of the markets is s

a box and is related by supply and demand factors to other markets. 

Additional boxes, such as the one called “B

hown as 

iofuel Drivers,” depict external 

nergy factors that drive these markets. In the figure, the boxes are 

s 

arket, such as the Renewable Fuel Standard (RFS), increase the demand 

ers of change or factors changing within a market. 

or example, within the ethanol market, an increase in demand for ethanol 

e

connected by arrows, signifying that a change in a driver or a market leads 

to a change in another market. For instance, drivers of the biofuel

m

for ethanol in the ethanol market, and thus the demand for corn for 

ethanol in the corn market. Within the boxes are a series of bullets 

indicating either the driv

F

causes an increase in the price of ethanol, which causes an increase in 

production of both ethanol and ethanol by-products. 

Page 159 GAO-09-446 Biofuels
Appendix VI: Economic Linkages of the Corn 

Ethanol Industry to Food and Agricultural 

Markets 

Figure 8: Economic Linkages of Ethanol Production to Food and Agricultural Markets 

RFS

Ethanol tax credit

Petroleum prices

Biofuels drivers

Weather

Agricultural policies

Trade policies

External factors

Land

Fertilizer

Pesticides

Input markets

Feed by-product market

Ethanol market

Demand for ethanol

Ethanol price

Ethanol production

Corn by-product production

Corn by-product prices

Price of substitutes for 

by-products

Livestock market

Feed prices

Livestock inventories

Price of livestock

Corn for export

Other crops for export

Livestock export and beef, 

turkey, pork, and poultry

Export market

Price of food containing corn

Price of food containing other 

crops

Price of beef, turkey, pork, and 

poultry

Consumer market

Corn prices and production

Other crops’ prices and production

Livestock prices and production

Input prices

Government payments

Farm returns

Source: GAO.

External factors

Input markets

Ethanol and agricultural markets

Final markets

Linkages and feedback effects

Crop market

Corn

 Demand for 

corn for ethanol

 Total corn 

demand

 Price of corn

Other crops

 Soybean prices

 Barley prices

 Wheat prices

 Cotton prices

In the upper left-hand corner of figure 8, petroleum prices (in particular, 

gasoline prices for which ethanol is a substitute), the ethanol tax credit, 

and the Renewable Fuel Standards are all primary “biofuels drivers,” 

leading to increases in the price and production of ethanol. As the ethanol 

Page 160 GAO-09-446 Biofuels
Appendix VI: Economic Linkages of the Corn 

Ethanol Industry to Food and Agricultural 

Markets 

price rises, so does the derived demand 

prices in the crop market. Assuming overall prod

for corn for ethanol and thus corn 

uction of corn remains 

constant during the period in question, corn used for ethanol would 

increase and corn used for feed is reduced. The increased corn price 

ripples down into the livestock market, increasing feed costs, and the 

price of livestock. At the same time, with greater ethanol production, there 

are larger supplies of the ethanol by-product, dried distiller’s grains 

(DDG), an animal feed by-product, reducing its price in the feed market. 

To a certain extent, the lower-priced DDGs counterbalance the rise in corn 

prices in the livestock market. Also, instead of corn for feed, livestock 

producers may be able to substitute other crops in livestock rations, such 

as barley or hay. However, the effects of higher corn prices would very 

likely dominate for livestock such as poultry, swine, and dairy cows, since 

in general corn is a more important feed source than DDGs and there are 

limits on substituting by-products for corn. In the short-run, some 

producers may be able to mitigate the effect of higher corn prices by 

decreasing livestock inventories. Nevertheless, these cost increases lead to 

an overall decrease in livestock production and an increase in livestock 

prices. 

In the longer-term, the higher demand for ethanol and higher corn prices 

affect farmers’ future expectations, providing incentives for different crop, 

land allocation, and input decisions. For instance, with higher corn prices, 

farmers may switch from a corn-soybean rotation to a corn-corn rotation. 

With reduced supplies of other crops, such as soybeans and barley, their 

prices also increase. The higher demand for and price of corn and other 

crops would also affect the demand for and prices of agricultural inputs 

associated with crop production. For instance, the higher demand for corn 

for ethanol may provide economic incentives for farmers to take land out 

of pasture or rangeland and devote this land to crop cultivation. Prices or 

rental rates for cropland would then be bid up. The increased land devoted 

to crop cultivation also increases the demand for and prices of other 

inputs such as fertilizer and pesticides. Furthermore, these increased 

prices in the input market would have feedback effects on the corn and 

other crop and livestock markets. 

For the farmer, the impact of the increase in corn prices as well as other 

crop prices would be an increase in net farm income. This may be 

mpered somewhat by the increasing costs of inputs. In the near term, for 

s 

te

the livestock producer, increased feed costs may lead to lower overall 

returns to livestock production and lower net farm income. The main 

short-term adjustment option to higher costs for livestock producers i

liquidation which would increase revenue temporarily to the individual 

Page 161 GAO-09-446 Biofuels
Appendix VI: Economic Linkages of the Corn 

Ethanol Industry to Food and Agricultural 

Markets 

producer. However, this could depress meat prices in the market and 

ultimately prevent livestock producers from covering higher feed costs. 

Also, in the absence of wide-spread herd liquidation, any short-term 

increase in meat prices could trigger an increase in imports from lowe

cost producers overseas, which in turn may lower prices. Many analyst

see the livestock sector shrinking as ethanol expansion could ultimately 

lead to a smaller U.S. sector and more production shifting overseas. 

as government payments to farmers, increased ethanol demand would lea

to lower counter-cyclical payments and marketing loan benefits because 

crop prices would be supported above the levels triggering these progra

benefits. 

For consumers, higher prices for corn and other crops and livestock are 

eventually passed on in the form of higher food prices, although the share 

of the farm value and the amount of pass-through of price increase

be small. These food products for which consumer prices are expecte

rise are meat or other processed food products that contain corn (such as 

high-fructose corn syrup) or other crops. 

r 

s 

As far 

d 

m 

s may 

d to 

In the export market, increases in the price of corn and other crops, all 

e 

nd 

e, a production decline caused by a 

drought could amplify the price impacts of a large RFS target on the corn 

else being equal, would generally cause U.S. corn exports to decrease 

compared to competing exporters. However, depending on other factors, 

such as world demand, exchange rates, stock levels, and world weather 

patterns, higher corn and other crop prices may not cause exports to 

contract and receipts from these exports may even increase. 

Conversely, if the biofuel drivers were to decrease, all else being equal, th

impacts would go in the opposite direction. For instance, if gasoline prices 

decrease, reducing the demand for ethanol, ethanol prices and production 

would also decrease. This could trickle down to other agricultural 

markets, contributing to lower crop prices, including the price of corn and 

other crops, livestock prices, the prices of inputs, and eventually the 

prices of food. Outside factors, such as weather, agricultural policies, a

trade policies can either lessen or increase the impact of ethanol on crop

and livestock markets. For instanc

market. 

Page 162 GAO-09-446 Biofuels
Appendix VII: Summary of Researchers’ 

Assumptions and Conclusions about Lifecycle 

Greenhouse Gas Emissions of Biofuels 

Production 

Page 163 GAO-09-446 Biofuels 

This appendix describes the key assumptions and conclusions of 17 

researchers we interviewed who have published work in the past 4 ye

on the lifecycle greenhouse gas effects of biofuels production. See 

appendix IV for a bibliography of the 46 research articles we reviewed. 

sumptions and conclusions influencing greenhouse gas emission results 

ars 

Researchers As

Timothy Searchinger 

(Princeton University) 

•

•

• feedstocks will be grown on productive, not marginal land 

• No energy is allocated to co-products for cellulosic feedstocks 

Food crops for biofuels will trigger higher crop prices and induce farmers worldwide to 

clear more forest and grassland 

Carbon sequestered will always be higher if the land reverts to its native form than if it 

is used for biofuel feedstocks 

Cellulosic

Ralph Heimlich 

(Agricultural Conservation Economics) 

•

•

• edstocks 

No new land will be available for biofuel feedstock production—these crops will come 

from existing croplands or “natural” lands. 

Yields will continue to increase at the same rate as they have historically, but yields will 

not respond to price increases 

General equilibrium models do not adequately estimate costs of production on marginal 

land 

No energy is allocated to co-products for cellulosic fe

•

Tad Patzek 

(University of Texas) 

•

•

•

Includes cumulative free energy consumed in farming and production as opposed to 

limiting inputs to fossil fuels 

Includes as energy inputs both the photosynthetic energy value of corn grain as well as 

the energy used to restore biodiversity damage created by biofuel feedstocks 

Processing co-products should be returned to the field 

David Pimentel 

(Cornell University) 

•

• sic ethanol 

• Corn stover or other agricultural residue would intensify soil erosion and further 

•

Using lignin as fuel for cellulosic conversion might not save energy 

Uses fossil fuels as utility energy inputs for both corn ethanol and cellulo

degrade ecosystems by removing nutrients and other species and should not be used 

for ethanol 

Includes energy inputs from farm labor, farm machinery, hybrid corn, and irrigation 

Holly Gibbs 

(University of Wisconsin) 

• d to 

•

•

•

• d improvements could increase biofuel production and in turn improve the 

ayback time 

• No energy is allocated to co-products 

Industrialized nations with biofuel mandates are unlikely to have the land neede

meet the demand for agricultural biofuels 

Expansion of biofuels into productive tropical ecoystems will always lead to net carbon 

emissions for decades to centuries 

Expanding into degraded or already cultivated land will provide almost immediate 

carbon savings 

Increased demand for crop-based biofuels will likely require expanding agricultural 

production at the expense of tropical ecosystems 

Crop yiel

carbon p

Appendix VII: Summary of Researchers’ 

Assumptions and Conclusions about 

Lifecycle Greenhouse Gas Emissions of 

Biofuels Production 
Appendix VII: Summary of Researchers’ 

Assumptions and Conclusions about Lifecycle 

Greenhouse Gas Emissions of Biofuels 

Production 

Page 164 GAO-09-446 Biofuels

Researchers Assumptions and conclusions influencing greenhouse gas emission results 

Joseph Fargione 

(The Nature Conservancy) 

•

•

Agricultural land diverted to biofuel production from food crops causes land in 

undisturbed ecosystems to be converted to biofuel crop production, resulting in large 

carbon debts 

Some cellulosic feedstocks may also accelerate land clearing by adding to the 

agricultural land base needed for biofuels 

• No-till farming might not result in soil carbon savings 

• Crops grown on abandoned agricultural land or from waste biomass may not accelerate

land clearing 

• Energy is allocated to co-products using market-based method 

Jason Hill 

(University of Minnesota) 

nd reverts to its native form if the biofuel 

nstead of land that 

• Carbon saved might not be higher if the la

feedstocks sequester more carbon than the original land 

• Used abandoned land as test sites for high-diversity grassland i

could still be used for farming 

• No-till farming might not affect the amount of carbon lost 

• Recent advances in crop yields and in system machinery reduce biofuel energy impacts

Erik Nelson 

(University of Minnesota) 

ifecycle analyses is how land-use change is linked to 

ht of the co-product 

• The primary information gap in l

biofuels, since researchers cannot always differentiate between existing baseline 

changes and changes due to biofuels 

• Energy allocated to co-products using mass balance – the weig

versus the weight of ethanol 

• The method used to allocate energy to the co-product can change the final energy 

impacts 

Michael Wang 

(Argonne National Laboratory, DOE) 

cts 

• Including land-use changes is correct, but current models cannot project the extent to 

which land-use changes might affect biofuel energy impacts 

• Cellulosic feedstocks may not cause indirect land-use change impa

• Increased yields and conversion productivity will reduce greenhouse gas impacts 

• Agricultural practices and utility process fuels can reduce impacts 

• Energy is allocated to co-products using economic displacement 

Mark Delucchi 

(University of California at Davis) 

ed to measure land-use change have significant uncertainties and 

e of land-use change effects 

• Methods us

omissions, including market-mediated effects, land-use change, climate impacts of 

emissions, and uncertain and highly variable data 

• There is not one single model and no well-accepted method that all researchers agree 

is the right one for calculating the magnitud

• Changes in carbon stocks related to deforestation might be the most important factor 

associated with land-use conversion

• The environmental performance of ethanol varies greatly depending on production

processes 

Ken Vogel and Marty Schmer 

(Agricultural Research Service, USDA) 

ero-loss of soil carbon 

• Switchgrass will be grown on marginal land, not productive land 

• There is no proof regarding indirect land-use change—high commodity prices from 

feedstocks may not lead to land change 

• Lignin from cellulosic feedstocks can be used to power biorefineries 

• No-till farming technique will lead to a z
Appendix VII: Summary of Researchers’ 

Assumptions and Conclusions about Lifecycle 

Greenhouse Gas Emissions of Biofuels 

Production 

Researchers Assumptions and conclusions influencing greenhouse gas emission results 

Bruce Dale 

(Michigan State University) 

• Current economic and equilibrium models cannot project global land-use, includ

unused and marginal land 

• Productive use

ing 

 could made of cleared timber, farmers could use conservation tillage or 

nitrogen leaching from the soil and 

e land requirements if the crop is 

nused land should be included in the modeling 

cover crops instead of plow tillage 

• Cover crops grown in the fall could reduce 

greenhouse gas emissions, as well as lead to negativ

harvested as an animal feed 

• Marginal and u

Kenneth Cassman 

of Nebraska-Lincoln) 

odity price increases 

r 

e 

ology breakthroughs, can 

e 

(University 

• Does not include indirect land-use changes in response to comm

because such indirect effects are applied generally to all corn ethanol at a national o

global level and are not specific to a particular corn-ethanol biorefinery 

• Updated energy efficiencies in new ethanol plants that have initiated production sinc

2005 can reduce greenhouse gas emissions 

• Advances in agronomic science, not in genomic or biotechn

result in increased corn yields and reduced environmental impacts 

• Includes updated energy efficiencies in new ethanol plants, including plants that are 

located in close proximity to cattle feeding operations to reduce co-product greenhous

gas emissions 

• Energy is allocated to co-products using displacement method 

• Research is not clear on increases and decreases in biofuel acreage in response to 

prices 

• The amount of existing carbon in soil and biomass is unknown 

• At least one feedstock could be grown and harvested on Conservation Reserve 

Program land that would not compete with food and feed cropland 

Madhu Khanna 

(University of Illinois) 

Steve Del Grosso 

(Texas A&M University) 

• Researchers have to make assumptions about the elasticity of the supply of feed that 

might affect measurement results for indirect land-use change impacts 

• Conversion to no-tillage at the national scale could mitigate about 20 percent of U.S. 

agricultural emissions 

Bruce McCarl re available on how 

, 

(Texas A&M University) 

• Indirect land-use change does affect analysis results, but no data a

much land would be replaced 

• Used a model that does not include alternative sources for utilities, such as biomass

but currently uses the average for the region 

• Satellite data to find implied land-use changes are not accurate 

• Allocates energy to co-products based on both the displacement method and market 

price 

Source: GAO’s analysis of greenhouse gas literature and interviews conducted with key researchers. 

Page 165 GAO-09-446 Biofuels
Appendix VIII: Comments from the Appendix VIII: Comments from the Department of Agriculture 

Department of Agriculture 

Page 166 GAO-09-446 Biofuels 
Appendix VIII: Comments from the 

Department of Agriculture 

Page 167 GAO-09-446 Biofuels
Appendix VIII: Comments from the 

Department of Agriculture 

Page 168 GAO-09-446 Biofuels
Appendix VIII: Comments from the 

Department of Agriculture 

Page 169 GAO-09-446 Biofuels
Appendix IX: Comments from the Department Appendix IX: Comments from the of Energy 

Department of Energy 

Page 170 GAO-09-446 Biofuels 
Appendix IX: Comments from the Department 

of Energy 

Page 171 GAO-09-446 Biofuels
Appendix X: Comments from the Appendix X: Comments from the Environmental Protection Agency 

Environmental Protection Agency 

Page 172 GAO-09-446 Biofuels 
Appendix X: Comments from the 

Environmental Protection Agency 

Page 173 GAO-09-446 Biofuels
Appendix X: Comments from the 

Environmental Protection Agency 

Page 174 GAO-09-446 Biofuels
Appendix XI: GAO Contacts and Staff 

Acknowledgments 

Page 175 GAO-09-446 

Appendix XI: GAO Contacts and Staff 

 Biofuels 

Mark E. Gaffigan, (202) 512-3841 or gaffiganm@gao.gov for energy issues 

Anu K. Mittal, (202) 512-3841 or mittala@gao.gov for environmental issues 

Lisa R. Shames, (202) 512-3841 or shamesl@gao.gov for agricultural issues 

In addition to the individuals named above, Richard Cheston, Assistant 

Director; Elizabeth Erdmann, Assistant Director; James Jones, Assistant 

Director; Sarah Lynch; Micah McMillan; Tim Minelli; Kevin Bray; Erin 

Carson; Jay Cherlow; Julie Corwin; Barbara El Osta; Cindy Gilbert; Rachel 

Girshick; Marietta Mayfield; Charles K. Orthman; Tim Persons; Jeanette 

Soares; MaryLynn Sergent; Ben Shouse; Anne Stevens; Barbara 

Timmerman; Swati Thomas; Lisa Vojta; and Rebecca Wilson made key 

contributions to this report. 

Acknowledgments 

GAO Contacts 

Staff 

Acknowledgments 

(360973, 360978, 361029) 
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