Dependence on foreign sources of crude oil, concerns over global climate change, and the desire to promote domestic rural economies have raised interest in renewable biofuels as an alternative to petroleum in the U.S. transportation sector. In response to this interest, U.S. policymakers have enacted a variety of policies, at both the state and federal levels, to directly support U.S. biofuels production and use (although some of these policies have expired). Policy measures have included blending and production tax credits to lower the cost of biofuels to end users, an import tariff to protect domestic ethanol from cheaper foreign-produced ethanol, research grants to stimulate the development of new biofuels technologies, loans and loan guarantees to facilitate the development of biofuels production and distribution infrastructure, and, perhaps most important, minimum usage requirements to guarantee a market for biofuels irrespective of their cost. As a result of expanding policy support, biofuels (primarily corn-based ethanol and biodiesel) production has grown significantly (up over 600%) since the early 2000s. However, despite the rapid growth, U.S. biofuels consumption remains small as a component of U.S. motor fuels, comprising about 5.7% of total transportation fuel consumption (on a gasoline-equivalent basis) in 2012. Initially, the most significant federal programs for supporting biofuels were tax credits for the production or blending of ethanol and biodiesel into the nation's fuel supply. However, under the Renewable Fuel Standard (RFS)—first established in 2005, then greatly expanded in 2007 (as described below)—Congress mandated biofuels use. In the long term, the expanded RFS usage mandate is likely to prove more significant than tax incentives in promoting the use of these fuels. This report focuses specifically on the RFS. It describes the general nature of the biofuels RFS and its implementation, and outlines some of the emerging issues related to the sustainability of the continued growth in U.S. biofuels production needed to fulfill the expanding RFS mandate, as well as the emergence of potential unintended consequences of this rapid expansion. This report does not address the broader public policy issue of how best to support U.S. energy policy. Congress first established a Renewable Fuel Standard (RFS)—a mandatory minimum volume of biofuels to be used in the national transportation fuel supply—in 2005 with the enactment of the Energy Policy Act of 2005 (EPAct, P.L. 109-58 ). The initial RFS (referred to as RFS1) mandated that a minimum of 4 billion gallons of renewable fuel be used in the nation's gasoline supply in 2006, and that this minimum usage volume rise to 7.5 billion gallons by 2012 ( Table 1 ). Two years later, the Energy Independence and Security Act of 2007 (EISA, P.L. 110-140 ) superseded and greatly expanded the biofuels mandate to 36 billion gallons by 2022. In addition to gasoline, the expanded RFS (referred to as RFS2) applies to most transportation fuel used in the United States—including diesel fuel intended for use in highway motor vehicles, non-road, locomotive, and marine diesel (MVNRLM). RFS2 directly supports U.S. biofuels production by providing a mandatory market for qualifying biofuels—fuel blenders must incorporate minimum volumes of biofuels in their annual transportation fuel sales irrespective of market prices. By guaranteeing a market for biofuels, RFS2 substantially reduces the risk associated with biofuels production, thus providing an indirect subsidy for capital investment in the construction of biofuels plants. As such, the expanding RFS is expected to continue to stimulate growth of the biofuels industry, particularly for the advanced and cellulosic biofuels categories that are potentially in short supply relative to their growing RFS mandates. EISA was passed on December 19, 2007, and EPA issued its final rule to implement and administer the RFS2 on February 3, 2010. The new rule builds upon the earlier rule for RFS1. However, there are four major distinctions between RFS1 and RFS2: First and foremost, RFS2 increases the mandated usage volumes and extends the time frame over which the volumes ramp up through at least 2022 ( Table 1 ). Second, RFS2 subdivides the total renewable fuel requirement into four separate but nested categories—total renewable fuels, advanced biofuels, biomass-based diesel, and cellulosic biofuels—each with its own volume requirement or standard (described below). Third, biofuels qualifying under each nested RFS2 category must achieve certain minimum thresholds of lifecycle greenhouse gas (GHG) emission performance, with exceptions applicable to facilities existing or under construction when EISA was enacted ( Table 2 ). Fourth, under RFS2 all renewable fuel must be made from feedstocks that meet a revised definition of renewable biomass, including certain land use restrictions. The RFS is administered by the Environmental Protection Agency (EPA). EPA issued its final rule for administering RFS1 in April 2007. This rule established detailed compliance standards for fuel suppliers, a tracking system based on renewable identification numbers (RINs) with credit verification and trading, provisions for treatment of small refineries, and general waiver provisions. EPA rules for administering RFS2 (issued in February 2010) built upon the earlier RFS1 regulations and include specific deadlines for announcing annual standards, as well as greater specificity on potential waiver requests and RIN oversight. RFS2 includes four biofuel categories, each with a specific volume mandate and lifecycle GHG emission reduction threshold (as compared to the lifecycle GHG emissions of the 2005 baseline average gasoline or diesel fuel that it replaces). Each is also subject to biomass feedstock criteria. Total renewable fuels . The scheduled mandate grows from nearly 13 billion gallons (bgals) in 2010 to 36 bgals in 2022. Biofuels from new facilities must reduce lifecycle GHG emissions by at least 20% relative to conventional fuels to qualify as a renewable fuel. Most biofuels, including corn-starch ethanol from new facilities, qualify for this mandate. However, the volume of corn-starch ethanol included in the RFS is capped at 13.8 bgals in 2013, but grows to 15 bgals by 2015 and is fixed thereafter. Advanced biofuels . The mandate grows from nearly 1 bgals in 2010 to 21 bgals in 2022. Advanced biofuels must reduce lifecycle GHG emissions by at least 50% to qualify. A subcomponent of the total renewable fuels mandate, this category includes biofuels produced from non-corn feedstocks—corn-starch ethanol is expressly excluded from this category. Potential feedstock sources include grains such as sorghum and wheat. Imported Brazilian sugarcane ethanol, as well as biomass-based biodiesel and biofuels from cellulosic materials (including non-starch parts of the corn plant such as the stalk and cob), also qualify. The total advanced biofuel mandate for 2013 is 2.75 bgals (ethanol equivalent). Cellulosic and agricultural waste-based biofuel . The mandate grows from 100 million gallons in 2010 to 16 bgals in 2022 (subsequently, RFS mandates were lowered for 2010, 2011, 2012, and 2013—see discussion under " Waivers to Annual Biofuel Standards "). Cellulosic biofuels must reduce lifecycle GHG emissions by at least 60% to qualify. Cellulosic biofuels are renewable fuels derived from cellulose, hemicellulose, or lignin. This includes cellulosic biomass ethanol as well as any biomass-to-liquid fuel such as cellulosic gasoline or diesel. Biomass-based biodiesel (BBD) . The mandate grows from 0.5 bgals in 2009 to 1 bgals in 2012. Any diesel fuel made from biomass feedstocks (including algae) qualifies, including biodiesel (mono-alkyl esters) and non-ester renewable diesel (e.g., cellulosic diesel). The lifecycle GHG emissions reduction threshold is 50%. EPA established the 2013 mandate at 1.28 bgals (actual volume). EPA is proposing the same 1.28 bgals (actual volume) for 2014. BBD produced from cellulosic feedstocks could potentially be used to simultaneously meet the cellulosic and BBD standards. RFS2 is essentially a biofuels mandate with limits on corn-starch ethanol inclusion and carve-outs for higher-performing biofuels ( Figure 1 )—as measured by reductions in lifecycle GHG emissions. The cap on the volume of ethanol derived from corn starch that can be counted under the RFS is intended to encourage the use of non-corn-based biofuels. As a result, corn-starch ethanol blended in excess of its annual cap is not credited toward the annual total RFS. Because of the nested nature of the biofuel categories, any renewable fuel that meets the requirement for cellulosic biofuels or biomass-based diesel (BBD) is also valid for meeting the advanced biofuels requirement. Thus, if any combination of cellulosic biofuels or BBD were to exceed their individual mandates, the surplus volume would count against the advanced biofuels mandate, thereby reducing the potential need for imported sugar-cane ethanol or other fuels to meet the unspecified portion of the advanced biofuels mandate (which grows to 21 bgals by 2022). Similarly, any renewable fuel that meets the requirement for advanced biofuels is also valid for meeting the overall total renewable fuel requirement (which grows to 36 bgals by 2022).