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GAO: More Biofuel Production Needed

October 12, 2009

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The production of biofuel, including biodiesel and ethanol, must be increased in order to meet the requirements of the 2007 Energy Independence and Security Act
, according to a recently released report by the Government Accountability Office. The report examines the effects of increased biofuel, the challenges to meeting the act's goals, and recommendations for moving forward.

In 2007, the renewable fuel standard was expanded to require that U.S. transportation fuel contain 9 billion gallons of renewable fuels in 2008, increasing annually to 36 billion gallons in 2022. This 2022 goal includes at least 21 billion gallons of advanced biofuels, which are still in the early stages of commercial production in the U.S., the report says.

In addition, the report points to several challenges preventing the growth in production of biofuels. Ramping up production would most likely impact commodity prices. It would also have negative environmental effects, including impairing water quality, reducing water availability, degrading air and soil quality and adversely affecting wildlife habitat.

To overcome these challenges, the report provides several recommendations, including urging Congress to require the Environmental Protection Agency to develop a strategy to assess lifecycle environmental effects of increased biofuels. The report also recommends that the EPA, the Department of Energy and the United States Department of Agriculture coordinate their efforts to address uncertainties in lifecycle greenhouse gas analysis. These agencies should also give priority to research and development of biofuels to address issues surrounding the blend wall, or the amount of biofuel that can safely be used in existing vehicles.

In addition, the GAO believes the EPA should examine whether the Volumetric Ethanol Excise Tax Credit, a 45-cent per gallon federal tax credit, should be revised. According to the report, the tax credit is not expected to stimulate ethanol consumption this year, unless crude oil prices rise significantly.

"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," the report says.

To view the full report, click here.


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