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Thursday, October 28, 2010

Cellulosic Ethanol: Feedstocks, Conversion Technologies, Economics, and Policy Options


Randy Schnepf, Coordinator
Specialist in Agricultural Policy

In the Energy Independence and Security Act of 2007 (P.L. 110-140), Congress mandated the use of a large and rapidly increasing volume of biofuels as part of the U.S. national transportation fuel base. In particular, the share of cellulosic biofuels is mandated to grow to 16 billion gallons by 2022—a daunting challenge considering that no commercial production existed as of mid-2010. Cellulosic biofuels can be produced from almost any sort of biomass. As a result, a variety of biomass types that can be produced or collected under a range of geographic settings are potential feedstock sources. However, part of the mandate’s challenge will be encouraging farmers to produce or collect non-traditional biomass materials that require multiple growing seasons to become established, and for which markets currently do not exist. Participation represents a substantial risk for producers, and even under the most optimistic conditions, U.S. agriculture will be challenged to produce the enormous volume of biomass needed to meet the biofuels mandate.

Potential biomass feedstocks are numerous and widespread throughout the United States, and include woody biomass, perennial grasses, and agricultural and forest residues. Each type of biomass faces tradeoffs in terms of production, storage, and transportation. Dedicated energy and tree crops have large up-front establishment costs and will likely take several years to produce a commercial harvest, but can produce high yields with relatively low maintenance costs thereafter. Residues are nearly costless to produce, but confront difficult collection strategies and do not always produce uniform biomass for processing. Agricultural residues face complicated trade-offs between soil nutrient loss and biomass yield, as well as questions about the optimal timing strategy for harvesting the main crop and residue (either jointly or separately). Logging residues confront a tradeoff with energy production at the plant (via burning).

None of the potential feedstocks (other than starch from corn) are economical to convert into biofuels under current commercial technology without substantial federal policy intervention. In addition to federal policy and the choice of feedstock, the processing technology used, the distribution infrastructure, and blending rates are expected to play major roles in the economic viability of cellulosic biofuels. Different processing technologies yield different biofuels in terms of energy content and usability, while also strongly influencing the economic viability of biofuels production. Ethanol produced under current biochemical processes yields only 67% of the energy of an equivalent volume of gasoline, and (due to its chemical properties) cannot use the same storage tanks, pipelines, and retail pumps as gasoline. In contrast, synthetic petroleum products (i.e., green hydrocarbons) obtained from biomass processed using more costly thermochemical technology yield an energy content nearly equal to petroleum fuels and can be used in existing fuel infrastructure. Currently ethanol is blended in most gasoline at about a 10% rate. If the rising usage mandate is to be met, the biofuels blending rate will necessarily have to increase, at which point the energy equivalence of a biofuel will likely influence the choice of processing technology, distribution infrastructure, and federal policy incentives.

Many uncertainties remain concerning biomass producer participation rates, the choice of biomass, and associated yields and costs of production, harvest, storage, and transportation, as well as contractual marketing arrangements, plant location, and conversion technology, among other issues. This report attempts to summarize the current state of knowledge regarding potential biomass feedstocks, production and marketing constraints, processing technologies, and the economics of biomass from field to fuel under current and hypothetical policy circumstances. As such, it is intended to serve as a reference for policymakers interested in understanding the complexity underlying the development of a large-scale, biomass-based fuel system. An executive summary of the report is available in Chapter 1.



Date of Report: October 22, 2010
Number of Pages: 78
Order Number: R41460
Price: $29.95

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Monday, October 25, 2010

Agriculture-Based Biofuels: Overview and Emerging Issues


Randy Schnepf
Specialist in Agricultural Policy

Since the late 1970s, U.S. policymakers at both the federal and state levels have enacted a variety of incentives, regulations, and programs to encourage the production and use of agriculture-based biofuels. Initially, federal biofuels policies were developed to help kick-start the biofuels industry during its early development, when neither production capacity nor a market for the finished product was widely available. Federal policy has played a key role in helping to close the price gap between biofuels and cheaper petroleum fuels. Now, as the industry has evolved, other policy goals (e.g., national energy security, climate change concerns, support for rural economies) are cited by proponents as justification for continuing policy support.

The U.S. biofuels sector has responded to these government incentives by expanding output every year since 1996, with important implications for the domestic and international food and fuel sectors. The production of ethanol (the primary biofuel produced in the United States) has risen from about 175 million gallons in 1980 to 10.7 billion gallons per year in 2009. U.S. biodiesel production is much smaller than its ethanol counterpart, but has also shown strong growth, rising from 0.5 million gallons in 1999 to an estimated 776 million gallons in 2008 before being impeded by the nationwide financial crisis.

Despite this rapid growth, total agriculture-based biofuels production accounted for only about 4.3% of total U.S. transportation fuel consumption in 2009. Federal biofuels policies have had costs, including unintended market and environmental consequences and large federal outlays (estimated at $6 to $8 billion in 2009). Despite the direct and indirect costs of federal biofuels policy and the small role of biofuels as an energy source, the U.S. biofuels sector continues to push for greater federal involvement. But critics of federal policy intervention in the biofuels sector have also emerged.
  • Current issues and policy developments related to the U.S. biofuels sector that are of interest to Congress include the following: 
  • Many federal biofuels policies (e.g., tax credits and import tariffs) require routine congressional monitoring and occasional reconsideration in the form of reauthorization or new appropriations funding. 
  • The 10% ethanol-to-gasoline blend ratio—known as the “blend wall”—poses a barrier to expansion of ethanol use. The Environmental Protection Agency (EPA), in October 2010, issued a waiver to allow ethanol blending (per gallon of gasoline) for standard engines of up to 15% for use in model year 2007 and newer light-duty motor vehicles. However, the vehicle limitation to newer models, coupled with infrastructure issues, is likely to limit rapid expansion of blending rates. 
  • The evolution of EPA’s methodology for estimating lifecycle greenhouse gas emission reductions of different biofuels production paths (relative to their petroleum counterparts) and the treatment of indirect land use changes will determine which biofuels qualify under the Renewable Fuel Standard. 
The slow development of cellulosic biofuels has raised concerns about the industry’s ability to meet large federal usage mandates, which, in turn, has raised the potential for future EPA waivers of mandated biofuel volumes and has contributed to a cycle of slow investment in and development of the sector.


Date of Report: October 14, 2010
Number of Pages: 34
Order Number: R41282
Price: $29.95

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Friday, October 22, 2010

Food Safety in the 111th Congress: H.R. 2749 and S. 510


Renée Johnson
Specialist in Agricultural Policy

The combined efforts of the food industry and government regulatory agencies often are credited with making the U.S. food supply among the safest in the world. Nonetheless, public health officials have estimated that each year in the United States, many millions of people become sick, and thousands die from foodborne illnesses caused by any one of a number of microbial pathogens and other contaminants. At issue is whether the current food safety system has the resources, authority, and structural organization to safeguard the health of American consumers, who spend more than $1 trillion on food each year. Also at issue is whether federal food safety laws, first enacted in the early 1900s, have kept pace with the significant changes that have occurred in the food production, processing, and marketing sectors since then.

In the 111
th Congress, several food safety bills have been introduced, and wide-ranging legislation (H.R. 2749) has passed the House. The Senate also has reported a comprehensive bill (S. 510). Both of these bills mainly focus on the U.S. Food and Drug Administration’s (FDA’s) food regulation rather than that of the U.S. Department of Agriculture (USDA, which has oversight of most meat and poultry). The bills would generally expand or modify existing FDA authorities rather than create a new food safety structure or authorities. H.R. 2749 is a revised version of H.R. 759, and was amended and approved by a House Energy and Commerce subcommittee on June 10, 2009. The full committee further amended and approved H.R. 2749 on June 17, 2009, and the full House approved the bill on July 30, 2009, with a number of additional amendments intended to satisfy the concerns of agricultural interests. The Senate Health, Education, Labor, and Pensions Committee amended and approved S. 510, and later reported it in December 2009. In mid-July 2010, potential amendments to the bill were being discussed, aimed at addressing issues of continued interest to various Senators. In August 2010, a group of Senate leaders released a manager’s amendment to S. 510. Senate floor action has been held up by objections about the projected cost of the bill, as well as attempts to further amend it.

Food safety legislation is a response to a number of perceived problems with the current food safety system. For example, a growing consensus is that the FDA’s current programs are not proactively designed to emphasize prevention, evaluate hazards, and focus inspection resources on areas of greatest risk to public health. Given its widely acknowledged funding and staffing constraints, and no explicit requirement on the frequency of inspections, the agency rarely visits food manufacturing and other facilities to check sanitary and other conditions. In response, the bills would require (although in different ways) food processing, manufacturing, shipping, and other regulated facilities to conduct an analysis of the most likely safety hazards and to design and implement risk-based controls to prevent them. The bills envision establishment of sciencebased “performance standards” for the most significant food contaminants. To help determine such risks and hazards, the bills propose improvement of foodborne illness surveillance systems.

The bills seek to increase frequency of inspections, tighten record-keeping requirements, extend more oversight to certain farms, and mandate product recalls if a firm fails to do so voluntarily. Major portions of the bills are devoted to more scrutiny of food imports, which account for an increasing share of U.S. consumption; food import shipments would have to be accompanied by documentation that they can meet safety standards that are at least equivalent to U.S. standards. Such certifications might be provided by foreign governments or other so-called third parties accredited in advance. The House-passed bill and Senate amendment differ in how to accomplish these objectives. The bills have provisions for certifying or accrediting laboratories, including private laboratories, to conduct sampling and testing of food.



Date of Report: October 15, 2010
Number of Pages: 91
Order Number: R40443
Price: $29.95

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Thursday, October 21, 2010

Cellulosic Biofuels: Analysis of Policy Issues for Congress


Kelsi Bracmort
Analyst in Agricultural Conservation and Natural Resources Policy

Randy Schnepf
Specialist in Agricultural Policy

Megan Stubbs
Analyst in Agricultural Conservation and Natural Resources Policy

Brent D. Yacobucci
Specialist in Energy and Environmental Policy


Cellulosic biofuels are produced from cellulose (fibrous material) derived from renewable biomass. They are thought by many to hold the key to increased benefits from renewable biofuels because they are made from potentially low-cost, diverse, non-food feedstocks. Cellulosic biofuels could also potentially decrease the fossil energy required to produce ethanol, resulting in lower greenhouse gas emissions.

Cellulosic biofuels are produced on a very small scale at this time—significant hurdles must be overcome before commercial-scale production can occur. The renewable fuels standard (RFS), a major federal incentive, mandated the use of 100 million gallons per year (mgpy) of cellulosic biofuels in 2010. After 2015, most of the increase in the RFS is intended to come from cellulosic biofuels, and by 2022, the mandate for cellulosic biofuels will be 16 billion gallons. Whether these targets can be met is uncertain, and on March 26, 2010, the Environmental Protection Agency issued a final rule that lowers the 2010 cellulosic biofuel mandate to 6.5 million gallons. Research is ongoing, and the cellulosic biofuels industry may be on the verge of rapid expansion and technical breakthroughs. However, at this time, only a few small refineries are scheduled to begin production in 2010, with an additional nine expected to commence production by 2013 for a total output of 389 mgpy, compared with an RFS requirement of 500 mgpy in 2012 (a year earlier).

The federal government, recognizing the risk inherent in commercializing this new technology, has provided loan guarantees, grants, and tax credits in an effort to make the industry competitive by 2012. In particular, the Food, Conservation, and Energy Act of 2008 (the 2008 farm bill, P.L. 110-246) supports the nascent cellulosic industry through authorized research programs, grants, and loans exceeding $1 billion. The enacted farm bill also contains a production tax credit of $1.01 per gallon for ethanol produced from cellulosic feedstocks. Private investment, in many cases by oil companies, also plays a major role in cellulosic biofuels research and development.

Three challenges must be overcome if the RFS is to be met. First, cellulosic feedstocks must be available in large volumes when needed by refineries. Second, the cost of converting cellulose to ethanol or other biofuels must be reduced to a level to make it competitive with gasoline and corn-starch ethanol. Third, the marketing, distribution, and vehicle infrastructure must absorb the increasing volumes of renewable fuel, including cellulosic fuel mandated by the RFS.

Congress will continue to face questions about the appropriate level of intervention in the cellulosic industry as it debates both the risks in trying to pick the winning technology and the benefits of providing start-up incentives. The current tax credit for cellulosic biofuels is set to expire in 2012, but its extension may be considered during the 111
th Congress. Congress may continue to debate the role of biofuels in food price inflation and whether cellulosic biofuels can alleviate its impacts. Recent congressional action on cellulosic biofuels has focused on the definition of renewable biomass eligible for the RFS, which is considered by some to be overly restrictive. To this end, legislation has been introduced to expand the definition of renewable biomass eligible under the RFS.


Date of Report: October 14, 2010
Number of Pages: 27
Order Number: RL34738
Price: $29.95

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Tuesday, October 19, 2010

Food Safety on the Farm: Federal Programs and Legislative Action

Renée Johnson
Specialist in Agricultural Policy

Foodborne illness-causing bacteria on farms can enter the food supply unless preventive measures are in place to reduce them, either prior to or after harvest. Also of potential risk to the food supply are pesticide residues, animal drugs, and naturally occurring contaminants such as aflatoxin.

There is interest in examining on-farm practices, given continued major outbreaks of foodborne illness involving both domestically produced and imported foods. An example is the case in April-July 2008, when more than 1,000 persons in more than 40 states and Canada were found to be infected with the same unusual strain of bacteria (Salmonella Saintpaul). Most recently, in May 2010, a large-scale recall of more than 550 million shell eggs has been linked to concerns about a nationwide increase in Salmonella Enteritidis (SE) infections.

Food safety experts agree that an effective, comprehensive food safety system should include consideration of potential hazards at the farm level. However, opinions differ on the need for more stringent, government-enforced safety standards for farms, as exist for processors and others in the food chain. This question and others, such as the potential cost of new interventions to producers, taxpayers, and consumers, are at issue as Congress debates food safety legislation.

The lead federal food safety agencies are the Food Safety and Inspection Service (FSIS) within the U.S. Department of Agriculture (USDA), which regulates major species of meat and poultry and some egg products, and the Food and Drug Administration (FDA) within the U.S. Department of Health and Human Services (HHS), which regulates virtually all other foods. Generally, these agencies’ regulatory oversight of foods begins after the farm gate, at slaughter establishments and food handling and manufacturing facilities. However, various activities of these and other federal agencies involved in assuring the safety of the food supply can, and do, have an impact on how farms and ranches raise food commodities.

In the 111
th Congress, comprehensive food safety bills are progressing that could affect farmers and ranchers. Wide-ranging legislation (H.R. 2749) passed the House in June 2009. The Senate also has a comprehensive bill (S. 510), which is pending further floor action. The House-passed bill would require the establishment of new standards for the production of some fruits, vegetables, nuts, and fungi. Other provisions of H.R. 2749 that focus more broadly on food safety, such as requiring a new food tracing system and expanding authority for access to records, also could impact on-farm practices. Provisions in S. 510—including a section requiring produce safety standards—also would affect on-farm production.

As both bills have progressed, Congress has continued to modify provisions to address the potential effects of proposed food safety requirements on small farms and food processors, and also on organic, direct-to-market, and sustainable farming operations. For example, although the House Energy and Commerce Committee amended H.R. 2749 to address small-farm concerns, the version passed by the full House in June 2010 contained additional changes addressing agricultural interests. Similarly, the version of S. 510 reported by the Senate Health, Education, Labor, and Pensions Committee in December 2009 was further modified to address small-farm concerns as part of a substitute manager’s amendment agreed to by Senate leaders that was released in August 2010. Despite these changes, farm groups continue to push for additional changes to further address these concerns.



Date of Report: October 5, 2010
Number of Pages: 25
Order Number: RL34612
Price: $29.95

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