The result is a final fuel product. Advanced: renewable fuel, other than ethanol derived from corn  starch, that has life-cycle greenhouse gas emissions at least 50  percent lower than traditional petroleum-based fuels. Such fuels, known as “drop-in” fuels,  include renewable diesel, renewable jet fuel, and renewable gasoline. For example, cellulosic  ethanol, like corn-starch ethanol, faces limits on the amount that can be  blended into gasoline, in part because it is more corrosive. Drop-in fuels  do not face this limitation because they are compatible with current  infrastructure. In addition to the RFS, there are federal tax incentives to promote the  production and use of advanced biofuels. Recent Federal Support for R&D Related to Advanced Biofuels Has Been Through Direct Research and Grants, and the Focus Is Shifting toward Drop- In Fuels

The federal government has supported R&D related to advanced biofuels  through direct research and grants in recent years, with the focus of this  R&D shifting away from cellulosic ethanol, an advanced biofuel that is not  fully compatible with current vehicle engines and fuel distribution  infrastructure, and toward drop-in biofuels, which are compatible with this  infrastructure. Agency officials said that they are focusing on drop-in fuels  in part because of this compatibility. As figure 4 shows, the federal  government obligated about $1.1 billion for R&D related to advanced  biofuels in fiscal years 2013 through 2015, of which DOE obligated over  $890 million, or about 80 percent of the total. It supports  this research primarily through collaboration with national laboratories,  universities, and industry. For  example, scientists in Peoria, Illinois, developed a novel process that  increased production of butanol—a drop-in fuel—from corn stover and  lowered estimated production costs from $4.39 per gallon to $3.42 per  gallon. NSF, DOD, and EPA Obligated Smaller Amounts for R&D Related to Advanced Biofuels

NSF, DOD, and EPA obligated less for R&D related to advanced biofuels  than DOE and USDA; combined, these three agencies accounted for  about 5 percent of the federal funds obligated for such R&D in fiscal years  2013 through 2015. Experts Agreed Several Advanced Biofuels Are Technologically Well Understood, but They Cited Several Factors That Make It Challenging to Significantly Increase Production

Experts said that several advanced biofuels are technologically well  understood but noted that among those currently being produced there is  limited potential for increased production in the near term. In addition, current advanced biofuel  production is far below overall RFS target volumes, and those volumes  are increasing every year. Given expert views on the limited potential for  increased production and current production volumes, it does not appear  possible to meet the targets in the RFS for advanced biofuels under  current market and regulatory conditions. Several Advanced Biofuels Are Technologically Well Understood, but They Are Not Being Produced at the Overall Volumes Called for in the RFS

Several advanced biofuels are technologically well understood, according  to experts, and some are being commercially produced in significant  quantities, but the overall volume being produced falls short of the volume  target in the RFS. Cellulosic biofuels—specifically cellulosic ethanol and renewable natural  gas from landfills—are also technologically well understood, according to  experts, but current production is far below the volume needed to meet  the target for these fuels. Both of these fuels are  considered drop-ins. These factors include the following:
Low price of fossil fuels relative to advanced biofuels. High cost of converting cellulosic feedstocks. Uncertainty about government policy. This uncertainty affects all stages of biofuel  production. Specifically, it describes (1) how the federal  government has supported advanced biofuels R&D in recent years and  where its efforts have been targeted and (2) expert views on the extent to  which advanced biofuels are technologically understood and the factors  that will affect the speed and volume of production. To describe how the federal government has supported advanced  biofuels R&D in recent years and where its efforts have been targeted, we  reviewed documents and obligations data and interviewed officials from  the following agencies: the Department of Agriculture’s (USDA)  Agricultural Research Service and National Institute of Food and  Agriculture; the Department of Defense’s (DOD) Defense Advanced  Research Projects Agency; the Department of Energy’s (DOE) Advanced  Research Projects Agency–Energy, Bioenergy Technologies Office,  Office of Science, and Vehicle Technologies Office; the Environmental  Protection Agency’s (EPA) Office of Transportation and Air Quality; and  the National Science Foundation (NSF). To describe expert views on the extent to which advanced biofuels are  technologically understood and on the factors that will affect the speed  and volume of production, we contracted with the National Academy of  Sciences to convene a group of 20 experts for a 2-day meeting in May  2016.
Why GAO Did This Study

The RFS generally mandates that domestic transportation fuels be blended with increasing volumes of biofuels through 2022, with the goals of reducing greenhouse gas emissions and expanding the nation's renewable fuels sector while reducing reliance on imported oil. Blending of conventional renewable fuels, primarily ethanol derived from corn starch which is required to reduce greenhouse gas emissions by 20 percent compared with petroleum-based fuels, has nearly reached the maximum called for under the RFS. Further growth in renewable fuels is to come from advanced biofuels, which must reduce life-cycle greenhouse gas emissions by at least 50 percent compared with petroleum-based fuels to qualify under the RFS. However, production of advanced biofuels has not kept pace with statutory targets. To promote the development and commercialization of advanced biofuels, the federal government has supported R&D efforts for biofuels since the 1970s.
GAO was asked to review issues related to advanced biofuels R&D. This report describes (1) how the federal government has supported advanced biofuels R&D in recent years and where its efforts have been targeted and (2) expert views on the extent to which advanced biofuels are technologically understood and the factors that will affect the speed and volume of production. GAO interviewed DOD, DOE, EPA, NSF, and USDA officials and worked with the National Academy of Sciences to convene a meeting of experts from industry, academia, and research organizations.
EPA generally agreed with the report.

What GAO Found

The federal government has supported research and development (R&D) related to advanced biofuels through direct research or grants, and the focus is shifting away from cellulosic ethanol and toward drop-in biofuels. Unlike corn starch-based or cellulosic ethanol, drop-in fuels such as renewable gasoline are fully compatible with existing infrastructure, such as vehicle engines and distribution pipelines. In fiscal years 2013 through 2015, the federal government obligated more than $1.1 billion for advanced biofuels R&D. Of this amount, the Department of Energy (DOE) obligated over $890 million. For example, DOE's Office of Science funds three bioenergy research centers affiliated with universities and national labs that conduct basic research for all stages of biofuel production. The Department of Agriculture (USDA) obligated over $168 million in fiscal years 2013 through 2015 to support advanced biofuels. For example, USDA scientists developed a novel process to increase production of butanol, a drop-in fuel that lowered production costs by over 20 percent. The remaining federal obligations during these years were through the Environmental Protection Agency (EPA), the Department of Defense (DOD), and the National Science Foundation (NSF), which obligated relatively less for such R&D. According to agency officials, agencies are shifting their focus to drop-in fuels in part because they are compatible with existing infrastructure. Officials from one federal funding agency said this compatibility makes drop-in fuels more desirable than cellulosic ethanol.
Experts said that several advanced biofuels are technologically well understood and some are being commercially produced, but they noted there is limited potential for increased production in the near term and cited several factors that will make significant increases challenging. Given that current advanced biofuel production is far below Renewable Fuel Standard (RFS) targets and those targets are increasing every year, it does not appear possible to meet statutory target volumes for advanced biofuels in the RFS under current market and regulatory conditions. Biofuels that are technologically well understood include biodiesel, renewable diesel, renewable natural gas, cellulosic ethanol, and some drop-in fuels. A few of these fuels, such as biodiesel and renewable diesel, are being produced in significant volumes, but it is unlikely that production of these fuels can expand much in the next few years because of feedstock limitations. Current production of cellulosic biofuels is far below the statutory volumes and, according to experts, there is limited potential for expanded production to meet future higher targets, in part because production costs are currently too high. Experts told GAO that technologies for producing other fuels, such as some drop-in fuels, are technologically well understood but that these fuels are not being produced because production is too costly. Among the factors that will affect the speed and volume of production, experts cited the low price of fossil fuels relative to advanced biofuels. This disparity in costs is a disincentive for consumers to adopt greater use of biofuels and also a deterrent for private investors entering the advanced biofuels market. Experts also cited uncertainty about government policy, including whether the RFS and federal tax credits that support advanced biofuels will remain in effect. While such policies should encourage investment, investors do not see them as reliable and thus discount their potential benefits when considering whether to invest.