However, biofuels are a small, yet growing, component of U.S. fuel consumption, accounting for an estimated 10 billion gallons in 2008, or 5% of total light-duty road motor transportation use by volume. The RFS mandates that increasing volumes of renewable fuels be blended with conventional fuels through 2022. This report's discussion of ethanol presupposes the continued dominance of the internal combustion engine and the current infrastructure for petroleum fuel extraction and refining and biofuels feedstock production and refining—as opposed to the major near-term market penetration of alternatives such as plug-in-electric automobiles. Renewable Fuel Standard Statutory Waiver

In April 2008, Texas Governor Rick Perry applied to the U.S. Environmental Protection Agency (EPA) for a waiver of the renewable fuel standard, citing economic damage to the livestock and poultry industries in his state. Ethanol Trade Issues

Most ethanol imported into the United States is subject to a tariff of $0.54 per gallon. Several factors may generate debate on the tariff during the 111 th Congress: (1) beginning in 2009, the tariff is $0.09 per gallon higher than the blender's tax credit it was intended to offset, (2) as the RFS increases and becomes more difficult to fulfill, imports may play a greater role in reaching mandated volumes, and (3) if the price of imported ethanol was lower (without the tariff), blenders would be likely to blend more ethanol into gasoline, achieving one of the benefits of ethanol—reduced emissions. This solution is very popular with corn and ethanol producers, who claim an increase in green jobs, benefits to rural economies, and the displacement of foreign-produced petroleum. Federal Support for the Ethanol Industry12

The ethanol industry has received substantial support from the federal government. Proponents of other types of renewable energy contend that available resources could be better used supporting wind, solar, or other types of renewable energy and they will likely argue for a shift of government support away from ethanol. Ethanol is generally produced in rural areas where corn is grown, to limit transportation costs for feedstocks. The second category is "advanced biofuels," and can be fulfilled with biofuels other than corn ethanol. Many argue that a tariff on ethanol increases costs to consumers. Demand for ethanol is dependent on regulatory mandates, its price relative to gasoline, and, until 2006, its use as an oxygenate. The critical factors underlying ethanol's energy efficiency include (1) corn yields per acre (higher yields for a given level of inputs improves ethanol's energy efficiency); (2) the energy efficiency of corn production, including the energy embodied in inputs such as fuels, fertilizers, pesticides, seed corn, and cultivation practices; (3) the energy efficiency of the corn-to-ethanol production process: clean burning natural gas is the primary processing fuel for most ethanol plants, but several plants (including an increasing number of new plants) use coal; and (4) the energy value of corn by-products, which act as an offset by substituting for the energy needed to produce market counterparts. Lifecycle Greenhouse Gas Emissions

Lifecycle greenhouse gas (GHG) emissions are the aggregate quantity of GHG emissions (including direct emissions and significant indirect emissions such as emissions from land use changes) accounting for all stages of fuel and feedstock production and distribution, from feedstock generation or extraction through the distribution, delivery, and use of the finished fuel to the ultimate consumer. Although the use of ethanol has been touted by proponents as reducing GHG emissions compared with conventional fuels, some contend that the benefits are nonexistent or minimal. These rules will likely be the subject of intense debate because they will determine whether a fuel is eligible for the RFS. Federal Intervention in the Ethanol Industry

The federal government provides incentives and support for the ethanol industry though tax credits, research and development, grants and loan guarantees for plant construction, import tariffs, and perhaps most important, the RFS usage mandate, which was discussed above.
Biofuels are a major source of renewable energy in the United States. Ethanol produced from corn starch accounts for 90% of the biofuels consumed, but only 5% of all light-duty motor transportation fuel consumption. Ethanol is blended with gasoline to increase octane and reduce emissions, and used as a substitute for gasoline to reduce consumption of petroleum-based fuels.
Ethanol has the potential to provide many benefits. As an alternative to gasoline refined from imported oil, its use can improve U.S. national energy security, albeit marginally. Although the exact magnitude is subject to debate, ethanol is thought by many to produce lower greenhouse gas (GHG) emissions compared with gasoline. For this reason, its increased use is seen by many as playing a potential key role in reducing the contribution of the transportation sector to global climate change. U.S.-produced ethanol can also boost demand for U.S.-produced farm products, stimulate rural economies, and provide "green" jobs in rural areas.
An ethanol-centric policy does have its critics. For example, ethanol has been implicated as a factor in rising commodity and food prices. As ethanol production increases, corn is diverted from feed and export markets and acreage is diverted from other crops, such as soybeans. The extent to which ethanol is responsible for these impacts has been the subject of debate and wide-ranging estimates. Also, the potential to displace gasoline and increase national energy security is limited by the land available to grow corn.
Since the 1970s, ethanol has received support from the U.S. government. Presently, federal support is provided in the form of mandated levels of consumption, financial incentives such as grants and loan guarantees, tax credits, tariffs on ethanol imports, and federally funded research and development efforts. Tax credits made available to blenders of ethanol are expected to total nearly $6 billion in 2009. Incentives were initially provided to get the ethanol industry off the ground—many now argue that the ethanol industry has matured and these resources should be used elsewhere.
Federal support for biofuels and ethanol in particular is likely to be an issue facing the 111th Congress. Ethanol has received more federal support than other types of renewable energy. Some argue that the market, rather than the government, should direct investment, whether it be for ethanol, wind, solar, geothermal, or other alternatives. In addition, ethanol is used in internal-combustion engines that mostly use fossil fuels, unlike alternatives such as battery or plug-in-electric vehicles, which do not consume fossil fuels directly.
Other issues of congressional interest may include financial support for ethanol during the recession and the extension of the blender's tax credit and the import tariff, both of which expire after 2010. The renewable fuel standard (RFS), which mandates increasing volumes of renewable fuel use through 2022, may become an issue if biofuels production shortfalls occur and the mandate cannot be met. The U.S. Environmental Protection Agency (EPA) is drafting rules on the calculation of lifecycle greenhouse gas emissions that will determine which fuels qualify for the RFS. These rules will likely attract congressional scrutiny if they exclude major stakeholders in the ethanol industry. In addition, continuation of the RFS itself may be the subject of debate.