The analyses performed indicate that U.S. agriculture is in a position to play a significant role as a source of energy. Not only can the U.S. meet food and feed demands, but it can also produce 60 billion gallons of ethanol per year by 2030. This would replace over 20 percent of the gasoline needs in the US market and would be produced from U.S. crop and forest lands. In addition to the ethanol, by 2030, 1.6 billion gallons of biodiesel per year could also be produced.

By 2030, the production of biofuels from renewable feedstocks will generate an estimated $368 billion of additional economic activity per year and potentially create 2.4 million jobs. This annual amount includes $110 billion in economic activity directly linked to the production and conversion of biofeedstocks to ethanol and biodiesel. An estimated $45 billion in tax revenue is generate for local, states and federal governments.

For agriculture, this new demand for cropland and crops implies an additional $11 billion of net farm income annually by 2030, and a yearly savings of more than $5 billion dollars in government payments. Overall, for the period 2007 to 2030, the estimated accumulated gains in net farm income are over $210 billion; and the accumulated potential savings in government payments are estimated to be $150 billion.

In addition, in the year 2030, ethanol would have displaced more than 20 percent of the domestic consumption of gasoline, potentially reducing oil imports by $52 billion each year assuming oil price remains at $60 per barrel. For the entire period through 2030, the cumulative displacement could be as high as 10.48 billion barrels of oil, causing a potential reduction in imports of $629 billion dollars.

Due to the geographic decentralization of the production of feedstock, the economic gains reach the vast majority of the country. This regional distribution of the benefits is reinforced by the fact that due to its low density transportation of feedstock is expensive, so pre-treatment and/or conversion facilities would also tend to be located across the country.

Regionally, the Midwest would have the comparative advantage to produce cellulosic ethanol from corn and wheat residues, while the Southeast and the South would have the comparative advantage in dedicated crops production. In addition, cellulosic material from wood and forest residues would come primarily from the West, Southeast, and Northeast. The gains would primarily be concentrated in the areas in which agricultural production occurs, but the use of wood and forest residues expands the gains beyond the agricultural areas.

The growth of the bioenergy industry is closely tied to the availability of the cellulose-to-ethanol technological path. A delay in the commercial introduction and wide spread adoption of this new technology would impose significant costs for the users of agricultural commodities and limit the contribution of agriculture to the energy needs of the country. To expedite commercial introduction of cellulosic ethanol technologies, adequate support of research and development activities and policies toward commercialization are merited.

The development of a sustainable bioenergy industry should rely on an environmentally sound use of resources within the framework of a coherent and sustainable energy policy. In order to foster development of the bioenergy industry, policies will likely need to be in place providing buffers from short- to medium-term drops in the price of fossil fuels that could jeopardize the long term viability of the new industry.

It is important to note that the 60 million gallon per year target does not represent an upper limit of the potential energy production of the agricultural sector. Significant expansion beyond the 60 billion gallon per year target could occur with one or more of the following:

• Expansion of the region suitable for the production of bioenergy crops beyond the western edge of the Rocky Mountains;

• Incorporation of the ability to convert pastureland (different than cropland in pasture) into energy dedicated crops;

• Allowing the use acreage in the Conservation Reserve Program for the production of bioenergy;

• Increasing short-rotation wood crops in the Northeast and Northwest regions;

• Increased yields above those assumed in the analysis; and/or

• Increasing the efficiency of cellulosic conversion.

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Guide to Alternative Fuels

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