State of the U.S. Biofuels Industry: Drivers of Adoption, Opportunities for Improvements and Paths to Expansion

Abstract

The U.S. biofuels sector is increasingly central to national energy security, both by diversifying the liquid fuel supply and by adding new energy sources. Yet growth remains rapid but uneven, driven by a complex mix of policies, constrained feedstock markets, and emerging conversion technologies. To provide a clearer basis for tracking biofuel growth and identifying practical opportunities for improvement and expansion, this study develops an integrated framework that links facility-level biofuel production data with feedstock use, conversion pathways, regulatory frameworks, and regional expansion analyses. Together with input from industry stakeholders, we compiled a comprehensive facility-level database for biodiesel, renewable diesel, ethanol, sustainable aviation fuel, and renewable natural gas by synthesizing industry and government data. We then evaluated the value of national and state incentive programs by pathway and feedstock and developed an Expansion Opportunity Index to identify promising regions for future growth based on four dimensions: resource headroom, infrastructure readiness, policy strength, and supply chain maturity. Results show that first-generation and waste-based feedstocks dominate current and announced biofuel production, while cellulosic biomass remains substantially underutilized despite its large technical potential. Stakeholder input identifies limited commercialization pathways, underdeveloped supply chains, financing risk, and cost competitiveness as major barriers to cellulosic biofuel scale-up. Results further show that existing incentive structures can improve the economic attractiveness of several biofuel pathways, particularly those based on cellulosic feedstocks. Overall, the results identify region-specific opportunities where scaling cellulosic biofuel pathways could expand domestic fuel supply while highlighting the practical constraints that must be addressed for broader industry growth.