U.S. Department of Energy - Energy Efficiency and Renewable Energy
Bioenergy Technologies Office
Biomass is an important commodity for the future of the United States. Increased production and use of biofuels will result in a variety of benefits to the nation, including:
The U.S. economy is heavily dependent on oil imports—containing 4% of the world's population, our nation consumes 25% of the world's oil production. And, with the decline of domestic crude oil production, U.S. dependence on imported oil has increased. According to the Energy Information Administration, oil imports account for 49% of net U.S. petroleum demand.[i] Furthermore, projections show the price of oil will remain strong as demand for oil continues to increase across growing world economies. This dependence on oil has left us vulnerable to disruptions in oil supplies due to natural disasters, political disruptions, and price volatility. In addition, our reliance on foreign oil contributes significantly to our trade deficit (see Biomass and the U.S Economy).
One way to diversify our energy supply and to build economic security is to increase our consumption of domestically produced renewable energy sources, such as biomass-derived transportation fuels (e.g., E10, E85, B20, or B100). Biofuels play an important role in this portfolio as near-term substitutes for petroleum-based liquid transportation fuels. In 2010, ethanol reduced dependence on imported oil by 445 million barrels.[ii] And, with an evolving biofuels market, a much greater percentage of our nation's fuel needs can be met with fuels derived from domestically produced, renewable biomass resources.
Small changes in crude oil prices or supplies can have an enormous impact on the American economy—increasing trade deficits, decreasing industrial investment, and lowering employment levels. Developing a strong industry for biomass-based fuels, power, and products in the United States will have tremendous economic benefits, including trade deficit reduction and job creation.
According to the U.S. Department of Commerce's Economics and Statistics Administration, the 2010 "petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our total deficit in goods." This is a significant decrease from the 2008 petroleum deficit of $386 billion.[iii] In 2010 alone, the ethanol industry helped create more than 400,677 jobs in all sectors of the economy, boosted the national household income by $36 billion through increased economic activity and new jobs, and added an estimated $7 billion in federal tax revenue and nearly $4 billion in state and local tax revenues. Ethanol also added $53.8 billion to the national GDP in 2010.[iv] Growth of the biomass industry is creating new markets and employment for farmers and foresters, as well as job opportunities in processing and distribution.
Growing biomass (e.g., energy crops like switchgrass) has important land, habitat, and soil conservation benefits. Producing energy from residues in forests, mills, and landfills avoids the release of methane into the atmosphere from the decomposition of unused wood and agricultural wastes. Depending on how much fossil energy is used to grow and process biomass feedstock, the result is a substantial reduction of net greenhouse gas (GHG) emissions. Most importantly, biomass is the only renewable energy that can be directly substituted for petroleum-based transportation fuels, which account for one-third of U.S. carbon dioxide (CO2) emissions—one of the principal GHGs. Most of the CO2 and other harmful emissions can be alleviated by substituting biofuels for fossil fuels or by using them as fuel additives, such as ethanol. Consequently, biofuels can play an important role in addressing climate change by reducing net GHG emissions.
The level of GHG emissions associated with a particular biofuel depends on the energy used in growing and harvesting the feedstock, as well as the energy used to produce the fuel. On a full fuel-cycle basis, corn ethanol has the potential to reduce GHG emissions by as much as 52% over petroleum-based fuels. Even better, when compared to gasoline, ethanol made from cellulosic feedstocks (e.g., switchgrass) or agricultural residues (e.g., corn stover) has the potential to reduce GHG emissions by as much as 86%.[v]
[i] Energy Information Administration How dependent are we on foreign oil? (Accessed December 15, 2011).
[ii] Urbanchuk, J.M., Contribution of the Ethanol Industry to the Economy of the United States. February 12, 2011. LECG LLC. Prepared for the Renewable Fuels Association.
[iii] Doms, M., Oil Prices And The Trade Deficit. March 9, 2011. U.S. Department of Commerce
[iv] Urbanchuk, J.M., Contribution of the Ethanol Industry to the Economy of the United States. February 12, 2011. LECG LLC. Prepared for the Renewable Fuels Association.
[v] Ask a Scientist: Biodegradability. Argonne National Laboratory.