The Development of Biofuels in the United States

The biofuels industry in the United States first began gaining momentum in the late 1970s following the oil crises. With a goal of reducing dependence on foreign oil, the federal government instituted programs and policies to spur research and production of alternative fuels made from renewable biomass. One of the earliest commercial biofuel products was ethanol made from corn. Federal incentives like the 51-cent-per-gallon blender's tax credit for mixing ethanol with gasoline helped boost production. By 1980, annual ethanol production in the U.S. reached 100 million gallons.

Over the following decades, ethanol production from corn grain steadily increased due to ongoing government support. The federal Renewable Fuel Standard (RFS) program, enacted in 2005 and expanded in 2007, required transportation fuel sold in the U.S. Biofuels to contain a minimum volume of renewable fuels blended with gasoline or diesel. This long-term mandate created  certainty and drove huge investments in new midwestern ethanol biorefineries near corn fields. As a result, annual U.S. ethanol production skyrocketed, reaching over 15 billion gallons by 2015 and meeting more than 10% of domestic gasoline demand.

Challenges to the Corn Ethanol Industry

While corn ethanol provided an early commercial success story, challenges soon emerged that continue to face the industry. One issue is the debate around corn ethanol's impact on food prices and supplies. Critics argue that diverting a portion of the corn crop for fuel increases feed costs and global food prices. Another challenge is that corn ethanol production is inefficient compared to next-generation biofuels and only provides modest carbon reductions. There are also environmental concerns about fertilizer runoff from increased corn acreage polluting waterways. 

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