The Energy Independence and Security Act of 2007 (EISA) includes requirements to boost fuel economy for cars and light trucks to 35 miles per gallon; requirements for improvement in efficiency in light bulbs; accelerated transition of government building to improve their energy efficiency; investment in geothermal energy; and, most importantly for agriculture, expansion of the renewable fuels standard with improved infrastructure.

Expanding the renewable fuels mandates established in the Energy Act of 2005, EISA establishes a renewable fuel mandate of nine billion gallons in 2008 that expands to 36 billion gallons by 2022 (Table 1). However, the total renewable fuel mandate is allocated between ethanol made from corn starch, and advanced biofuels that are defined as biofuels made from feedstocks other than corn starch. Through 2015, the mandate continues to expand for corn ethanol; beyond 2015, the mandate begins to emphasize advanced biofuels more heavily to the point where their mandate exceeds corn ethanol in 2021. This backloading of the advanced biofuels mandate is designed to allow the technology for producing advanced biofuels to advance making their production more economically feasible.

Within the advanced biofuels mandate, specific mandates for cellulosic biofuels and biodiesel are also specifically stated. Cellulosic biofuel mandates expand from 0.1 billion gallons in 2010 to 16 billion gallons in 2022, a very aggressive schedule given the economics of current technologies. Switchgrass is among the most highly researched cellulosic feedstocks. Assuming the economics favor rapid adoption of switchgrass production and storage problems were overcome, an average yield of 10 tons per acre, and 100 gallons of cellulosic ethanol produced per ton, approximately 1 million acres would be needed to produce a billion gallons of cellulosic ethanol. With the mandates in EISA, this would imply 16 million acres of switchgrass by 2022, if all of the cellulosic mandate was met by switch grass. Now certainly there are likely to be a variety of cellulosic feedstock sources, but it does suggest significant changes are coming in agriculture.

Renewable Fuel Mandates
from The Energy Independence and Security Act of 2007
Calendar Year	Total Renewable Fuel Mandate	Advanced Biofuel Mandate	Cellulosic Biofuel Mandate	Biomass Based Biodiesel	Implied Maximum Corn Ethanol Mandate**
	billion gallons
2006	4				4
2007	4.7				4.7
2008	9				9
2009	11.1	0.6		0.5	10.5
2010	12.95	0.95	0.1	0.65	12
2011	13.95	1.35	0.25	0.8	12.6
2012	15.2	2	0.5	1	13.2
2013	16.55	2.75	1	1	13.8
2014	18.15	3.75	1.75	1	14.4
2015	20.5	5.5	3	1	15
2016	22.25	7.25	4.25	1	15
2017	24	9	5.5	1	15
2018	26	11	7	1	15
2019	28	13	8.5	1	15
2020	30	15	10.5	1	15
2021	33	18	13.5	1	15
2022	36	21	16	1	15
* Advanced biofuels exclude ethanol made from corn starch
** Global Insight calculations

The biodiesel mandate is expected to continue to pressure vegetable oil prices higher. The mandate is slightly more aggressive than our current forecast assumptions, and should help to keep profitability in the biodiesel sector more stable and to utilize some of the excess capacity in the U.S. biodiesel sector.

The corn ethanol mandate is calculated by subtracting the advanced biofuels mandate from the total renewable fuels mandate. The mandate does provide some incentive for continued expansion in the ethanol sector through 2015, but it is not a lot different than where we projected profitability in the ethanol sector to drive production anyway. Basically, the implied path for corn ethanol is very similar to levels imbedded in our most recent long-term U.S. Agriculture forecast. To attain these levels of starch based ethanol production, corn-planted area will need to average roughly 92 million acres. This area estimate relies on productivity advancement to continue at historic levels (this is a very reasonable assumption give the corn technology pipeline).

At this early stage of assessing the impact of the new energy bill, the largest change from the previous Global Insight long-run perspective is the formal commitment to cellulosic production. Depending on what agricultural resources this feedstock comes from, it will have differing impacts on rural America. Likely, the split will include switchgrass, our other "on-purpose" feed stocks in the Plaines states (traditionally heavy Conservation Reserve Program participants), as well as crop residue harvesting such as corn stalks in areas in close proximity to production facilities.

Finally, but importantly, the Act specifically addresses infrastructure improvements needed for the movement and delivery of biofuels. Specific regulations address the ability of gas stations to supply and advertise biofuels at their stations and may provide some infrastructure development grants. In addition, studies of the feasibility of ethanol pipeline(s), as well as the adequacy of railroads and other modes of transportation, are to be completed within the next 15 months.