Marta Wlodarz and Bruce A. McCarl

Abstract Today, many countries are increasing the biofuel share in national energy supply, mainly to strengthen their domestic energy security and to protect against sudden oil price hikes. Some biofuels also provide greenhouse gas emis­sion offsets, becoming a part of climate change mitigation framework. Second- generation liquid biofuels (e. g., lignocellulosic ethanol, algae fuel, biomethanol) are under ongoing research effort investigating conversion technologies and eco­nomic feasibility. In this chapter, we will concentrate on the economic prospects of bioethanol production from lignocellulosic materials in the USA in terms of their cost-efficiency and profitability, and implications for global commodity markets. Moreover, we will analyze the emergence of drop-in fuels (e. g., fuels that can be used in existing infrastructure) and the relative difference this makes in the poten­tial for future market penetration.