In the last three decades, the US ethanol industry has grown from small areas of the midwest to 211 plants operating in 29 states with an annual capacity of 14.8 billion gallons. Over 80 % of this ethanol is produced in the so-called corn belt,

which includes nine states: Iowa, Nebraska, Illinois, Minnesota, South Dakota, Indiana, Ohio, Kansas, and Missouri.

In 2012, in the middle of a severe drought, the industry operated very close to its maximum capacity: It used approximately 90 % of its capacity to produce approximately 13.3 billion gallons of ethanol. A significant increase in ethanol production (approximately 43 %) can be observed in Fig. 8 in this period. Even with the drop in US corn production to 10.8 billion bushels in 2012, the national ethanol production remained stable.

The demand for ethanol remains strong especially because it is mixed with gasoline and used in flex-fuel cars. In the USA, most recently introduced cars run on blends of up to 10 % ethanol, and the local manufacturers are developing vehicles that will be able to run on higher percentages of ethanol blends. Since 2008, almost any type of commercial vehicle that has been available in the market has had the flex-fuel option.

Part of America’s ethanol is produced for export. During 2012, the industry exported 750 million gallons of ethanol, or 6 % of the entire production. The US etha­nol industry is confronting protectionist policies from Brazil and the European Union, which expect to increase their exports. In addition, E10 is available almost every­where in the domestic market, but the industry’s goal is to generally use E15 blends.

An expansion of ethanol production with a strong investment in increasing the capacity of production is expected in the USA based on some existing factors: (1) the replacement of MTBE by ethanol, (2) government policies that incentivize the reduc­tion of the country’s dependence on foreign oil, and (3) the need for fuel production.

After analyzing the biodiesel supply and demand, it is clear that in 2005 the USA had 45 biodiesel plants in operation that produced an average of 6.5 million gallons per year. Currently, there are 193 such plants, and their total capacity is 2,917.72 in millions of gallons. Points of biodiesel sale are located in the middle of the USA, with great concentrations in the states of Minnesota and Missouri,

which are the forerunners of the project. Figure 9 shows the production of biodiesel and soybeans in the USA.

From 2009 until 2012, there was a reduction in the production of soybeans in the USA, but the production of biodiesel continued to increase. Indeed, there was a production increase of 43 % between 2008 and 2012.

The major challenge for the US biodiesel industry is the increasing price of soybeans. This price increment is partly explained by the lower yield (in metric tons per hectare) of soybeans compared to corn (which is necessary for producing ethanol), and partly by the expansion of corn production in the USA. This expan­sion occurs to the detriment of soybean production to meet the surging demand from the emerging ethanol industry (Sawhney 2011).

In 2005, 2.3 % of the overall US soybean production was used for manufac­turing biodiesel. This percentage rose to 19.2 % in 2009. The higher compound annual growth rate (CAGR) for the use of soybeans for biodiesel production rel­ative to the rate of overall soybean production emphasizes the increasing use of soybeans for biodiesel production (Sawhney 2011). Although it has been growing rapidly, in 2009 the total amount of biodiesel produced in the USA was small at approximately 7 % of the total ethanol production (Hoekman 2009).

2 Conclusions

The complexity of the activities that involve the production and trade of biofuels surpasses geopolitical boundaries. The early development of this market was a response to the need for an alternative source of energy to replace fossil fuels.

At the moment, the development of biofuels is not exclusively associated with petroleum replacement. Because it represents a reduction of greenhouse gas emissions, biofuel production is also related to environmental protection.

This chapter presented evidence of a significant increase in the demand for bio­fuels in many countries, which contributes to their energy and environmental secu­rity and adds value to their agriculture.

The incentive programs for biofuels depend on government policies such as changes in taxes, grants of subsidies to producers and consumers, and mandatory quotas with minimum participation rates of biofuels. However, the production of biofuels differs in each studied country. In general, the main drivers are the cli­matic conditions, the availability of raw materials, the structures of the production chains, mastery of the necessary processing technologies, and the availability of (public and private) investment.

The development of biofuels’ chains is recent and depends on the whole structure of the chain and not exclusively on one institutional agent. In this context, the devel­opment of more economically attractive biofuels is challenging and demands both further searches for alternative raw materials with higher efficiency and lower pro­duction costs and the continuous improvement of the relevant industrial processes.