In recent years, the U.S. has engaged in an experiment to reduce its reliance on hydrocarbon-based transportation fuels and associated greenhouse-gas (GHG) emissions. The goal is to replace fuels derived from crude oil with alternative, renewable biofuels and natural gas.
Federal and state governments have jumped into the race by passing legislation to drive this evolution. Two notable examples are the federal Renewable Fuel Standard (RFS) in 2005 and California’s Low Carbon Fuel Standard (LCFS) in 2007. The RFS seeks to reduce GHG emissions by mandating that specific volumes of biofuel be blended into U.S. gasoline and diesel; the LCFS seeks to reduce GHG emissions by mandating annual reductions in the carbon intensity (CI) of the gasoline and diesel sold in California.
In response to government regulation and optimistic commercial expectations, the venture capital (VC) and private equity (PE) industries have invested in a number of renewable-energy technologies, including wind, solar, and biofuels. VC and PE investments in this sector collectively averaged $5.6 billion annually from 2006 through 2012, with a cumulative annual growth rate exceeding 20 percent. Similarly, oil and gas giants such as Valero Energy have signaled their intent to take advantage of the opportunities by directly investing in promising technologies and commercialization—for example, Diamond Green Diesel is a renewable-diesel joint venture between Valero and Darling International.
See full Article: https://www.bcgperspectives.com/content/articles/energy_sustainability_us_biofuel_race_hype_or_reality/
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