The next generation of biofuels is entering commercial production which offers farmers and others new income opportunities while reducing the U.S. dependence on foreign oil.

Advanced biofuels are high-energy liquid transportation fuels derived from low-nutrient input, high-yield crops including switchgrass, miscanthus, and others; agricultural and forestry waste; and other sustainable biomass feedstocks including algae.

These renewable biomass sources are converted through various processes which break down the cellulose in plant cells to produce cellulosic ethanol and other products.

Advanced biofuel joins corn-based ethanol and bio-diesel from soybean oil - the first generation of biofuel - in the ongoing U.S battle to reduce foreign energy imports. Corn ethanol refineries today produce about 14 billion gallons of conventional ethanol annually which curbs U.S. oil imports by about 300,000 barrels per day.

The U.S. imports about half of its petroleum needs. Americans spend about $2 billion a day overseas to purchase imported oil to convert to fuel.

A handful of advanced biofuel refineries in the U.S. are either in production or in the construction phase. Company leaders shared the latest details on their cutting-edge ventures during the 2012 Biomass Conference held in Washington, D.C. in July.

About 700 advanced biofuel industry members, scientists, academia, and others attended the event, sponsored by the U.S. Department of Energy (DOE). More than 80 speakers shared the latest in advanced biofuel developments.

Christopher Standlee, Abengoa Bioenergy’s executive vice-president, said the company will complete construction of its first U.S. cellulosic ethanol commercial refinery in Hugoton, Kan., next year. The refinery will shift into commercial production in 2014.

The advanced biofuel refinery will produce about 25 million gallons of cellulosic ethanol annually from biomass, plus generate 20 megawatts of electricity.

The Abengoa plant will produce the ethanol from corn stover primarily, plus wheat straw, milo stubble, switchgrass, and prairie grasses.

The company will purchase about 390,000 tons of dry biomass annually from farmers located within 50 miles of the refinery. Abengoa will pay farmers about $17 million annually for the biomass.

Standlee says the “key driver” for Abengoa’s entrance into advanced biofuels is the Energy Independence and Security Act of 2007 passed by Congress and signed by President George W. Bush. The law calls for the production of 36 billion gallons of renewable transportation fuels annually by 2022. About half of the mandate is for cellulosic ethanol.

“This is the legislation that says if we build bio-refineries there will be a market,” Standlee said. “If we make the fuel, there will be a market for the fuel.”

Standlee also credited DOE loan guarantees to companies for bringing the advanced biofuels market to fruition. Abengoa invested $200 million of its own money before the DOE put up its first dollar. Abengoa will repay its DOE note in full, plus interest, the company leader said.

Abengoa has 15 grain ethanol refineries in the world including six in the U.S. The refineries produce nearly one billion gallons of conventional biofuel annually.

Across the U.S., about 25 advanced biofuel refineries are under development. David Danielson, DOE Assistant Secretary for energy and efficiency and renewable energy, expressed excitement over the industry’s developments.

“Construction is underway, steel is in the ground, jobs are created, and new technologies are being validated,” Danielson told the crowd.