**7. Incentive system: renewable fuel standard (RFS)**

To a great extent, expanding the distribution of bio-alcohol depends on the RFS system currently implemented in many countries. Basically, biomass ethanol cannot compete in normal market situation with petroleum-based fuels. As shown in **Figure 12**, liquid fuel cost of corn ethanol and cellulosic ethanol is similar to the level of crude oil price around \$90–110/barrel. Considering the crude oil price during the 2000s, this high level of biomass-based ethanol price cannot compete in normal market situation. To make a room to enter the fuel market, incentive system of renewable fuel standard (RFS) was introduced.

Important aspect in **Figure 12** is that bio-ethanol route (corn ethanol, cellulosic ethanol) is cheaper than the biomass to diesel/gasoline (BTL) route and comparable to the coal/biomass to diesel/gasoline (CBFT) route.

Mandatory addition of renewable energy sources in regulated proportions for transportation fuel is underway in 64 countries worldwide in connection with greenhouse reduction effects. Most such countries employ ethanol-based mixing program, while a few countries including Korea implement mandatory mixing of biodiesel only [13].

In the EU, 27 countries operate the mandatory mixing policy for bio-alcohol. Many countries in different continents implement similar policy: 13 nations in North and South America, 12 nations in Asia-Pacific, 11 nations in Africa and contiguous nations along Indian Ocean, and 2 nations in non-EU sphere [13]. All in all, current trend regarding bio-ethanol mixing in major countries is summarized as follows: mandatory mixing ratios are 27% in Brazil since 2015, while nine provincial governments of China mandate 10% mixing and, it will be expanded to the entire China by 2020. RFS program was newly initiated in Vietnam since 2018 for 5% ethanol mixing. Canadian E5 mandates 5% mixing and E8.5 program is implemented in five Canadian states. Columbia implemented E8 since 2008, but E5 was targeted in Chile but not mandatorily regulated. Costa Rica mandatorily implement E7 while E10 and E2 are regulated in Jamaica and Mexico, respectively. The EU currently mandates 5.75% mixing with 10% objective for 2020 and recommends EU member nations to accomplish target 10% ratios of 2020 [13].

**Figure 12.** *Costs of alternative liquid fuels of different origins with zero carbon price [8, 26].*

*Alcohol Fuels: Current Status and Future Direction DOI: http://dx.doi.org/10.5772/intechopen.89788*

In the United States, MTBE additive to transportation fuel was gradually becoming prohibited since 2002 to prevent the groundwater pollution, and 25 US states had banned the use of MTBE by 2007. Bio-ethanol has thus become a replacement for MTBE. Mandatory mixing of bio-ethanol in transportation fuel has been implemented for dual purposes of using US surplus corn products as raw material for bio-ethanol and simultaneously safeguarding US farm economy, which prompted legislation and implementation of mandatory mixing of bio-ethanol in transportation fuel.

More specifically, Energy Policy Act of 2005 paved a way for RFS program which led to more concrete implementation plan in 2007 via Energy Independence and Security Act. The US Environmental Protection Agency (EPA) announced Regulatory Impact Assessment (RIA) in 2010, and RFS2 program was thus made available to the public, where LCA was required for the greenhouse gas evolution during the bio-ethanol production.

In many countries, government-level subsidies are being curtailed for bio-alcohols with no significant contribution to the greenhouse gas reduction. For example, cellulosic bio-ethanol is given higher Renewable Identification Number (RIN) credit in the United States for its efficient greenhouse gas reduction and non-edible nature of raw material. RIN credit ratio is 0.85:2.85 for corn-based ethanol/cellulosic bio-ethanol, which sets a higher ratio for the cellulosic ethanol.
