Despite a challenging year, the advanced biofuels industry continues to grow, according to a new report from Environmental Entrepreneurs (E2). Biofuel production capacity has increased from 437 million gallons last year to more than 685 million gallons, the report shows. By 2015, the industry has the potential to produce 1.6 billion to 2.6 billion gallons of clean, renewable fuel.

According to the report, standards like California's Low Carbon Fuel Standard (LCFS) and the federal Renewable Fuel Standard (RFS2) create an incentive for investors and biofuel companies to continue to innovate and increase biofuel production, which in turn will drive down costs and carbon emissions.

The California LCFS, part of the state's landmark AB 32 climate change legislation, requires a reduction of 10 percent in the carbon intensity of California's transportation fuels by 2020. It provides an incentive to produce advanced biofuels, which come from non-food based sources.

California uses about 18 billion gallons of transportation fuel each year, and transportation fuels produce about 40 percent of the state's annual greenhouse gas emissions.

At least 27 new or retrofitted biofuel refineries are expected to come online by 2015 to meet potential demand from the LCFS and the RFS2, according to the E2 report. Three of these will be located in California, with an additional two demonstration facilities in the state. California is already home to eight major advanced biodiesel facilities.

Nationally, between 18,407 and 47,700 new jobs could be created by the growth in the biofuels industry if state standards in California and other states and the federal Renewable Fuel Standard are implemented as planned, according to the E2 report.

"What this report shows is that we have sufficient, proven technology to meet these new standards that will help clear our air, strengthen our economy and provide new choices in transportation fuels," said Bob Epstein, co-founder of Environmental Entrepreneurs, the national group of business leaders who advocate for sound economic and environmental policies.

For a copy of the full report, please go here.