Second generation biofuel production facilities have been slower to reach large-scale production than was anticipated a few years ago even though in Europe, the Renewable Energy Directive has incentives for, and in the United States there are also financial incentives and, the Energy Independence and Security Act of 2007 has targets for second generation biofuels. There have been a number of facilities that have been cancelled, but starting in 2013 it appears that significant quantities of second generation biofuels will be produced. A variety of conversion processes, thermal and biological, as well as hybrids of the two is being utilized. There will be a variety of fuels – ethanol, drop-in fuels (e.g. gasoline, diesel), biodiesel, steam, electricity, bio-oil, sugars, and chemicals; and a variety of feedstocks – crop residues, wood, wood wastes, energy crops, waste oils and municipal solid waste (MSW). One approach to reducing the risk of moving from first to second generation biofuel production has been to take incremental steps such as converting the cellulosic part of grains into ethanol in addition to the starch portion. Many of the second generation biofuel facilities are co-located with first generation biofuel production facilities to share infrastructure as well as trade by-products (e.g. excess steam). One of the challenges has been financing, but both private and government sources are being utilized. Private sources include internal corporate funds and debt offerings, and venture capital. Government sources include the U.S. federal government, the European Union, European national governments, and state and local governments.