Dynamic programming method is used in transportation fuel portfolio planning. The learning effect in new fuel technology is endogenously modeled through an experience curve. Cellulosic biofuels play critical role in de-carbonization transport sector in near term. The initial 3–4 billion gallons production is critical to bring down cellulosic biofuels’ cost. Large penetration of Zero Emission Vehicles will discourage development of cellulosic biofuels.