The arguments in favor of cellulosic ethanol as a replacement for gasoline in cars and trucks are compelling. Cellulosic ethanol can reduce our dependence on imported oil, increase our energy security, reduce our trade deficit, and rural economies can benefit in the form of increased incomes and jobs. Growing ‘energy crops’ and harvesting agricultural residuals are projected to increase the value of farm crops, reducing or possibly eliminating the need for some agricultural subsidies. Cellulosic ethanol also provides positive environmental benefits in the form of reductions in greenhouse gas emissions and air pollution.

There is a growing consensus on the steps needed for biofuels to succeed: Increased spending on research and development (R&D) in conversion and processing technologies, funding for demonstration projects and joint investment or other incentives to spur commercialization. Without these three pieces, the effort is likely to stall, and will surely be delayed. The challenge is to increase awareness and focus efforts to the commitment to make biofuels a part of our economy. The continued success of our economy and our world may very well depend on making these technologies work.
There is also agreement on one of the main factors impeding the development of biofuels; Inadequate government funding. We are grossly under investing in this area and are just piddling along at a mere 30 or 40 million dollars per year; this can be related to a national security issue. Another problem is that over the last several years, Congressional earmarking has been horrendous. The process is splintering critical resources and as a result, overall effectiveness is diminishing. We are in need of a well aligned, consistently directed R&D effort into biofuels / renewable energy resources.

The "Growing Energy" report calls for $2 billion in funding for cellulosic biofuels over the next ten years, it includes just over $1.1 billion directed at research, development and demonstration projects with the remaining $800+ million slated for the deployment of bio-refineries. The report created in December 2004, lays out an aggressive plan for how biofuels can become cost-competitive with gasoline and diesel, slash global warming emissions, improve air quality, and allow us to invest our energy dollars at home. The plan has two main features; first, the amount of money available decreases over time, so that by 2015 the industry is ready to stand on its own two feet and second, the dollars available to developers is in a menu format allowing them to pick subsidies that work best for their product. Other advocated subsidies and incentives for the industry include production tax credits, bond insurance for feedstock sellers and biofuel purchasers and efficacy insurance. Some organizations would like to see private insurance plans develop but lacking private sector involvement, the government should offer a program.

Given sufficient investment in R&D, and demonstration/deployment, the report predicts that the cost per gallon of cellulosic ethanol could be reduced in the near future. Cellulosic ethanol could be leaving bio-refineries at an approximate cost of $.59-$.91 per gallon. The price range is dependent upon plant scale and efficiency factors. At these prices, biofuels could be competitive with the wholesale price of gasoline. In the past, discussions regarding ethanol as a potential replacement for gasoline have centered on the availability of suitable land in addition to an ongoing feed versus fuel debate. Technological and process advances coupled with the promise of bio-refineries are allowing room to refocus the debate. Scenarios exist where well directed public policies emphasizing biofuels investment and incentives in addition to fuel efficiency could promote a transition to cellulosic ethanol. Given the right policy choices, America's farmers could one day be filling both our refrigerators and our gas tanks.