As long as electric vehicles remain a niche, biofuels will be the most serious alternative to fossil fuels as a way to power cars and trucks. Millions of existing vehicles can run on fuels mixed with high concentrations of ethanol or biodiesel. The rest, hundreds of millions more in the U.S., can run on mixtures that include some ethanol.

Making vast quantities of biofuels without cutting into food supplies, however, means finding a way to use wood chips, corn stalks, and other forms of cellulosic biomass as feedstocks. Dozens of pilot and demonstration-scale plants for producing cellulosic ethanol have been built across the United States, and a few are planned abroad, including some in China. But it's still not clear when the technology will prove competitive.

Most approaches to making cellulosic biofuels require enzymes to break down cellulose into simple sugars, but these enzymes are expensive. Some companies have developed cheaper ones--Denmark-based Novozymes, for example, says it has lowered the cost by 80 percent over the past two years--while others are engineering microbes to create their own. An organism developed by Qteros, in Marlborough, MA, produces enzymes that convert cellulose into sugar and then turns that sugar into ethanol.

Another strategy is to try to get rid of the enzymes altogether. For example, Coskata, based in Warrenville, IL, uses gasification technology to break down biomass and municipal waste into carbon monoxide and hydrogen. It has developed organisms that can feed on this mixture and produce ethanol.

Other companies are trying to make fuels that resemble gasoline or diesel. BP and DuPont are developing a process for turning cellulose into butanol, an alcohol with properties similar to those of gasoline. LS9, in South San Francisco, has used synthetic biology to design organisms that can process sugars into something "essentially indistinguishable" from petroleum-based fuels such as diesel.

But these companies also need to build large biorefineries capable of producing fuels as cheap as gasoline, which has production costs of around $2.00 a gallon. The latest public data suggest that it costs between $3.00 and $4.50 to produce cellulosic ethanol that matches the energy content of a gallon of gasoline. The figure for corn ethanol is $2.40.