The Obama administration said Tuesday it is taking steps to boost demand for the nation's sagging biofuels industry.
Many ethanol producers are struggling because motorists consider gasoline prices around $2 a gallon affordable, and are not clamoring for a cheaper fuel.
A 2007 energy law, however, requires a dramatic increase in the use of biofuels: 11.1 billion gallons this year, nearly 60 percent more than what the United States used in 2007.
VeraSun Energy, the nation's second largest ethanol producer and a partner of General Motors Corp., filed for bankruptcy in November. Three other ethanol companies have also sought bankruptcy protection in recent months.
The $787 billion federal stimulus package sets aside $786.5 million to accelerate biofuels research and boost commercialization by providing additional funding for commercial biorefineries.
Biofuels are produced from living organisms or from organic or food waste products. In order to be considered a biofuel, the fuel must contain more than 80 percent renewable materials.
Obama announced Tuesday establishment of an interagency task force to boost ethanol use.
"We must invest in a clean energy economy that will lead to new jobs, new businesses and reduce our dependence on foreign oil," Obama said. "The steps I am announcing today help bring us closer to that goal.
"If we are to be a leader in the 21st century global economy, then we must lead the world in clean energy technology. Through American ingenuity and determination, we can and will succeed."
Obama's Biofuels Interagency Working Group is directed to develop a "comprehensive approach to accelerating the investment in and production of American biofuels and reducing our dependence on fossil fuels."
The new funds include $480 million for pilot- and demonstration-scale biorefineries; $176.5 million for commercial-scale biorefinery projects; and $130 million for research.
Congress required the nation's refineries to use 36 billion gallons of biofuels by 2022, including 16 billion gallons of cellulosic biofuels and 1 billion gallons of biodiesel. The U.S. used about 7 billion gallons of biofuel in 2007.
Almost no cellulosic ethanol has been produced outside a handful of laboratories and pilot refineries.
The Environmental Protection Agency will study the overall impact of corn-based ethanol on greenhouse gas emissions. Many complain that corn-based ethanol uses so much water and energy to create that its environmental benefits are marginal, at best. Others say diverting that much corn to fuel gas tanks hikes food prices.
Biofuels advocates dispute both claims.
"EPA has reconfirmed the fact that when directly compared to gasoline, ethanol significantly reduces greenhouse gas emissions," said Renewable Fuels Association President and CEO Bob Dinneen.
"This apples-to-apples comparison reaffirms the substantial greenhouse gas reductions offered by ethanol calculated in numerous studies including one done recently for the International Energy Agency."
The EPA figures don't include indirect emissions from growing corn and the impact on land use -- such as cutting down forests to grow crops.
Jeremy Martin, of the Union of Concerned Scientists, said the EPA must closely study the overall impact of biofuels.
"The best biofuels take a big bite out of global warming emissions without gobbling up our food crops," he said.
California recently adopted a low-carbon fuel standard that will account for indirect land use emissions.