A couple of years back the Congress decided that a good way to deal with our dependency on foreign oil was to start using lots and lots of domestically produced ethanol in our cars.

The government, with some help from farm lobbyists, decreed that by 2022 we should burn 36 billion gallons of ethanol a year of which 15 billion gallons was to come from corn. Now this is all well and good, except that corn-based ethanol production will be about 9 billion gallons this year and will require a major increase in corn planting in order to reach 15 billion gallons a year and keep us eating at the same time.

The other part of this story is the Chesapeake Bay Commission, a regional governmental organization that was set up in 1980 by Virginia, Maryland, and Pennsylvania with some help from New York, West Virginia, Delaware, and the District of Columbia, to see what could be done about the deteriorating condition of the water in the Chesapeake Bay. The goal of producing 35 billion gallons of ethanol each year did not pass by the Commission unnoticed, so a study was done that concluded that an additional 300,000 acres of corn might be planted in the Bay’s watershed.

If the usual quantities of fertilizer were dumped on these new acres of corn, an additional 5 million pounds of nitrogen could end up in the Bay each year. Improve the Bay? The Commission might as well fold its tents, for the Chesapeake would be on the way to becoming another Dead Sea like the one forming at the mouth of the Mississippi. In reviewing the options, the Commission’s first study looked at the possibility of biofuel production using cellulosic feedstocks rather than corn and other feed grains to make the ethanol.

For those of you new to the issue, cellulosic ethanol can be made from a variety grasses, trees and woody plants that require no artificial fertilizer, and actually remove nitrogen from the soil and carbon from the air. The downside is that cellulosic ethanol is five or six years away from being commercially viable.

Anyway, the Commission liked what it saw. Cellulosic ethanol was a perfect fit for the Chesapeake’s watershed which has lots of forests and underutilized agricultural land, and is not particularly good corn country. A massive move towards growing and using cellulosic ethanol has the potential to help clean up the Bay and the air as well as powering our cars and providing a new source of economic growth for the region.

In conjunction with the Commonwealth of Pennsylvania, the Commission undertook a second year-long study entitled “Next Generation Biofuels – Taking the Policy Lead for the Nation.”

The technology for producing the next generation of biofuels from cellulosic feedstocks, manure, algae and even municipal wastes is advancing on many fronts. There is general agreement that these processes can and will become commercially viable; however, no investor wants to become the Betamax of biofuels. Some 33 pilot projects for advanced biofuels are currently being built or planned around the U.S. However, it will take several years of trials before enough operational experience is gained to determine the most cost-effective way of producing non-grain-based biofuels and what the costs of production might be. One commercial cellulosic ethanol plant is under construction and an additional 21 are being planned.

The committee that prepared the recent report was quite enthusiastic about the prospects for biofuels and prepared a list of recommendations that the member and associate states of the Commission take action. With six not-inconsequential state governments behind the proposals the chances are good that they will be taken seriously and acted upon at both the federal and state level.

While there were too many recommendations to discuss here, the general idea was for a regional approach to Congress and the federal government to pass laws and develop policies that would encourage and support the development of next-generation biofuels in the region. Suggestions ranged from seeking federal funding to efforts to affect national energy policy.

The report also makes a number of recommendations for the member state governments to implement. These range from a coordinated and consistent message about the benefits of biofuels, to state mandated guidelines for producing biofuel crops.

Starting a biofuels industry will not be easy. Unlike corn-based ethanol which started with huge surpluses of corn, new and unfamiliar crops such as switch grass, miscanthus and camelina currently have no market. State governments will have to take the lead in guaranteeing temporary markets so that feed stocks will be available when processing plants are built. Some potential feedstocks such as corn stover, sawdust, and wood slash are already available and would make a good place to start.

The report recommends a number of actions such as production, infrastructure and tax incentives that state governments can take right away. Mandates that state and local government vehicle fleets and power plants start using second generation biofuels would also be an area where legislatures could give demand for biofuels a boost.

While this study concludes that there would be many advantages to a large and vibrant next-generation biofuels industry, the question remains about whether we can get there. All indications are that a combination of depleting world oil reserves, inadequate new production projects, and declining world petroleum exports will combine to effect a reduction in the amount of petroleum products available on the U.S. market within the next few years.

Large scale production of next-generation biofuels is likely to be a decade or more away and people are starting to wonder about whether the increasing scope of U.S. economic problems will leave enough capital for investment in all the projects necessary to remake our oil-based civilization.

In the meantime, it is encouraging that state and regional groups are starting to recognize there is a problem and a partial solution available, and are taking the initiative to do something.