Really, the biofuel industry is close to taking off.

That's the sentiment conveyed by biofuel company executives and researchers at a symposium by the Society for Industrial Microbiology in San Francisco this week, where biofuel experts presented their research and business updates on making ethanol, diesel, butanol and other types of transportation fuels that don't use corn starch as the raw material but a host of other plants, agricultural wastes and even garbage from city landfills.

Doug Cameron, chief science advisor of Piper Jaffray Investment Management and former director of biotechnology at Cargill, estimates that a dozen or more pilot and demonstration plants are under construction. Examples of companies that are making good progress are Mascoma, Gevo, Poet and Abengoa Bioenergy, he added.

He believes that 2011 is the year when biofuel makers would be able to show that they could produce biofuels in commercial quantities.

"Once some of these have proven their economics and technical successes, then financing will be available to build other ones," Cameron said. "Now there is a lot of money out there, but people don't know where to put their money yet."

The announcement earlier this week by the federal government to propose new regulations for biofuel production and nearly $800 million to fund research and production renewed the spotlight on an industry that has struggled to line up funding and execute production plans (see Feds Propose Controversial Biofuel Mandate, Offer $800M to Boost Production). 

Debate over "food v. fuel" has continued from last year, when environmental groups, cattle ranchers and other industry organizations blamed corn ethanol producers for the rising food and animal feed prices. A report released last month by the Congressional Budget Office said higher energy costs and other factors had a greater impact on the rising food prices than the rising price of corn as a result of expanded ethanol production between April 2007 and April 2008.

Corn prices contributed to roughly 10 percent to 15 percent in food price increases, the report said.

The big debate isn't just over food prices but also land use for both corn ethanol and other biofuel makers that are counting on fast-growing and drought-resistant plants as feedstocks. California approved a low carbon fuel standard last month that requires biofuel producers to count emissions from expanding crop cultivation or replacing food crop with energy crop.

The federal EPA is looking at doing the same, which prompted no small amount of consternation at the symposium this week. The impact of the federal proposal and California regulation remains to be seen.

Boston-based Mascoma has obtained federal and Michigan state funding to build a plant there. The startup has a demonstration plant in Rome, N.Y. that began producing fuel from wood chips in August last year, said Michael Landisch, Mascoma's chief technology officer. It is planning for a new refinery in Michigan that could produce 20 million gallons a year. Construction is scheduled to begin next year.

Sioux Falls, S.D.-based Poet, which has been producing ethanol from corn starch, is developing a project to build a plant that could use corn cobs to make ethanol. The $200 million project, which will locate next to a corn ethanol refinery, would enable the company to churn out 25 million gallons per year, the company said. Production is scheduled to begin in 2011.

Using corn cobs – instead of leaving them on the field as is the common practice today – could produce 5 billion gallons of ethanol per year, said Jason Kwiatkowski, head of the biorefinery process at Poet. That represents about 3.5 percent of the gasoline supply in the country today, he added.

To reduce project costs, some biofuel companies have been looking at retrofitting corn ethanol plants or locating new refineries with industrial operations that rely on the same feedstocks. Mascoma, for example, is talking to lumber and pulp processors, said Jim Flatt, senior vice president of research and development.

Englewood, Colo.-based Gevo also plans to retrofit existing ethanol plants for producing butanol from agricultural wastes. The startup plans to open a pilot plant later this summer that could produce 1 million gallons per year. A commercial plant is scheduled for production in 2011, the company said.