The Buddha tells the private equity fund he can fulfill one of its wishes.  A managing director asks, “could you simplify the tax code?”  Seeing the Buddha frown in silence, the person suggests another wish,  “could you make our cellulosic ethanol project work at commercial scale?”  After a long sigh, the Buddha says, “let’s talk about capital gains taxes.”

Last week, the New York Times published a take-down of government biofuel mandates (“A Fine for not Using a Biofuel that Doesn’t Exist,” 1/9/12).  For 2011, gasoline and diesel suppliers will pay ~$6.8 million in penalties because they failed to mix 6.6 million gallons of cellulosic biofuel into their motor fuels as required by law.  One problem: we can’t produce cellulosic ethanol at commercial scale.  So we’re fining firms for noncompliance when compliance remains unfeasible. (Say that five times fast….)

The article reaffirms from multiple sources the conclusion of our 2011 wood biofuels study:  substantial technical hurdles remain.  Even the executive director of the Advanced Biofuels Association acknowledged in the article that wood-based biofuel “was not yet ready for commercial introduction.”