Biofuels could become nationwide industry: Peterson

WASHINGTON (Reuters) - The U.S. biofuels industry, now centered in the Midwest, could become a nationwide industry as cellulose becomes as an abundant and widespread feedstock, the chairman of the House Agriculture Committee said on Tuesday.

"There's interest in every state," said Chairman Collin Peterson, interviewed as part of the Reuters Global Biofuel Summit. "Make this a national effort, not a Midwest effort or a traditional Farm Belt effort."

A Minnesota Democrat, Peterson said the Agriculture Committee would focus on development of ethanol from cellulose, found in woody shrubs, grasses and crop stalks. The long-time feedstock, corn (maize), is a well-established biofuel crop and doesn't need further incentives, he said.

The interest in ethanol will be reflected in committee structure, where one subcommittee will oversee energy, agricultural research, rural lending and land stewardship.

"These are all elements in what we need to do to get this industry stood up," said Peterson.

Federal loan guarantees will be needed to assure construction of the first commercial-size cellulosic ethanol plants, he said, while scientists need to find more efficient and lower-cost enzymes to digest cellulose and produce ethanol. Peterson also advocated a pilot program to let growers in all parts of the United States experiment with biomass crops for cellulosic ethanol.

"We're looking at trying to do this all over the country," he said.

Democrats on the Agriculture Committee are scheduled to meet on Wednesday to select subcommittee seats. Republicans will make their selections later in the week.

Peterson said the explosion in fuel ethanol production was making the biofuel an attractive alternative to agricultural exports, which now account for a quarter of farm receipts.

"If we get our policies right," he said, ethanol could produce large enough income that "we don't need subsidies."