Producers look to next generation of biofuels

California – For America’s biofuel industry, these are times of incredible promise – and serious pain.

The Bay Area teems with entrepreneurs trying to replace oil with new, renewable fuels. Their experiments are attracting investment despite the global recession, with venture capitalists pouring $96 million into the industry in this year’s first quarter.

The federal government wants to expand biofuel production by nearly two-thirds in the next five years, with specific quotas for advanced biofuels made from such ingredients as grass, algae, enzymes or yeast.

But older biofuel companies are facing financial ruin, hammered by low fuel prices.

California’s largest ethanol producer, Pacific Ethanol of Sacramento, closed its plants in Madera and Stockton earlier this year, laying off nearly 80 people in the process. The Stockton plant had been open less than five months.

San Francisco Chronicle