Meanwhile, back on the farm...

It's finally sinking in on cellulosic ethanol producers that somebody better figure out where their feedstock is going to come from and what it will cost. And there are some surprises.

When it comes to growing and harvesting switchgrass as an energy crop, recent studies have shown that farmers likely could grow switchgrass for $30 to $35 a ton in the Midwest. However, many cellulosic-ethanol technology companies have not been able to bring down their production costs far enough to allow them to pay farmers enough to grow such a crop at a profit.

Petiot said cellulosic plants will require at least 7,000 tons of feedstock per day and will need to be able to produce their own enzymes near the plants to make it economical.

Corey Radtke, a scientist at the Idaho National Laboratory, said that when it comes to storing biomass materials such as switchgrass or corn stover, the U.S. faces a unique situation.

For example, he said while the moderate-to-moist climate in the eastern half of the country is virtually ideal for growing biomass crops, it is not a good area to store crops like switchgrass. That's because such cellulosic-ethanol feedstocks can be ruined if they become wet during storage.

In the much drier and warmer western half of the country, Radtke said, farmers struggle to grow biomass crops, but the climate is perfect for storing biomass. [More]

The free-lunch theory associated with cellulosic ethanol is now facing serious scrutiny. I believe the most critical test is to convince skeptics like me to grow, harvest, handle and store the monstrous volumes of low-energy biomass needed for the feedstock.

While it could work (on paper), nobody is offering me switchgrass contracts, either.