Some key research, development, and demonstration challenges related to the ethanol-production process need to be overcome before the fuel’s widespread commercialization can be achieved. These challenges are as follows: (1) improve the effectiveness of pretreatment in removing and hydrolyzing the hemicellulose, separating the cellulose from the lignin, and loosening the cellulose structure; (2) reduce the production costs of the enzymes for converting the cellulose to sugars; (3) reduce operating costs by developing more effective enzymes and more efficient microorganisms for converting the sugar products of biomass-deconstruction into biofuels; (4) demonstrate the biochemical-conversion technology on a commercial scale; and (5) begin to optimize capital costs and operating costs. The size of the biorefineries will likely be limited by the supply of biomass available from the surrounding regions. Such limitations could result in potential loss of the economies of scale that characterize large plants.

Process improvements in cellulosic-ethanol technology are expected to reduce the plant-related costs associated with ethanol production by up to 40 percent over the next 25 years. Over the next decade, process improvements and cost reductions are expected to come from evolutionary developments in technology, from learning gained through commercial experience and increases in the scale of operation, and from research and engineering in advanced chemical and biochemical catalysts that will enable their deployment on a large scale. Federal support for R&D programs is important for resolving the major technical challenges facing ethanol production from cellulosic biomass: pretreatment, suitable enzymes, tolerance to toxic compounds and products, solids loading, engineering microorganisms, and novel separations for ethanol and other biofuels. Designing the R&D programs with a long-term perspective could address current problems at a fundamental level and contribute to visible industrial goals. Furthermore, R&D programs that are closely coupled with pilot and commercial-scale demonstrations of cellulosic-ethanol plants could help resolve issues that arise during demonstrations.

Biochemical conversion processes, as configured in cellulosic-ethanol plants, produce a stream of relatively pure CO₂ from the fermenter that can be dried, compressed, and made ready for geologic storage or used in enhanced oil recovery with little additional cost. Geologic storage of the CO₂ from biochemical conversion of plant matter (such as cellulosic biomass) further reduces greenhouse gas life-cycle emissions from advanced biofuels, whose greenhouse gas life-cycle