challenge of fuel distriubtion must be addressed. However, if cellulosic biomass were dedicated to thermochemical conversion with a Fischer-Tropsch or methanol-to-gasoline process, the resulting fuels would be chemically equivalent to conventional gasoline and diesel, and the infrastructure challenge posed by the use of ethanol would be minimized.

The panel’s analyses provide a snapshot of the potential costs of liquid fuels produced by biochemical or thermochemical conversion of biomass and thermochemical conversion of biomass and coal. Fuel costs are dynamic and fluctuate as a result of other externalities. With the wide variation in the prices of most commodities, especially oil, investors will have to have confidence that such mandates as carbon caps, carbon tax, or tariffs on imported oil will ensure that alternative liquid transportation fuels can compete with fuels refined from crude oil. The price of carbon emission or the existence of fuel standards that require specified reductions in greenhouse gas life-cycle emissions from fuel will affect economic choices.

Other economic issues are specific to particular types of plants. For biochemical conversion and thermochemical conversion plants that use biomass as feedstock, the volatility of feedstock costs is a concern: the supply and costs of feedstock can be affected dramatically by weather. For thermochemical conversion plants, the investment risk is considerable because of the high capital expenditure. Because a 50,000-bbl/d plant could cost $4–5 billion, the plants could be expected to approach a cost of $100,000 per daily barrel, which is about 6 times the capital investment cost for crude oil in deepwater Gulf of Mexico.