Government support uncertainty, scarce yield information, and the inherent risk in bioeconomic phenomena are some of the deterrents faced by investors in the nascent cellulosic biofuel industry. A financial probabilistic model was developed to contrast the economic feasibility of producing cellulosic biofuels from energy cane and sweet sorghum using three technologies: hydrolysis, pyrolysis, and gasification. Hydrolysis and pyrolysis proved feasible (showed possibilities of a positive net present value) without government support and conditioned to stochastic feedstock yields and biofuel prices. Gasification was feasible with government support. Improved feedstock and biofuel productivity would considerably raise the feasibility probabilities for hydrolysis and pyrolysis without government support.

Recognition of the environmental costs of fossil fuels coupled with concern over their depletion within the next few decades has broadened the search for alternative energy resources, including biomass energy. Ethanol produced from corn (Zea mays L.) grain currently is the primary form of biomass energy produced in the Midwest, but its net energy balance commonly is negative when corn grain is produced under conventional practices. Reducing fossil fuel inputs, particularly for nitrogen fertilizer, will improve the energy balance, but more substantial improvements involve increased efficiency of ethanol production. An alternate source involves fermentation of crops such as sweet sorghum (Sorghum bicolor [L.]Moench).

Other potential biomass energy resources for the Midwest include oils extracted from seed crops, methane from waste digestion, and combustion, gasification or fermentation of woody and herbaceous crops and crop residues. These resources may serve as an energy supplement or a useful energy source for individual farms, households or rural communities. Biomass energy systems in Midwest agriculture must be evaluated regarding their long term environmental impacts and their sustainability. Externalities that must be considered include surface and ground water pollution, soil erosion, and economic and social benefits to the rural community.