Interest in the use of crops for the production of bio-fuels has accelerated with the increased price oil. The potential of cereals to compete with other crops in this market will depend upon several factors. The price of oil will continue to be a dominate factor determining the viability of fuel production form crops. Other competing technologies (for example gas or coal conversion) may become important especially if oil prices become much higher. Current technology allows efficient conversion of carbohydrate (sugars and starch) to fuels (ethanol or other fuel molecules) Technology developments may deliver efficient lignin and cellulose conversion in the future but the timing of delivery of this technology and its efficiency remain unproven. These developments would create a conflict with the retention of crop residues in many farming systems. The competitive position of grains relative to other crops may be influenced by these developments. Use of crops to substitute for oil in other products may be more attractive than use for fuel. Plants to convert corn to precursors of polyester products such as carpets are already in production. Political or policy decisions that are central to the development of industry in this area include, mandating of the use of bio-fuels, establishment of carbon trading schemes and the level of protection of domestic bio-fuel industries against cheap imports from bio-fuel exporting countries likely to emerge in the near future. Australian producers with potential to target premium food markets will need to assess the relative value likely in food, feed and fuel markets. Dual or multipurpose crop varieties may emerge. Key issues for research at the plant or cereal level are identified in a recent report (US DOE 2006)
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