"The problem is that there aren't nearly enough filling stations and--nor will there be for decades--that are capable of using the fuel. Without changes downstream in the current distribution infrastructure and end-use, ethanol's growth will soon cease--even if it's given away for free," said Mark Bünger, a research director at Lux Research, who headed up the report "Biofuels After the Fall."
Bünger and his group said that research has been focused on developing more cost-effective production methods and reducing, and that the industry is poised to produce 10 billion gallons for 2009.
But demand will be stifled until the development of commercial infrastructure giving consumers greater access to biofuels and of more vehicles that can use biofuel blends, according to Lux Research.
The report is "a reality check for biofuel advocates operating under the false assumption that demand will exceed supply as soon as costs are competitive with fossil fuels," the group said in a statement.
Lux Research, which interviewed 35 leading biofuel organizations as part of its study, saw, , and lucrative biofuel byproducts as other areas ripe for development and investment.
Earlier this year, a report from Sandia National Laboratories and General Motors said.