JENNINGS, La. — The sun shone brightly on the crowd ... as company officials showed off diagrams explaining how they planned to turn weeds and agricultural wastes into car fuel. ... the Energy Department was predicting that cellulose ethanol equal corn ethanol in the market by about 2009. That was in October 1998, when ethanol from crop wastes seemed to be just around the corner.

“Producing cellulosic ethanol is clearly more difficult than we thought in the 1990s,” said Dan W. Reicher, who was assistant secretary of energy efficiency and renewable energy at the time of the first ceremony and who spoke here then. Because of growing concerns about oil imports and climate change, Mr. Reicher said, “it is essential that we figure this out, and fast.”

Mounting concerns over excessive demands for corn as both food and fuel only add to the urgency. In January, President Bush set a goal of producing 35 billion gallons of alternative fuels, probably mostly ethanol, by 2017.

But the more than six billion gallons of ethanol that will be produced this year have already helped push corn to its highest price in years, raising the cost of everything from tortillas to chicken feed. Poor people in Mexico have protested against the higher prices, and now China and India are starting to suffer from food inflation. ...

But everyone is still struggling to develop a method that is cost competitive with corn ethanol — not to mention competing with gasoline and other fuels from oil without subsidies.

...

The enzymes needed to break corn starch into sugar are cheap, costing 3 to 5 cents a gallon of ethanol. His goal for the enzymes that work on cellulose is 10 cents a gallon, but it does not appear that anyone has gotten the cost anywhere near that low yet.

“Some people are still underestimating how difficult it is going to be,” Mr. Emalfarb said.

The Energy Department has set a goal of bringing down the overall cost to produce cellulosic ethanol to $1.07 a gallon by 2012. That is less than half the cost of producing it now and lower than the current cost of about $1.50 a gallon for corn-based ethanol.

The race to commercialize cellulosic ethanol has been helped by the recent flood of investment from public and private sources.

The Energy Department has devoted $726 million for renewable energy projects this year, including wind and solar energy. It recently awarded grants totaling $385 million over four years to six companies working on cellulosic ethanol plants. The Agriculture Department is seeking to increase its bio-energy financing to $161 million from $122 million, which would include $21 million in loan guarantees for cellulosic plants.

Venture capital firms, Wall Street banks and even oil companies have invested about $200 million in the last six months alone.“There is nothing in the last several decades that has generated such private sector enthusiasm and investment,” said Keith Collins, the Agriculture Department’s chief economist. ...

The cellulosic process also promises to use less energy than corn-based ethanol. And it can work on material that is not currently considered a crop, like switch grass or wood chips left over from paper making.

In Louisiana, Celunol is experimenting with an aboriginal sugar cane that grew 200 years ago, “it doesn’t need fertilizer and it grows everywhere, like weeds,” said Matthew Gray, a research engineer with the company.