A new study says wood-based biofuel, which creates fewer greenhouse gas emissions and requires less water to produce, could become a competitive alternative to fuel made from corn by 2020, but commercial production requires government support to be economically viable.

Wood-based biofuel, which is considered more sustainable, is not currently produced in large commercial quantities in Canada and the United States because of high production costs.

The researchers from the University of British Columbia's Faculty of Forestry found that large-scale commercial production of the wood-based ethanol, also known as cellulosic ethanol, will reduce capital and operation costs thus making it more competitive even without government support.

"As industrial production increases, cellulosic ethanol is likely to become more competitive with corn ethanol for a share of the renewable fuels market," says Jamie Stephen, a PhD candidate at UBC and lead author of the study.

The research noted that improving the economic competitiveness of wood-based ethanol fuel production can done by reducing the capital costs of facilities and equipment, reducing enzyme costs and generating revenue from co-products like electricity.

As industrial volumes of biofuel are produced and demand grows, technological learning and economies of scale will help reduce the cost, the study said.

Corn ethanol is predominantly used at present to satisfy government-mandated targets to include renewable content in transportation fuel because wood-based biofuel is more expensive to produce.

"If you do a purely economic production cost comparison between wood and corn today, corn will be the lower-cost option," said Stephen. However, the author added that if other factors, like energy security, the environmental impact and availability of resources are considered, cellulosic ethanol becomes a more competitive option for Canada and the United States.

"There has been a lot of investment in the research and development of cellulosic ethanol, especially in the United States and Canada. Huge advancements have been made to reduce the cost of production, but there is still a long way to go before the volumes produced by the corn ethanol industry are attainable," said Stephen.

The study, published in the journal Biofuels Bioproducts & Biorefining, was supported by the Natural Sciences and Engineering Research Council of Canada and the British Columbia Innovation Council.