Industry leaders at the recent SAE World Congress in Detroit express little confidence in the future of biofuels and are equally lukewarm about diesel engines, blaming U.S. consumers and regulators who fail to see their value.

John DiCicco, senior lecturer-School of Natural Resources and Environment at the University of Michigan, says researchers have been chasing the “magic enzyme” to making biofuels production cost-effective compared with gasoline for more than 30 years with few successes.

“We've seen zero measurable benefit to date, and I don't see one on the horizon,” DiCicco says in a panel discussion.

The Detroit Three would argue otherwise. General Motors Co., Ford Motor Co. and Chrysler Group LLC have millions of vehicles on the road capable of running on a gasoline-ethanol mix.

There are so many flex-fuel vehicles, the cost for those OEMs to make their cars and trucks flexible to burn either fuel has sunk to an inconsequential level.

GM has invested heavily in startup companies researching cost-effective production of next-generation cellulosic ethanol from garbage and non-grain sources.

“We think there will be a (research) breakthrough,” says Roger Clark, senior manager of the Energy Center at GM, a unit focused on developing technologies to meet new corporate average fuel economy and emissions standards.

Clark says Brazil's pervasive use of biofuels demonstrates its potential and also points to grain-rich states such as Minnesota and Iowa, where consumers are embracing E85.

But critics argue ethanol refining facilities in the Midwest drive down the per-gallon cost of E85, erasing its 30% energy deficiency against gasoline. Ship it to the coasts, however, and E85 loses its edge.

According to E85prices.com, the recent price spread between a gallon of E85 and a gallon of gasoline was 27%. In California, the spread shrinks to 16%.

John Juriga, director-powertrain at Hyundai-Kia America Technical Center Inc., says his company could add FFV technology to its products but finds little motivation from consumers.

“It offers (government) credits, but we don't need them,” he says. “So we're not going to put (FFVs) out there, because we don't see the value.”

2010 World Congress Attendance: 10,000 Down 38% from 2009