Some issues and news that can be discussed:
- Biofuels produce a lot of CO2 (February, TRF)
- The New York Times about it (February)
- Sean Carroll: Biofuel is a very inefficient battery
- Gordon Brown: Biofuels aggravate food prices, G8!
- Brazil's Lula: Don't tell me that
- Jose Barroso (EC): Lula is right, let's do it
- United Kingdom: Backs waste wood biofuels
- United Kingdom: Demands for crackdown on biofuel scam
- Germany: Biofuel backtrack
- India: Plans to increase biofuel usage
- CPI, India: Biofuels will lead to disasters (and high CPI)
- India & Africa and the World Bank: West, stop using biofuels
- Saudi oil minister: Biofuels are not sustainable
- Amherst, MA: New biofuel technology
- Nude Socialist & Michigan: New cow bug biofuel technology
- EEA, EU: Suspend the 10% biofuel target: soil, water, biodiversity suffer
- Burma: Junta forces farmers to grow poisonous jatropha
- Airbus: Burning biofuel to fly
Of course that higher food prices would be extremely bad and we are already starting to see them. On the other hand, if you could make much lower oil prices, such as USD 1 per gallon as promised in various articles, the positive effects could hypothetically beat the negative effects. I don't think we're there yet. But a properly optimized and genetically modified plant could eventually become a better and cheaper method to capture, store, and use (a part of) solar energy than e.g. solar panels because fuel in your fuel tank could still be more acceptable than recharging of batteries.
So if the market price of the biofuels is lower than the market price of the food you could grow, it is obvious that no responsible farmer or government should support such a silliness. On the other hand, if these inequalities change their direction in the future, the appropriate reasoning could change, too.
But one must be careful that plants grown as food are pretty much the only source of food we (and animals) have while biofuels are not the only fuels. It follows that the price of food may be much more volatile - it may depend on the supply of corn etc. much more sensitively than the price of fuels may depend on the supply. The more types of fuel you will have, the less volatile this commodity will become. So even if you find a good biotechnology giving you an economically viable biofuel assuming the current prices, you should be careful about the extrapolation of your calculations into the future because the ultimate food price relevant for the correct calculations could be much higher than the present one.
If you try to make any long-term plans, you should simply think about the year 2020 or so, a realistic idea about the world's total population, efficiency of agriculture (and artificial food production), the required amount of plants for food, and the estimated required amount of fuels (proportional to their increased GDP per capita).
If you find out that the improvements in agriculture won't be enough to catch up with the increasing population, it is clear that you can't afford biofuels in the long run because the food will be more important and more expensive. If you find out that the improvements in agriculture can feed those 7 or 9 billion people, there is some potential room for an alternative usage of plants.
But there are many other assumptions that should be discussed. For example, agriculture is less than 1% of the U.S. GDP. That's a very tiny fraction. It is so tiny because the food is still relatively cheap. Shouldn't it be more expensive, after all? There is clearly no God-given answer here but one can try to imagine how the world would look like if the farmers were much wealthier because we would have to pay them much more.