The future of biofuels in this country has never looked bleaker. Last week Denver-based BioFuel, Inc., reported a net quarterly loss of $11.2 million  and said it must restructure its debt or reach “other accommodations” with lenders “to continue operating as planned.” In other words: we are in deep s**t.

 Hammered by soaring prices for corn and plummeting demand for energy brought on by the recession, ethanol companies have been falling faster than Tom Cruise’s box-office receipts. BioFuel, which went public in 2007, at least has the distinction of remaining in business. “Several [ethanol producers] are now bankrupt,” reports MarketWatch, “dozens of plants are shut, plans to build others are on hold, and investors — including such luminaries as software magnate Bill Gates and hedge fund manager David Einhorn — are smarting from losses.”

Among the former high-flying corn-based fuel companies that have filed for bankruptcy are VeraSun Energy Corp., Northeast Biofuels L.P., and Aventine Renewable Energy. The industry has not fared much better at the governmental and regulatory level, either: Reflecting the growing awareness that corn-based ethanol is not the “clean” energy source it was once purported to be, new environmental standards announced earlier this month by the Obama Administration would account more fully for the indirect energy costs of growing crops for fuel, such as dramatically increased water use.

So is there a future for biofuel as part of America’s overall energy strategy? The answer is yes.

For one thing, never discount the power of Congress to protect pet projects. Legislators from corn-producing states have already submitted bills to protect ethanol. Republican Senator John Thune, of South Dakota, has introduced legislation that would waive the new EPA regulations  for producers whose output would be limited, or who could demonstrate that the standards would “cause economic harm within the biofuels industry.” At the same time, the EPA is considering raising the minimum requirement for ethanol (from all sources, not just corn) in gasoline from 10% to 15%.

More promising are renewable-energy technologies that promise to generate energy from less demanding sources than corn. Englewood-based Gevo, Inc. said in April that it has received funding from French oil giant Total  to support its plans to convert ethanol plants to produce butanol, which can be manufactured from existing biomass such as agricultural waste. Gevo, founded in 2005, uses a genetically engineered microbe to produce fuel that can be transported in existing fuel pipelines and run in conventional gas engines at a concentration of 85%. It could be that butanol will be the successor fuel to ethanol, as the cassette was the successor to the eight-track tape; Gevo’s first converted ethanol plant, in St. Joseph, Mo., is expected to go online later this year.

But then there’s a lot of biomass out there, waiting for its latent energy to be tapped. Technology, in this case, must play the role that eons of heat and pressure played to transform biomass into oil. Some believe that smaller may be better for accomplishing that feat. Based in Littleton, Community Power Corporation  sells “modular biomass units,” about the size of a shipping container, that gasify woodchips and other forms of biomass at high temperatures to produce energy.

Byproducts including grapevine prunings, olive and peach pits, and walnut, apricot, almond and pistachio shells can be processed in the Biomax units, which produce electricity for around 10 cents a kilowatt hour. Though the company’s based in Colorado, where millions of board-feet of pine beetle-killed timber would seem ripe for processing into energy, founder Robb Walt tells the Colorado Independent that, at least so far, the state hasn’t become a market  for the portable generators.

 Small-scale facilities that run on alternative, available fuels may be the future of the energy-from-biomass industry. It’s going to take time, though, for viable business models to emerge. Unfortunately time is something companies like BioFuel Energy probably don’t have.