Obama to outline biofuels strategy

WASHINGTON (Reuters) - President Barack Obama on Wednesday will outline a government strategy to boost development of U.S. biofuels and address their environmental challenges, an administration official said.

The strategy will be laid out in a report titled "Growing America's Fuel" by the Biofuels Interagency Working Group, a body the president established to help spur investment in biofuels and make the industry more environmentally friendly.

Obama and members of his cabinet are scheduled to meet on Wednesday with a handful of state governors to discuss energy policy and the "opportunities and challenges presented by the transition to a clean energy economy," the official said.

The president is pushing for the United States to overhaul its energy habits by switching to less-polluting fuels and reducing its dependence on foreign oil.

Boosting production of home-grown biofuels, such as ethanol, would help achieve that while also creating jobs in rural regions of the United States as the country battles double digit unemployment, the administration argues.

The president may touch on other energy policies such as technology for capturing and storing carbon emissions during the meeting with governors.

Obama charged the biofuels working group, which includes the leaders of the Department of Agriculture, Department of Energy, and the Environmental Protection Agency, with retooling the nation's policies toward biofuels in many areas.

The group was asked to develop a strategy to increase biofuel production, investment in the industry, and the use of "flex fuel" cars, which can run on either gasoline or fuel that is mostly ethanol.

Biofuels, which are made from biomass -- organic matter such as wood, crops and animal waste -- are used to power vehicles, but critics do not see them as the perfect replacement to high-polluting fossil fuels.

Environmentalists and some scientists say production of U.S. biofuels from corn and other grains can drive out production of other crops, forcing farmers in other countries to burn down forests and clear land to grow those crops -- creating new sources of carbon dioxide, a greenhouse gas blamed for global warming.

(Editing by Paul Simao)