"The prospects look bright for the future of biofuel," Ambassador Klaus Scharioth told policymakers and representatives from business, international agencies and non-profits in remarks that opened a Capitol Hill conference on the new fuels.

Already now, biofuels contribute significantly to satisfying energy demand in the transportation sector, Scharioth said.

Their use is helping to curb emissions of green house gases blamed for global warming and promoting economic growth through development of innovative technologies, he added.

Biofuels also offer the opportunity for countries that are poor in energy resources — like Germany — to reduce their dependence on imported fossil fuels.

"In a sense, you could say we are building new drilling pumps on our domestic farmland," Scharioth told the conference, which also heard speeches from World Bank President Paul Wolfowitz and former CIA chief R. James Woolsey.

Scharioth warned, however, that biofuels are only in their infancy and that more in-depth study is needed to identify potential risks that their production and usage could pose for agriculture, the environment, development and the economy.

Scharioth said the German government has taken measures to expand biofuel usage, citing a recent agreement committing the oil industry there to a specific consumption goal similar to the ambitious Renewable Fuel Standard in the United States.

The European Union is meanwhile seeking to boost the share of biofuels used in its transportation sector to 5.75% by 2010, from less than 1% in 2005, according to the European Commission.

Scharioth’s remarks coincided with the publication of a new report on biofuels by the Washington, DC-based Worldwatch Institute, released in collaboration with the German Agencies for Technical Cooperation and Renewable Resources with support from the German Agriculture Ministry.

The new report, called "Biofuels for Transportation: Global Potential and Implications for Sustainable Agriculture and Energy in the 21st Century," offers an assessment of the opportunities and risks associated with the large-scale international development of biofuels.

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