Amid rising fuel costs and calls for fuel independence, dramatic growth of the biofuels industry seems inevitable to many. But a report released Monday by consulting firm Accenture identifies several hurdles that could slow, even reverse, the march of biofuels.

Biofuels champions want to see gasoline and diesel, produced from oil controlled by a small number of countries, replaced by renewable fuels produced from widely available corn or sugarcane and as-soon-as-possible from even more abundant non-food sources, like grasses or agricultural waste.

The respected research firm Clean Edge predicts the worldwide biofuels market will triple by 2017, reaching $81.1 billion from $25.4 billion last year. Mountains of money have poured into biofuels research and development at universities, large corporations and venture-backed startups.

But the Accenture report, titled “Biofuels’ Time of Transition: Achieving high performance in a world of increasing fuel diversity,” says the creation of a global biofuels industry will be “much more difficult to achieve” than is widely believed.  

Distribution and infrastructure development are partly to blame, according to the report. In the U.S., for example, most gasoline is piped around the country from refineries to large storage facilities, called terminals. From there the fuel is trucked to local fueling stations. The system is highly efficient, which drives down costs.

But today in the U.S., as elsewhere save perhaps Brazil, biofuels have no such countrywide distribution system in place. Producers generally sell directly to fueling stations, which explains why ethanol has taken root in the Midwest, center of U.S. corn production, or send it by rail to terminals to be blended with gasoline. This is far less efficient than the more consolidated gasoline distribution network.

If biofuels are to be a serious replacement for gasoline, then challenges in the distribution chain, including storing, blending and accommodating different grades of fuels, will need to be overcome. It’s still uncertain if biofuels can be sent through the same pipelines used for gasoline. New pipelines may need to be built. Even dispensers at fuel stations need to be retooled for biofuels.

What’s clear is that the development of an efficient biofuels market requires enormous investment in the infrastructure needed to support large-scale operations and trading. That financial commitment is difficult to justify, according to the report, when the ultimate returns and size of the market are uncertain.

The growth of biofuels also has an enemy lurking in the distance. It’s called plug-in hybrid vehicles. Plug-ins will run on electricity and be recharged through standard home or office electrical outlets. Unsurprisingly, they will pose a direct threat to the growth of biofuels when they start rolling off production lines in 2010, a widely used date that may or may not prove true.

Whether they come in 2010 or 2020, the cost per mile for plug-ins is expected to be dramatically lower than that for exclusively gasoline or biofuels-powered vehicles. For one thing, the “fuel” generation and distribution network—in this case for electricity—is already in place. That’s why the Accenture report says that the biofuels market will need to become as global and efficient as possible within the next 10 years, before competing technologies become mainstream.

Still, biofuels will have their place in the global tapestry of transportation fuels. The Accenture report says they could make up 10 to 15 percent of the fuels mix in 10 to 20 years.

Biofuels will be especially attractive in developing markets, for example in Africa, where rising gasoline prices have brought real suffering and not just the cancellation of summer vacations. Developing countries could become fuel producers themselves, driving the local economy. And their weak electricity infrastructure will be an obstacle for the introduction of plug-in hybrids, not to mention the high upfront costs that go along with the early adoption of any new technology.