Recent studies have raised concerns over ethanol's sustainability, but industry representatives say they're closer than ever to getting more environmentally friendly fuels on the market, thanks to some government investments.

At the end of January, Department of Energy officials announced $114 million in grants over the next four years for four small-scale biorefineries. These test plants will serve as pilots for future commercial-scale operations, and each plans to produce advanced biofuels from non-traditional sources.

The investment comes at a pivotal time in the renewable fuels industry, as producers ramp up their efforts to meet a new federal mandate, passed in December, requiring biofuels production to increase nine-fold to 36 billion gallons by 2022. Close to two-thirds of this -- 21 billion gallons -- must come from "advanced sources," meaning non-food crops, such as switchgrass, or biomass, like wood chips.

Producing these advanced fuels is more complex than making ethanol, though, and, so far, none has progressed beyond the laboratory.